Is Supply Chain ESG Woke?

Is Supply Chain ESG just another string for the puppeteers of the world...I'm kidding

Hey Procurement Legend, something a bit different today. I’m making this more of a neutral article because, and I’ll be totally honest with you, I’m sitting on that spiky hedgerow unsure where I might land when I make my mind up on this.

But I do think this is an incredibly important conversation point and something to keep in mind. We don’t want to fall in the trap of greenwashing through ESG or using it as a mechanism to make CEOs and the big shareholders more money without improving our world.

I would love to hear your thoughts in the comments.

ESG Puppeteers?

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I’ve been enjoying a flurry of comments on the World of Procurement YouTube channel from two videos I have: One is “What is ESG”, a simple breakdown of the E, S, and G elements. The second is a video about Elon Musk and ESG.

I removed a bunch and blocked people who were attacking me for these videos, which do not, in any way, share any of my views of the world. They’re merely basic insights into a couple of interesting areas.

So, I thought I’d do some digging, read a bit more, and try to figure this all out. Because I’ve seen enough noise around ESG that we should consider whether it’s a beneficial force, a force for the woke and the controlling elites (whatever this means - but I’ll cover woke in a moment), or somewhere in between.

In short, ESG isn’t perfect.

And there’s a difference between the ESG scores that are being pushed by rating agencies and the on-the-ground ESG due diligence that Procurement and Supply Chain teams are undertaking to figure out if the supplier is a good bet.

But there is causality. A chain link between these ESG scores that aren’t necessarily good and sometimes ridiculously stupid and the need for supplier assessments.

What is Woke?

Woke is a minefield. It isn’t easy to know where to start.

So I’m going to call on two sources.

First, the Oxford English Dictionary: 

woke, adjective: Originally: well-informed, up-to-date. Now chiefly: alert to racial or social discrimination and injustice; frequently in stay woke.

The etymology of woke indicates being “awake”, which has transcended to a level of “awareness”.

This definition of “woke” sounds good. Pleasant. One might like to be considered to be woke. But the truth is that this definition doesn’t get to the heart of the issue. The word woke is often used, mainly in America, but increasingly around the world, as a slur for leftist ideology.

Wikipedia (a site I cherish beyond all others has an informative overview of this):

Woke is an adjective derived from African-American Vernacular English (AAVE), meaning “alert to racial prejudice and discrimination”.[1][2] Beginning in the 2010s, it came to encompass a broader awareness of social inequalities such as sexism. Woke has also been used as shorthand for some ideas of the American Left involving identity politics and social justice, such as white privilege and slavery reparations for African Americans.[3][4][5]

The phrase stay woke has been present in AAVE since the 1930s. In some contexts, it referred to an awareness of social and political issues affecting African Americans. The phrase was uttered in recordings from the mid-20th century by Lead Belly and post-millennium by Erykah Badu.

The term woke gained further popularity in the 2010s. Over time, it became increasingly connected to matters beyond race, such as gender and other marginalized identities. During the 2014 Ferguson protests, the phrase was popularized by Black Lives Matter (BLM) activists seeking to raise awareness about police shootings of African Americans. After the term was used on Black Twitter, woke was increasingly used by white people, who often used it to signal their support for BLM; some commentators criticized this usage as cultural appropriation. The term became popular with millennials and members of Generation Z. As its use spread internationally, woke was added to the Oxford English Dictionary in 2017.

By 2020, many on the political right and some in the centre in several Western countries began sarcastically using the term as a pejorative for various leftist and progressive movements and ideologies they perceived as overzealous, performative, or insincere. In turn, some commentators came to consider woke an offensive term that disparages persons who promote progressive ideas involving identity and race. Since then, derivative terms such as woke-washing and woke capitalism were coined to describe the conduct of persons or entities who signal support for progressive causes rather than working toward genuine change.

