Recession is forcing small businesses to abandon ESG, says Clarke Murphy

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Hello.

After yesterday’s message suggesting that 59% of CEOs might ‘pause’ or ‘reconsider’ their ESG plans, I got a call from Clarke Murphy, who was CEO of research firm Russell Reynolds for a decade and runs now the practice of the company’s board of directors. “Is interest in ESG declining? ” I asked. His answer :

” No way. If anything, he has surged forward in the past six months.

Murphy uses the word “sustainability” instead of the acronym ESG, in part because it’s broader. And he says the focus today is not on the cost of sustainability, but rather on sustainability as a means of cost control and competitive advantage.

“Everyone is talking about cost. But people are generating revenue and reducing costs, especially around supply chains… European boards have been paying attention to this for some time, integrating ESG skills into their governance and the way they manage their CEO searches. Now it’s happening in the United States and it’s just getting started.

Murphy has a new book called Sustainable management, and he says he receives requests to speak on the subject from many conferences and councils all over the country (not just the “woke” coasts). I asked him how he explained the survey result suggesting that 59% of CEOs are retiring. “I would like to see the market cap of 59%.” His theory: they are smaller companies. Big business, he thinks, is totally on board, “measuring it, funding it, analyzing it, integrating it.” And it’s only a matter of time before smaller businesses have to follow suit, in part because the larger businesses they serve and supply demand it.

More news below. And check out Ellen McGirt and my interview with Wharton Dean Erika James in the latest episode of Leadership Next, on Apple or Spotify.

Alan Murray
@alansmurray

alan.murray@fortune.com

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