2021 Trends Forecast in ESG, Ethics and Corporate Responsibility

Every year, one of my favorite January exercises is to read all of the “trends” articles that pop up in our industry and various others. At heart, I consider myself a futurist (for various reasons, but in part because futuristic is my #1 Strengths Finder Strength). The action of looking at what’s coming and what’s shaping the forces of what’s coming is an exciting and worthwhile exercise.

In 2021, though, I’ve noticed a significant decrease in the number of trends articles posted in the realm of ESG/sustainability/CSR. As I’ve been working on a number of 2020 sustainability reports for my clients, I notice the same thing. We are reticent to talk about “trends” when there’s clearly one huge global “trend” befalling our lives right now….still…COVID. But as I thought more about it, I realized there is still value in thinking about trends in both a macro and micro way even in a global pandemic, so I put together my own forecast here. In fairness, this article is long…but I polled my LinkedIn followers and the overwhelming majority told me to release it in full rather than in parts. So I’m doing just that – along with an episode of Table Stakes Podcast that outlines all of these trends as well.

When I thought about how to break down my own trends forecast in 2021, I started in the most basic place – the dictionary. Merriam-Webster has a few definitions and I find their differences fascinating. The first definition is “a prevailing tendency or inclination,” the second is “a general movement,” the third is “a current style or preference,” and the fourth is “a line of development.” So that’s how I’ve chosen to focus my analysis of trends in sustainability, ESG and corporate responsibility in 2021 – in these four key definitions. I also found it important to identify that there is no such thing as a single, unnuanced trend in each of these areas – so in each definition I’ve highlighted what I consider a trend in action (happening right now), a trend in development (starting to happen), and a trend in decline (was a trend in recent years but diminishing today).

Trend Definition #1 – A prevailing tendency or inclination.

Trend – Preparedness.

  • A trend in action: Preparedness for global macro issues. It’s an absolute no-brainer to say that COVID has raised the issues of crisis and disaster preparedness in every company around the world. For decades, scholars will most certainly evaluate the rapid (or not so rapid) response companies had to the pandemic in 2020 and how that response affected their short- and long-term success. But what happened in 2020 will, I think, also spur companies around the world to think about other macro-level disasters they must be prepared for. Those who were once “doomsdayers” inside companies may just find themselves getting the budgets and resources they need to develop plans and scenarios for macro disasters like climate events, banking collapses, energy grid concerns, another global pandemic and much more.
  • A trend in development: Preparedness for micro issues. So we get it, right, the trend in action is clear. Companies are going to be better prepared for huge, macro disasters. But here’s the trend developing – companies are starting to also think about micro disasters. Because companies are investing more in risk management, crisis communications, and issues management, it’s natural they’ll also take the time to evaluate not just the macro issues, but those issues that are specific to their company, geography or industry. There will be a newfound focus on materiality as more than just a chart in a sustainability report. Material issues will serve to highlight real threats and identify real weaknesses, and hopefully begin to force the hand of companies who need highly developed, micro issues management processes in place to weather a hyper-local storm. Consider this analogy: COVID was the climate change of global pandemics – it affects everyone at every corner of the globe. But if COVID is like climate change, these kinds of topics are like a local tornado. You might not hear about it globally, but it will rip your house apart.
  • A trend in decline: Traditional disaster funding. As companies prioritize the development of their plans, strategies and benches for macro and micro disasters, I see another major shift happening specifically in corporate philanthropy and that’s a major change in traditional disaster-relief funding. For decades, it’s been well-known in any CSR department or corporate foundation you always have to hold a percentage of your budget in case there’s a major hurricane, tornado, flood, etc. that affects your company or your employees. In the case of disasters like Hurricane Katrina or the earthquake in Haiti, it didn’t matter if you were in the disaster zone, as a corporation you were expected to step up and give. And in many cases, these gifts are big dollars – in the 7 and 8 figures at times. Most CSR leaders have also been on the other side of those 7 figure gifts when we look back and realize we aren’t sure where they were spent or how much impact they really had. As we all tune in strategically to the realities of crisis (big or small), the philanthropy community is asking more questions than ever before. I’ve already seen corporations pulling back on the “blanket gifts” they make in disaster scenarios and digging deeper on the purpose of those dollars, who they truly help, and where. Even in the cases of hurricanes or floods, I think we will begin to see hyper-local, hyper-specific funding more and more and less big dollar check writing to the big dogs of disaster relief.

Trend Definition #2 – A general movement.

Trend – Corporate funding shifts.