Holy shit, we’re doing this. We’re going down the rabbit hole together. And we need to. We cannot proclaim “thou shall do ESG to add value” without understanding the entirety of the picture.

The ESG Rabbit Hole

You might note the phrase “Woke Capitalism”.

A phrase often associated with the standpoints of people in my generation, the millennials, who everyone seems to love to hate, and the upcoming Gen-Zs (who I adore).

In short, Woke Capitalism is a view that brands take a stand on easy-to-win battles when it comes to cultural elements that they do not like.

For example, this could be the view that people have of Apple, with Tim Cook telling people not to invest in Apple if they are climate sceptics when Apple still utilises materials from countries that are rife with modern slavery.

The greenwashing, capital woke, who virtue signal - I can see their point.

ESG, and its association with Woke, is the murky waters of Dagobah. You can’t quite see the monster lurking beneath it. Or is it just a friendly large creature trying to do good in the world.

Let’s explore this, someone.

Why ESG Scores are being targeted

“Companies rated highly on widely accepted environmental, social and governance metrics pollute just as much as lowly rated companies, research has found”.

And when you have one of the most influential people in the world post this:

The premise of Elon’s point was that Tesla was given an ESG score of 37/100, whereas the tobacco company, Philip Morris, had a far higher score of 84/100.

What you have here is a product quite literally designed to cause addiction which kills millions around the globe every year, and the other is designed to rid the world of Internal Combustion Engine Vehicles.

You start to wonder what is going on.

And yes, Tesla scores well on the E element but lower on the S & G elements.

And this raises a vital point.

ESG isn’t about the environment. It’s about a flurry of competing & conflicting supposedly wants.

And let’s not even get started on the lack of transparency around scores, the approach to ESG, or what is acceptable or not.

In short, ESG scores from an investment angle are ripe to be called out. The “woke” label, the slur of it, could be well founded here. For it does appear to be broken. Broken from the start. People who use the woke word as a slur will throw in your face the control that the likes of BlackRock have over ESG. Apply critical thinking to this - see where you get to.

But how does that impact Procurement?

Is Supply Chain ESG Woke?

Of the hints of wokeness, political influence, greenwashing, and the rest at the investor level, we are cutting through much of the BS when it comes to our supply chains.

But there are still widespread issues when it comes to ESG.

Sustainability and ESG are used interchangeably at times.

This is wrong. Don’t do this. Sustainability is a process of reviewing the impact one has on the environment. An inside-out review.

ESG, on the other hand, only in part cares about the environment.

So, ESG is primarily a risk management and investment framework that seeks to evaluate the financial risks that environmental, social, and governance factors pose for a company’s value…It adopts an “outside-in” perspective that is best described as an investor- and company-centric framework which seeks to de-risk portfolios and increase the economic resilience of a company. Source

And this is where the divergence with our suppliers becomes an issue.

We might start our ESG with hopes of saving the world through our organisations only to find that our organisations care more about that stock price and the use of that supplier, who might muddy the waters with its murky response to modern slavery that you know is BS, will get used because they are the best overall, and that’s going to keep your profit margins healthy.

Call me a cynic, but this is happening.

And we can influence this. We truly can make ESG a valuable exercise where we have clear criteria, with policies that ensure that any supplier who partakes in X, Y, or Z, or who cannot satisfy us that we’re so absolutely, positively, brimming with confidence that they don’t have “child labourers”, cannot become a supplier. Even if that means we cannot create a product that then has a negative impact on stock prices, shareholders, or the CEO’s pay.

Closing Thoughts

ESG is a shitshow in many respects. There are incredibly good intentions around it, but there are those who would absolutely use it as another commercial weapon. There may be those in the world who want to use it to steer the ship with their quasi-governmental powers.

I’m undecided on whether “ESG is Woke”.

It’s far from perfect. It’s rough, unshaped, and murky. But can it be polished into a diamond?

I’m not sure.

But we have an incredible opportunity to work with our supply chains to make it a force for good.

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