One of the more curious phenomena of the West’s meaning crisis has been the turn of CEOs and business school professors towards the use of explicitly theological language. The Financial Times and World Economic Forum are full of talk of highest principles, generative forces, and even souls. Under the new banner of ‘stakeholder capitalism’ we seem to be witnessing a wholesale re-purposing of capitalism itself. A new acronym “ESG” (standing for Environmental, Social and Governance) is becoming ubiquitous as the mark of this new corporate teleology. What is going on here?
The idea that businesses exist to make returns for their shareholders is becoming dangerously old-fashioned. Capitalist elites are instead insisting on a new orthodoxy, the merger of profit and purpose. In short, this requires that companies have a defining reason for being beyond merely making money. A “North Star” must be identified by each company. This should then pervade the organisational hierarchy and manifest in desirable social and environmental change.
In his recent book Deep Purpose, Harvard Business School professor Ranjay Gulati defines purpose as a “unifying statement of commercial and social problems that a business intends to profitably solve”. 1 His language is strikingly and unashamedly religious in tone. We are told that businesses need a “soul” alongside a “divine mission”, and that the best CEOs should be capable of “beaming divine revelation”.2
This evangelical zeal should then manifest in the building of “moral communities” with a “religious fervour”.3Gulati explains how a “deep fidelity” can improve employee engagement. 4However, this is not limited to mere productivity gains in the workplace. He also suggests that businesses should be in the priestly business of providing the guidance that helps individuals connect their personal purpose with that of the organisation “explicitly inviting them to ‘live’ the organisation’s purpose in their own ways”.5
If in any doubt, Gulati reminds us time and again that this is simply obvious business sense. Having a sustainable purpose sits at the “heart and soul of high-performance companies”.6 Tap into what consumers supposedly want – socially and environmentally conscious goods and services – and companies can expect to earn a premium.
Could we be witnessing, then, the construction of a new telocentric religion? Larry Fink, head of the world’s biggest asset manager, Blackrock, certainly sounds like St Maximus the Confessor when he writes that placing ESG and purpose at the top of the corporate structure can “unify management, employees and communities” whilst being able to “drive ethical behaviour”.7
Fink sees the goals of ESG as part of a universal pattern. His annual Letter to CEOs – with its sermon-like quality – is the template of the new belief structure. When he writes that “the relationship between a company, its employees and society is being redefined”8, we implicitly understand that the nature of this re-definition is already determined. His letters confidently make repeated reference to a universal set of ESG “values” that companies must reflect back at their customers.
At the centre of all this is the net-zero target. Fink writes about this as if it were some mighty deity to be appeased by offering up “unprecedented amounts of capital” in sacrifice.9This is in pursuit of no less than “the greatest investment opportunity of our lifetime”. Companies which do not meet “sustainability-related disclosures” (tellingly left very ambiguous) will be voted down and funds diverted accordingly.
We therefore see the construction of a new hierarchy of gods and demons. At the top of the hierarchy we see “Environmental” promising the delivery of a net-zero, greener future. On the second level comes “Social” with a particular view of human rights, diversity and inclusion at its core. At the third level, “Governance” addresses organisational ethical standards and board-level diversity.
The underlying logic of Fink’s approach is that if it can be made harder for evil non-ESG investments (e.g., fossil fuels, arms or insufficiently diverse companies) to raise money, they will eventually be made un-investable ventures and driven out of the hierarchy altogether. This Manichean casting-out of undesirable participants is of course a very different argument to the one that claims companies with a “virtuous” purpose supposedly outperform those without.
Yet it is often when the rubber hits the road on ESG that things get trickier for business. Take, for example, the recent history of Unilever, one of the world’s biggest food and consumer products groups. The maker of Ben & Jerrys and Dove Soap puts “purpose” at the heart of its strategy, namely to “make sustainable living commonplace”.10Its core strategy document describes the company as wanting to win “with brands powered by purpose” with a firm that “stands as a beacon for diversity, inclusion and values-based leadership”.11
Predictable enough, right? Look more closely, however, and one spots a rather big problem: not a single mention of the customers or their needs.
No wonder Unilever was attacked earlier this year by a top shareholder, Terry Smith, for “corporate gobbledegook”. 12Smith also suggested Unilever management had “lost the plot” in the pursuit of trying to define the purpose of its mayonnaise brand Hellman’s.13In other words, some investors are increasingly seeing Unilever’s “purpose-driven” strategy as a distraction from its core operating responsibility. For the record, Unilever has significantly underperformed its rivals, Nestle and Proctor & Gamble, over the last five years.
The rush to gather and define ESG data upon which companies (and also presumably their “stakeholders”) can be judged is another curiosity. As Robert Armstrong has pointed out in the Financial Times, if purpose were inextricably linked to outsized profits then “profit-seeking investment managers would be doing all the work for us, and we wouldn’t have to be having this damn conversation in the first place”.14And so, the hunt for additional ESG data points itself suggests business is venturing into genuinely new realms of non-financial activity.