  • A trend in action: Racial justice funding. Again, this first trend in action is a bit of a no-brainer, but it’s important to note. The racial justice issues that commanded headlines throughout 2020 are not a flash in the pan. The events of 2020 brought on a major seismic shift in corporate diversity, equity and inclusion activities. C-suites are sitting up and realizing they can no longer promote “in name only” DEI. It’s time to put their money where their big black boxes on social media are. And for many corporations, that meant earmarking significant funding for racial justice locally and globally. These will not be one-time investments. Many corporations who had never invested in racial justice before did so in a reactive way in 2020, but then continued to budget for these investments in 2021.
  • A trend in development: Arts funding. In the world of CSR and philanthropic funding, there are always “hot” funding areas. And sadly for the arts community, arts funding hasn’t been “hot” for quite a while in the corporate sector. Sure, we still see big name companies sponsoring the symphony and the opera in our cities, but in large measure it’s become a bit “uncouth” to invest heavily in arts funding. I’ve been there when an employee says “why are you guys giving $100k to the opera when people can’t feed their families” and for a long time, that was a tough question to answer. But I think we’re going to see a major swing in this pendulum following the pandemic. Kids all over the world have been learning online at least partially for nearly a year. And in many schools, especially those without strong financial resources, arts education could be left behind during this period. Research has shown for years that arts education leads to better performance in math and science, and I believe we’ll see an increased focus on arts funding in the corporate sector to help schools and the individual kids within them bounce back academically from the effects of the global pandemic.
  • A trend in decline: STEM funding. I am fully prepared to get some push-back on this one, but as I said with arts funding, corporate philanthropy often swings on a pendulum. For the last decade or so, that pendulum has swung heavily in the direction of STEM funding (science, technology, engineering, math). Don’t get me wrong, I love STEM. I led a CSR department where our goal was to dedicate a majority of funding to STEM activities. But again, I think this pendulum is beginning to swing another way. Perhaps in our push to invest in STEM, we have forgotten the impact of arts and in many cases the thought provoking methods of a liberal arts education. We need our students, our college hires, to be technically savvy, no doubt. But as our world becomes more technical, almost every HR department in the world is emphasizing the importance of communications skills, critical thinking, political savvy, etc. I think in the coming years we will see a decrease in overall funding related to STEM and a renewed interest in social-emotional learning, culture and arts in a very real way.

Trend Definition #3 – A current style or preference.

Trend – Individual activism inside companies.

  • A trend in action: CEO activism. I won’t belabor the point here because we see this trend everywhere. As trust in government dwindles, corporations and their CEOs are expected more and more to take a stand on issues and use their voice to drive global change. This trend will continue to build in 2021 and beyond.
  • A trend in development: Board activism. The trend in development, though, is a continuation of CEO activism. I think we are beginning to see more than ever before Board member activism as well. As companies focus on building Board diversity and credibility in the ESG space, I think they will also release the reigns on Board members’ willingness to speak, act and think on behalf of the company. For years, Board members’ roles were confined to the Board room. Today, as CEOs continue to invest in their own thought leadership and activism, it’s only natural Board members will follow suit and amplify those messages externally.
  • A trend in decline. Drawing hard lines on personal activism in the workplace. When Twitter first began, corporate employees weren’t sure how to navigate the grey lines between personal and professional. So we’d add something like “Views=Mine” in our bios and hope that did the trick. It said to the Twitter-sphere, “I work for this company, but I speak for myself,” and “boss, don’t fire me because I post about my personal politics on Twitter.” Frankly, I think those days are gone. As CEO activism, Board activism, and corporate activism grows, the grey lines between personal and professional activism will blur as well. Having to keep your views to yourself is absolutely in decline, and the interesting story of the next few years will be how companies deal with the inevitable conflict that will come with differences of political opinion in the workplace.

Trend Definition #4 – A line of development.

Trend – Diversity, equity and inclusion.

  • A trend in action: The importance of ERGs. In many corporations, ERGs (employee resource groups) have been incredibly valuable groups driving diversity internally. Yet many corporations still resist this model for a traditional top down approach to DEI. As the importance of DEI grows, so too will the importance of the ERG model in the corporate sector. Great work in diversity certainly requires mechanisms at the Board the Executive level, but the real work happens further down the hierarchy. Peer mentorship and sponsorship, departmental education, networking, and other activities ERGs are skilled at will be key to achieving any major diversity goals.
  • A trend in development: Size inclusivity and health/body diversity. Corporate diversity programs have, until now, largely ignored the issue of diversity in body shape and size. Many corporate wellness programs not only ignore this issue but continue to demonize larger bodies with internal communications focused on weight loss and diets. In recent years, corporate marketing has become attuned to the importance of body inclusivity as we see big brands like Athleta advertising with real women of all sizes or CVS Health’s Beauty Mark committing to imagery that is unaltered in its stores. This trend will, I believe, become internal as strongly as it is external and emphasize inclusion in this area as important to DEI strategies on the whole.
  • A trend in decline: Single day diversity initiatives as virtue signaling. Don’t get me wrong, I love International Women’s Day as much as the next woman, but it’s a good example of a declining trend that’s important to mention here. For years, many companies have participated in virtue signaling by emphasizing specific days or events. For example, Tweeting about Black History Month while having no plan to increase racial diversity in the company or celebrating International Women’s Day with zero women on an executive team or Board. Our employees and stakeholders have become savvy to these techniques and want to know that if our companies say something, they back it up. Gone are the days of being able to virtue signal without real programming. Either back it up, or keep your social media quotes to yourselves.

Even though this is a long list, it’s certainly not exhaustive of the trends we’ll continue to see wax or wane in 2021 in ESG/CSR/sustainability. I’d love to hear your thoughts. What’s coming in our industry? How do you prepare? Share your ideas in the comments or email me to talk 1:1 about the work we’re both doing to move these trends forward.