Opinion: ESG scores: What they really tell us

Here is the Statement of Purpose for HB 191:

“The bill amends relevant procurement statutes to restrict the state from using environmental, social and governance criteria in evaluating contract bids. Contract awards, including for public works projects, must be based on competitive pricing, contract requirements and contractor qualifications. The state cannot consider unrelated, subjective ethical or sustainability criteria when determining whether a contractor is qualified or a bid is awarded.”

For some time now, right-wing Republicans have derided even the voluntary disclosure of ESG scores or consideration of sustainability criteria as liberal hogwash. For background, here is the explanation of ESG by the Harvard Law School Forum on Corporate Governance (Aug. 1, 2020):

“ESG grew out of investment philosophies clustered around sustainability and, thereafter, socially responsible investing. Early efforts focused on ‘screening out’ companies from portfolios largely due to environmental, social or governance concerns, while more recently ESG has favorably distinguished companies that are making positive contributions to the elements of ESG:

“· The ‘E’ captures energy efficiencies, carbon footprints, greenhouse gas emissions, deforestation, biodiversity, climate change and pollution mitigation, waste management and water usage.

“· The ‘S’ covers labor standards, wages and benefits, workplace and board diversity, racial justice, pay equity, human rights, talent management, community relations, privacy and data protection, health and safety, supply-chain management and other human capital and social justice issues.

“· The ‘G’ covers the governing of the ‘E’ and the ‘S’ categories—corporate board composition and structure, strategic sustainability oversight and compliance, executive compensation, political contributions and lobbying, and bribery and corruption.”

It is true that a lack of standardized metrics by which to measure ESG performance makes side-by-side comparisons or verification of corporate claims highly difficult. Still, there is value in seeing how a given business approaches these issues, especially if one is evaluating the potential risk of business failure due to board corruption, intractable labor issues or susceptibility to climate-related disasters.

Thankfully, the federal government has made sustainability a higher priority than the state of Idaho. According to its Sustainable INL report: “the Idaho National Laboratory is earnestly working toward becoming a sustainable laboratory by pursuing economic, social and environmental goals — the three equally balanced priorities for sustainability. Sustainability, in the real sense, is the simultaneous consideration for people, planet and prosperity. The concept of sustainability emphasizes making decisions and meeting our needs today without compromising options for the future.”

Thanks to our Republican-dominated Legislature and governor, those procuring goods and services for state government may no longer consider ethical or sustainability criteria in awarding contract bids. Without such forward-thinking, it is another step backward for Idaho.

Janice Brown is the state committeewoman for the Bonneville County Democratic Central Committee and a retired nonprofit executive.