Latest Dirty Word In Corporate US: ESG

Many companies no longer utter these three letters: E-S-G. Following years of simmering investor backlash, political pressure, and legal threats over environmental, social, and governance efforts, a number of business leaders are now making a conscious effort to avoid the once-widely used acronym for such initiatives.

On earnings calls, many chief executives now employ new approaches. Some companies, including Coca-Cola, are rebranding corporate reports and committees, stripping ESG from titles. Advisers are coaching executives on alternative ways to describe their efforts, proposing new terms like "responsible business." On Wall Street, meanwhile, some firms are closing once-popular ESG funds as interest fades.

The shift in messaging reflects a reality: "ESG is complicated," said Daryl Brewster, a former Kraft Foods and Nabisco executive who now heads Chief Executives for Corporate Purpose, a nonprofit of more than 200 companies focused on social impact.

The movement to bake accountability into business decisions stretches back centuries; the term gained momentum after the United Nations used it about 20 years ago. Over time, the effort became divisive derided by some state officials as "woke capitalism," and criticized by others for putting too much focus on measurement and disclosure requirements.

Many CEOs stress that they continue to follow sustainability commitments made years ago even if they are no longer talking about them as often publicly. A December survey by the advisory firm Teneo found that about 8% of CEOs are ramping down their ESG programs; the rest are staying the course but often making changes to how they handle them.