I know a family that comes to the Thanksgiving Day table with broadly diverse political and social views. Left unaddressed, these diverse opinions would cause the dinner conversation to erode rapidly, harsh words would be spoken, and the day would be ruined. This happened repeatedly until one year, the family agreed to follow a simple rule: Nobody would discuss politics, social issues or any perceived past failure of another family member.

Nonprofit boards function much like a family; they bring together a diverse group of individuals, all with one common goal – advancing their agency’s mission.  If the board’s nomination process is working well, the board should reflect the broad diversity of the community the agency serves. This diversity will bring varying points of view to board discussions – vitally needed to ensure that decisions are well-reasoned and in the best interest of the agency and its community.  Conversations can get heated but are constrained by the knowledge that all directors are focused on supporting the agency.
ESG can be controversial – why not avoid it if you can?

ESG can be controversial – why not avoid it if you can?

For a nonprofit board, a discussion on ESG invites a verbal conflict that is unnecessary and ultimately unproductive. In our communities, people of diverse political opinions often come together to serve a greater good and that greater good is often the work of a nonprofit charity. People who disagree vehemently on political issues may have no problem working together on a topic of community concern. This is an excellent way to get warring factions to see that they have common interests and desires and can work together to benefit the entire community.  Working together this way may also help temper the political rhetoric when the same people confront their political differences.

What are the risks of an ESG discussion?

As noted in the prior blog, ESG is optional for nonprofit corporations.  By discussing ESG, you may discover that people who have worked cooperatively together for years now see each other in a new and unflattering light. This could lead to the fractionalization of the board and possibly resignations.

One of the realities of today’s America is that neither side of the divide can fathom how the other side could possibly believe what they believe or understand the vehemence by which those beliefs are held.  Board leadership might never see the conflict coming.

Earlier this year, the editors of the Kiplinger Report surveyed the magazine’s readership.  The conservative personal finance magazine that caters to senior investors was looking for feedback about what features its readership enjoyed and how the publication could be improved. They were blindsided by the response.  While much of what they heard was about format and subject matter, a vocal minority of respondents expressed concern about Kiplinger’s apparent move to the dark side by doing articles on ESG and creating an “ESG 20,” a list of corporations scoring high on ESG rankings.  In a July column entitled “Readers, We Hear You,” Kiplinger’s Editor Mark Solheim wrote: “…some of you expressed a desire to see less ESG coverage and less “political bias.” “  He continued by defending their coverage, noting that the magazine does “recommend timely opportunities in energy and other “non-woke” industries.”  Perhaps coincidentally, in the August edition, Solheim announced that he was retiring and would be replaced by the person who wrote the survey results.

Board leaders must know their boards and anticipate where a discussion might go.  Before embarking on an ESG discussion, board leaders should assess the potential for unnecessary conflict. 

These are important topics. How do we avoid the politics?

There are other strategies.  Since it seems like the initials E-S-G are most likely to provoke claims of “wokism,” could the topics be “deconstructed” and prioritized?  Each element of ESG has a place in nonprofit board discussions. Nonprofits must be focused on effective governance.  Most nonprofits are already “social” organizations doing good by providing needed services to their community.  And any nonprofit that delivers healthcare services is subject to strenuous environmental regulations.  All these topics can be discussed without lighting the fuse labeled “ESG.”

Another strategy would be to broaden the discussion to include topics that are undeniably crucial to nonprofits.  We call that broader discussion ESG-C, and it is the subject of our next blog.