These realms were once those of civic and religious leaders: the political and the moral. Under the ESG flag, business now sees itself as needing to define and bring about the common good at the same time as giving spiritual counsel to employees. Former Blackrock Chief Investment Officer turned ESG sceptic, Tariq Fancy, recounts Johnson & Johnson CEO Alex Gorsky saying that “there were times I felt like Thomas Jefferson” 15, while there is barely a profile of former Unilever CEO Paul Polman that does not reference the time he nearly become a priest.16
What does this merger of CEO with priest and president signify? Firstly, we see the strange paradox of the participants of the decayed hierarchy putting themselves forward to fix it. This feels rather like the builders of the Tower of Babel pitching to do the renovation work. Secondly, we should recognise the huge transformational impact that this could have. Corporates are tapping into both the meaning and the environmental crises as sources of growth. They are doing so with a teleological pitch and with trillions of dollars to make its principles manifest.
Traditional religious organisations will be required to make a response. The Church of England, for example, was an early mover and supporter of ESG funds. Archbishop Welby has spoken of the need to reconnect “wealth creation and social justice”.17Yet on its current path, this also means letting Ben & Jerrys and hundreds of other global brands lead the conversation and deploy huge resources (certainly greater than those of the Church of England!) to shape social norms and even geo-politics.18.
A similar dilemma will also face the not-for-profit sector. Its very existence was predicated upon the idea that there were some ends that the market could not achieve. If profit and purpose converge, then where does not-for-profit fit in the hierarchy? Were these organisations not historically set aside from the market for good reason?
Private equity firms with billions of dollars in investment capital are incredibly hungry for investments they can describe as ESG. It is surely not far-fetched to see these firms taking stakes in not-for-profits, helping them on their way to the stock market where the public can have a piece of them. Anybody for the IPO of Unicef in 2030?
Perhaps we shouldn’t act too surprised if large corporations have started to see the power of symbolism and purpose. After all, marketing departments have long made use of abstract concepts to create a sense of meaning in their customer’s lives.
So the real dilemma here is where to draw the line. In the West, we have worked under the assumption that markets have moral limits. As Michael Sandel has pointed out, in many situations “monetary exchange spoils the good being bought”.19If I paid for someone to write an apology to a friend, then the end might be achieved but the chance for inward transformation is lost. This point is being lost in the debate. What then do we stand to lose in a culture which John Gray has described as being “mesmerised” by the market?20
Set within the right limits, Amazon might offer the most impressive study of genuinely effective corporate symbolism. Its purpose of being “the Earth’s most customer-centric company” is deceptively simple and not obviously aligned to any set of social or environmental outcomes.21
Such a statement acts as a genuinely compelling North Star for the organisation, which has led to a famously efficient set of routines, habits and employee participation, and thereby to outstanding success.
Capitalism has, of course, often been described as being like a replacement religion.22However, the difference now is that it seems to be explicitly presenting itself as such. The ESG moment therefore marks a profound paradigm shift.
Even so, we are still relatively early in these conversations around ESG and purpose. It is probable that the tough conversations about the true business and ethical trade-offs have still not been had yet. As the Unilever case shows, there will be many bumps in the road which lead to questions about the underlying assumptions of the new orthodoxy. A worsening economic environment with rising borrowing costs will test how committed investors really are to the new sacred symbols.
This convergence of markets and morality also raises fundamental questions about dissent. In a world where money (and therefore opportunity) is increasingly digitally distributed, what recourse will those have who disagree either with the aims of the new orthodoxy or at the very least the means of getting there? The rush to achieve ESG compliance and funding flows denies the opportunity for a patient ferment of its ideas.
It would be far too easy to cast corporate do-goodery as merely cynical PR. That has not been my intention here. Corporate boardrooms are welcoming the ESG trend as a source of growth and a way of making what they see as a positive impact on the world. Nobody can reasonably deny that we are not in fundamental meaning and environmental crises. To have business not be conscious of its long-term impact on these would itself be damaging.
Yet the theological turn of business marks a significant development. We are seeing the rapid construction of new hierarchies of meaning by a relatively small number of powerful organisations. Paradoxically, in the attempt to curb the excesses of capitalism through purpose, the outcome may be that we end up with an expansion of capitalism, underwritten and emboldened by a new teleology.
This new hierarchy of meaning will stand in opposition to Christ’s admonition that “one cannot serve both God and mammon”. Instead, it will run the experiment to prove the opposite. As this new symbolic story begins to unfold, we should continue to ask ourselves what it means for goodness and justice to have their price.
