ESG Hiring Isn’t What It Used to Be

Facing the need to cut costs and amid swirling political backlash, many companies are shrinking roles dedicated to governance issues.

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Photo by Mariana Proença via Unsplash

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ESG is drying up faster than the planet it’s meant to protect.

Data provided to The Wall Street Journal by employment analytics company Live Data Technologies showed that 2023 had six months where the number of people leaving ESG (environmental, social and governance) jobs in the US exceeded the number of people starting them.

The Great ESG Disillusionment 

The data spanned 360,000 current and former ESG workers at US companies. Among the months where outflows outpaced inflows was December 2023, when 2,897 people were hired into the sector but 3,071 left. That’s only a net loss of 174, which doesn’t seem like a significant number, but it marks a big gear shift from previous years when companies were eager to hire ESG workers.

So why the sudden depression? For starters, investment in ESG is tailing off, as evidenced in Q3 of last year when ESG funds shrank for the first time ever — and there are a couple of reasons why that’s happening:

  • We’re in an era of wide-scale corporate cost-cutting, and some companies have evidently decided that when they want to eke out as much profitability as possible, ESG is on the chopping block. The firms to shed the most ESG jobs were Meta, Amazon, and Google according to the WSJ, all of which saw giant swathes of job cuts last year (including deep cuts to their AI ethics teams).
  • There has been a political backlash against ESG, largely driven by Republican lawmakers — although not exclusively. The way ESG has been used to configure bonuses for top executives at large companies has drawn rancor from pretty much every corner.

The EU Puts Its Foot Down: One criticism of ESG investing is that companies can essentially game the system for themselves, setting targets that are more achievable than the companies disclose and greenwashing their operations while unlocking some financial rewards along the way. Last week, though, the EU set out a new parcel of rules to regulate how companies rate their ESG efforts, so they won’t be able to reset their goalposts anymore.