Follow the money on ESG attacks

For a couple of years after the murder of George Floyd, chief diversity officers were the hottest thing in executive recruitment. Hiring of CDOs rose by 169 per cent between 2019 and 2022, according to LinkedIn, as companies scrambled to address warnings of structural racism and sexism in the workplace.

But over the past year, as the Financial Times reported yesterday, that trend has gone into reverse, with CDO hiring down by 4.5 per cent. Several high-profile diversity heads in the entertainment sector, including at Disney and Warner Bros Discovery, have left their roles in quick succession. Other such positions at companies including Twitter have been eliminated altogether. Meanwhile, there are increasingly conspicuous warnings that diversity heads are not getting the resources and support they need to do an effective job.

Does this reflect companies’ growing discomfort with the political backlash against “woke capitalism”? Are businesses simply tiring of a diversity agenda to which they were never truly committed in the first place? Or is real progress being made, despite these troubling signs? Let us know your thoughts at moralmoneyreply@ft.com, or just reply to this email.

Today, Patrick has the latest on this week’s dramatic hearings on the ESG agenda in the US House of Representatives. And Kenza has an intriguing tale about a tie-up between the BBC and a major agricultural chemicals producer. Have a good weekend. — Simon Mundy

Industries hurt by ESG investing give money to Republicans on the attack

On Wednesday, the House of Representatives held its first hearing about environmental, social and governance investing before the powerful financial services committee.

This committee is stocked with Republicans who have strong financial backgrounds rather than noisy Trump loyalists. So the conversation around ESG was more thoughtful than the House Republicans’ previous ESG scrutiny this year.

But it’s important to remember which companies fund the politicians responsible for calling this week’s hearing. Evidence suggests that the hearing was being pushed by companies opposed to ESG because it might hurt their businesses.

A new report found that the Republicans who held Wednesday’s hearing have taken a chunk of money from oil and gas companies as well as other business sectors that often fall foul of ESG filters.

The July 12 report was written by the Congressional Integrity Project, which is headed by Brad Woodhouse, a longtime Democratic operative.

Republicans serving on the House Financial Services Committee have taken more than $9.6mn in campaign contributions from the four industries commonly excluded from ESG funds. Nearly 69 per cent of that $9.6mn is from the oil and gas industry. Congressman Patrick McHenry, the committee’s chair, took $362,008 from oil and gas companies, the report said.

The third-largest recipient of contributions from the oil and gas industry among House members was Republican Pete Sessions, who banked $1.5mn. He is also the sixth-largest recipient of money from gun manufacturers, the report said.

Representatives for McHenry and Sessions did not immediately respond to requests for comment on Thursday.

These disclosures only scratch the surface of money flowing to politicians. So-called “dark money” donations to non-profits and trade associations do not have to be declared and their spending can only be tracked by examining advertising purchases and tax returns.

Democrats are not immune from pushing political agendas for the organisations that pay them — specifically labour unions.

But it is helpful to see that the attacks on ESG are not happening in a vacuum. From cryptocurrencies to banking regulations, the House financial services committee has a lot of possible issues to investigate. ESG investing is getting its turn in the barrel because campaign donors want it there. (Patrick Temple-West)

A BBC farming documentary with a twist

Agriculture, forestry and other land use is responsible for around a fifth of human greenhouse gas emissions, according to an International Energy Agency report this year. This can, to some extent, be tackled by better management of manure and of enteric fermentation — the digestive process of cows — which both emit methane, the IEA report said.

But the agricultural industry, including companies making pesticides that can harm the environment, are also trying to create their own solutions, many of which have been subject to debate. 

The recent Follow the Food documentary series on BBC provides one such example. The documentary profiles farmers working on decarbonisation projects, such as reducing how much they till their soil, promoting carbon absorption in oceans using seaweed, or powering industry using biogas from animal waste. The series also focuses on gene editing, a technology that companies, including pesticide giant Corteva, have a financial interest in. 

The BBC series — when accessed from the UK — looks much like an editorially independent documentary, comparable to David Attenborough’s influential Our Planet series. The UK landing page for the series makes no reference to sponsorship. 

However, BBC award submissions for the first and second seasons of Follow the Food, unearthed by the investigative website DeSmog, explained that it was commissioned as part of an “multi-layered partnership” with US pesticide and seed producer Corteva Agriscience, supporting the company’s efforts to establish itself as “a leader in the agriscience industry”.

Sponsored content — produced on behalf of a commercial sponsor — is now common among major news organisations. Typically, this is clearly labelled to distinguish it from other coverage. If accessed from other countries, including the US, the BBC page for Follow the Food carries a banner reading “in association with Corteva Agriscience”.

The BBC said it could not include Corteva’s name in the UK because it does not allow sponsorship on UK public service platforms. “Follow the Food was an international editorial series, subject to the same editorial guidelines as any other piece of BBC content, and the BBC had full editorial control,” it added.

While the awards submission was by BBC Storyworks, a BBC unit that produces branded and sponsored content, a person close to the BBC said the series had been produced and commissioned by its editorial arm. The series does not mention Corteva by name.

The documentary includes little criticism of the idea that industrial agriculture can help solve the climate crisis, or of the impact of fungicides, herbicides and pesticides on biodiversity and on soil health. Corteva, which declined to comment, sells pesticides containing cyproconazole, which the European Chemicals Agency describes as “very toxic to aquatic life” and harmful to foetuses.

As the UK public broadcaster, the BBC is bound by a set of editorial principles that include acting in the public interest, as well as providing coverage that is fair, accurate and impartial. Commercial content should be clearly marked as such, according to its website.

Shefali Sharma, director of the Institute for Agriculture and Trade Policy’s European office, told Moral Money the films are an example of “window-dressing” for agricultural practices that can damage biodiversity. They could also be an attempt to demonstrate the industry is “doing a great job” on the climate by itself and therefore does not need to be regulated, she added.

Opponents of the EU’s flagship “nature restoration” law, and of separate plans by the bloc to halve the use of chemical pesticides, have argued that both proposals could endanger food security and economic growth. CropLife Europe, a trade group of which Corteva is a member, has argued that regulation on pesticides could jeopardise food production, and that innovation could be a better solution — for example “precision farming” to make cuts to emissions and improve soil health.

“Many of these companies see the writing on the wall because of a call for regulation,” Sharma said. Transparency in dealing with these organisations should be “fundamental”, she added. (Kenza Bryan)

Smart read

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