- Gulati, Ranjay, Deep Purpose, Harper Collins, February 2022, p.11[↩]
- Gulati, p.12[↩]
- Ibid.p.194[↩]
- Ibid.p.166[↩]
- Ibid.p. 200[↩]
- Ibid, front cover[↩]
- Fink, Larry, Letter to CEOs 2019, Blackrock[↩]
- Fink, Larry, Letter to CEOs, 2022, Blackrock[↩]
- Ibid.[↩]
- taken from Unilever Annual Report 2020, p.8[↩]
- Ibid. [↩]
- Smith, Terry, .Unilever + GSK Consumer: A post mortem, January 2022, p.3[↩]
- taken from Fundsmith’s annual letter to shareholders, January 2022, p.3[↩]
- Armstrong, R, The ESG Investing Industry is Dangerous, August 24, 2021, Financial Times[↩]
- Fancy, Tariq, The Secret Diary of a Sustainable Investor Part 2, August 2021, Medium.com[↩]
- Schumpeter, The parable of St Paul, Sept 2nd, 2017, The Economist[↩]
- Justin Welby quoted at the Inclusive Capitalism Conference, Huffington Post, December 6 2017[↩]
- Ben & Jerry’s sent a tweet on February 4th admonishing Joe Biden for fanning the “flames of war” by sending troops to Eastern Europe[↩]
- Palmer, Tom, Book Reiview: What Money Can’t Buy: The Moral Limits of Markets, September 2012[↩]
- taken from review of Michael Sandel’s ‘What Money Can’t Buy:The Moral Limits of Markets’, 2012[↩]
- Amazon’s ‘Our Mission’ statement taken from https://www.aboutamazon.co.uk/uk-investment/our-mission[↩]
- and Max Weber famously drew the link between Protestantism and a particularly dynamic strain of capitalism[↩]
Great article!
Interesting article, thanks!
I think another pattern manifest here is perfectly represented on Apple products. “Designed by Apple in California” they say, while production takes place offshore.
There is a separation of heaven and earth, and here in the West (and in the patterns, you lay out), we pretend as we can just live in the realm of ideas.
Loved your post, thank you!
Great article, thank you.
Excellent piece, thank you! If there is a solution, it lies in that ultimate heresy against finance capitalism. Perhaps governments should regulate corporations to ensure their actions meet social norms…
But we couldn’t have that, could we.
The problem is not so much Capitalism, but the attempt to combine business with the sacred or to pretend the end of business is charity.
Capitalism, at least the economic view of Adam Smith, allows for some government intervention. The problem is determining when it is needed and how much. Not enough and its useless. Too much and people starve.
In this post, businesses are try to act as if they’re charities. And given the names of those leading this charge, they may have the fiscal and political resources to keep competition out. If government were to intervene (and why would they when these keep politicians flush with cash) it would need to be to break up these companies so that other business models can compete.
This is an interesting article and asks some important questions. That the meaning crisis is being felt at leadership levels stirs hope for a brighter future in the age to come. Materialist types are having a hard time denying that resources, survival, or money alone are enough to satisfy. They have forgotten the ways of old when churches, Kings, towns, and businesses of yesterday recognized the path forward was a path upward.
The mystery of human existence lies not in just staying alive,
but in finding something to live for.
—Fyodor Dostoyevsky, The Brothers Karamazov
For me the ESG stuff is just pseudo-meaning talk. It will leave people empty. Purpose and profit have always been merged – if nothing positive (profit, survival, value) comes out of what you do wasn’t it meaningless? It seems the Information Age has just obscured that reality temporarily.
Knowledge of an organization’s skills, market, industry and resources is only part of being profitable. What is most profitable or valuable will always be that which transcends. The great paintings aren’t valued because of the amount of paper and ink they contain but because of what someone put mentally, emotionally, and spiritually into the painting. True purpose ultimately transcends ability, relationships, position, and resources regardless of entity (individual, relational, or community). This applies to individuals, relationships, and communities like business, churches, towns, and even ideological.
No business exists as if there is absolutely no meaning. If they did it would be a rough start right at the beginning of things. Businesses need to recognize the truth if they want to focus on purpose. The purpose of life is best discovered in confronting suffering and bringing peace, in healthy relationships of learning, sharing, and partnership. The healthiest of communities/businesses will encourage and allow these types of behaviors. If business leadership seeks meaning, they will ultimately come back to a focus on individual freedom and liberty, not groups. They are going to struggle for a bit until they realize this search for meaning cannot be faked. This is a great opportunity for the church and Christians. If we can get back to making disciples.
Not that direction, vision, or mission of a community cannot be outward toward others, bringing others into a community of growth. The individuals within the community must grow first. If not, they will have nothing to offer. I have served as a financial adviser, accountant, consultant, and financial officer most of my life, and the greatest tragedy of all modern accounting systems is to look at payroll as an expense instead of an investment. Thinking of payroll as an expense is antiquated and ineffective nonsense. The fact that most generally accepted accounting principles (GAAP), tax laws, and regulations do not update this is a testament to the general stupidity of financial people. Employees can be valuable assets to an organization, an asset that can appreciate instead of depreciate!
