ESG has for some time now been a hot button issue for companies. More recently, an anti-ESG backlash has emerged, further complicating the ESG environment for companies and sometimes putting them in a “damned-if-you-do-and damned-if-you-don’t” dilemma. How are companies to navigate these complicated conditions? In a May 23, 2023 post on the Harvard Law School Forum on Corporate Governance entitled “Navigating the Current ESG Landscape: Recommendations for the Board and Management” (here), veteran and respected corporate attorney Martin Lipton of the Wachtell, Lipton law firm provides guidance for companies as they navigate these difficult circumstances and describes the principles companies should follow in trying to make their way on these issues.

Lipton opens his article by observing that ESG has “emerged as a political battleground.” On the one hand, opponents of ESG have “coalesced at the state level,” with legislative initiatives and regulatory actions targeting the consideration of ESG factors in investment and procurement decisions. On the other hand, companies continue to be “inundated with shareholder proposals that overwhelmingly seek the expansion of ESG commitments.” At the same time, companies that have ventured to take a public stance on ESG issues have “attracted national controversy and exposed deep riffs among their different stakeholders.”

As a result, companies and their leadership are “increasingly caught in the crossfire” and face a “challenging balancing act.” Notwithstanding these challenging conditions, corporate law continues to impose “fiduciary duties on management and the board of directors to take into account and balance the interests of all the stakeholders and to use their informed business judgment to address the risks and profit opportunities to achieve the highest long-term growth in the value of the corporation.”

In light of these duties, corporate fiduciaries continue to have an obligation to “assess which ESG factors may have a material impact on their business and actively seek to address them in strategic and operational decision making.”

The increasingly politicized environment around ESG issues “not only serves to underscore the importance of remaining attuned to the perspectives of different stakeholders, but also recognizing that such perspectives, however forceful, are not substitutes for the informed judgment of the board and management.” Managing the conflicting political views “requires a business judgment decision that satisfies the objective of furthering the long-term increase in the sustainable value of the corporation.”

With all these considerations in mind, Lipton summarizes the principles that well-advised company leadership need to consider in seeking to navigate these challenging conditions: “(1) approach important ESG issues as one would approach other important business decisions or risks and (2) recognize that political pressure on ESG is a risk that needs to be managed (rather than a missive to be obeyed.”


There is no doubt that when it comes to ESG issues, companies risk getting caught up in what Lipton describes as the political crossfire. The problem with the politicization of ESG is that while ESG may be many things it is emphatically NOT exclusively a political issue. It is definitely also a practical issue. For example, NASA, in recognition that its launch facilities on Cape Canaveral are vulnerable to rising sea levels, is taking prudent action to protect its exposed facilities.

Corporate leaders similarly worried about potential impacts on their companies’ operations from climate change might appropriately take steps to protect their companies’ long-term interests by acting prudently to protect those interests. These kinds of prudent actions are not the result of a “woke” agenda as some politicians would have it; they are the actions of corporate leaders who want to do what’s right for their companies’ long-term best interests.

The principles that Lipton enunciates makes it clear that companies’ leaders should take the steps they believe to be in their companies’ long-term interests, not by ignoring the political debate, but by taking it into account as the leaders guide their companies within their judgment of their companies’ best interest.