As long as the business/community continues to look outward into the environment, society, and with governance (things they can’t actually control) they are going to get mediocre results. When they look inward at the type of community they are building, they are going to have to look at the individual – individuals created in the image of God. The ESG stuff seems like an attempt to put an outward faux face on meaning. Instead of an inward and real effort to seek true meaning and purpose.
I am not sure what is meant by this new hierarchy standing in opposition to the command not to serve God and money. I think there is an opportunity for communities to place money in its correct context as a resource like lumber for a building, time, knowledge, or people in which we should be disciplined, purposeful, and focused on how we use said resources. As for goodness and justice, they always have a price. The price can be paid by a community, but it is going to be felt at an individual level. If they are sacrificing to false gods outside their control (society at large, the environment, or whims of governance) they are going to have a painful ride. Communities that are truly focused on purpose, skills, service, relationships, adding value, and resources in proper context should be able to have a competitive advantage.
I really enjoyed this article. Does anyone know where I can find out more of the author’s ideas on this subject?
I noticed that the author leaves arm dealers out of ESG, but it might not be the case for too long. Truly a cyberpunk future.
https://www.reuters.com/markets/stocks/live-markets-when-defence-stocks-become-an-unlikely-esg-play-2022-03-02/
Great comment.
ESG does not include the businesses of firearms or ammunition or the like. ESG will wind its way through every institution and if you (the business first, the individual next) are not of the “right way of thinking” then you will be denied access to banks, credit cards, credit card processors – but wait!!! Hasn’t that already happened???? Wasn’t even General Flynn canceled by Citibank because they told him he was a liability to them or some such (I paraphrase poorly) fucktardery? Yeah, it is already happening. I seriously doubt this is about corporate goodness reaching toward higher values. Rather as all this fuckery that has been going on now for over 2 years, it remains about POWER AND CONTROL of you, the Sheeple!
When I read the title of this article, I was rather looking forward to a rigourous critique of all things Davos: The Great Reset, Agenda 2030 and all things associated therewith.
While I wouldn’t quite go as far as saying I’m disappointed, I do feel that your implicit criticism of Capitalism in the article is misguided to a significant degree. To build upon Patrick’s comment above, Capitalism isn’t comparable with a political, religious or spiritual ideology; it is a way of outlining the fundamentals of human action and all that this encompasses i.e. incentive structures, resource efficiency optimisation etc. As Austrian economists very adeptly put, it seeks to find the way to make the most of scarce resources purely in material terms.
Yet, if I interpreted your article correctly, you seem to make the assumption that Capitalism has a set of values attached to it. This is absolutely not the case: observing that certain actions will lead to certain outcomes in material terms does not automatically presume that said outcomes are desirable or otherwise. To understand value, the metaphysical needs to be considered, something which is off limits for Capitalism.
There is no doubt some truth to what you say about Larry Fink (insert Bill Gates and a whole host of other morally bankrupt Davos elites if you prefer) and their devout belief in the smell of their own regurgitations, insofar as it comes across as doctrinal; but, since these elites are denouncers of traditional religion and by extension all that is metaphysical i.e. that which has value beyond material reach, schemes or movements such as ESG can never pretend to reach the messianic or divine status that is claimed here, for they are secular in their roots and material in their outlook.
What is covered here is actually genuine fascism, that is to say, the hand-in-hand management by the top corporations and governments of the numerous societies of the world. It is, in fact, a bastardisation of Capitalism taken in a bid to enrich the ruling elites at the expense of everyone else. We do not currently have a free market, and, but for scant small-scale exceptions, the world has never seen a truly free market – and it doesn’t appear that we’re about to any time soon either.
I was actually excited to read about how meaning and material are re-aligning in businesses, and more clearly reflecting the Kingly role all people serve in as the image of God. I honestly don’t know a lot about politics, but I can’t help but think it may be somewhat confusing the issue to frame the discussion as a reaction to it, unless I’m misunderstanding. I would personally really like to see how the cultural concerns brought up in the article might be addressed in in the context of the cultural mandate, and our responsibility as Christians to participate as a priestly role in these emerging symbols. Thank you for the food for thought!
There are two things. First of all, the religious language is the reason why capitalism is failing at being a solution, because the religious ideas add new desires onto people, and create an insatiable society.
On the other hand, businesses and customers united underneath religious values is exactly what a culturally Christian society would need to be.
The problem, Kevin, is that the meaning crisis is a non material, need that people have, and which is intersected by markets and material goods, it would be naive to assume businesses wouldn’t address that