The UArizona Freedom Center Justice, Law, and Capitalism Talk Series presents an in-depth examination of ESG through the insights of nationally renowned scholars. They will explore the multidisciplinary dimensions of ESG, as an instantiation of private law embodying justice concerns, and address both its legitimacy and broader social and economic implications. These talks are open to faculty, students, and the public, but space is limited.

Topic: The Making and Meaning of ESG

ESG is one of the most notable trends in corporate governance, management, and investment of the past two decades. It is at the center of the largest and most contentious debates in contemporary corporate and securities law. Yet few observers know where the term comes from, who coined it, and what it was originally aimed to mean and achieve. As trillions of dollars have flowed into ESG-labeled investment products, and companies and regulators have grappled with ESG policies, a variety of usages of the term have developed that range from seemingly neutral concepts of integrating “environmental, social, and governance” issues into investment analysis to value-laden notions of corporate social responsibility or preferences for what some have characterized as “conscious” or “woke” capitalism.

This Article makes three contributions. First, it provides a history of the term ESG that was coined without precise definition in a collaboration between the United Nations and major players in the financial industry to pursue wide-ranging goals. Second, it identifies and examines the main usages of the term ESG that have developed since its origins. Third, it offers an analytical critique of the term ESG and its consequences. It argues that the combination of E, S, and G into one term has provided a highly flexible moniker that can vary widely by context, evolve over time, and collectively appeal to a broad range of investors and stakeholders. These features both help to account for its success, but also its challenges such as the difficulty of empirically showing a causal relationship between ESG and financial performance, a proliferation of ratings that can seem at odds with understood purposes of the term ESG or enable “sustainability arbitrage,” and tradeoffs between issues such as carbon emissions and labor interests that cannot be reconciled on their own terms. These challenges give fodder to critics who assert that ESG engenders confusion, unrealistic expectations, and greenwashing that could inhibit corporate accountability or crowd out other solutions to pressing environmental and social issues. These critiques are not necessarily fatal, but are intertwined with the characteristic flexibility and unfixed definition of ESG that was present from the beginning, and ultimately shed light on obstacles for the future of the ESG movement and regulatory reform.

Elizabeth Pollman is an expert in business law. She teaches and writes in the areas of corporate law and governance, as well as startups, venture capital, and entrepreneurship. Her articles have been selected by scholars in the field as among the Top Ten Best Corporate and Securities Articles in their respective years, most recently in 2022 for “The Supreme Court and the Pro-Business Paradox”; in 2021 for “The Corporate Governance Machine” (Columbia Law Review, co-authored with Dorothy S. Lund); in 2020 for “Private Company Lies” (Georgetown Law Journal); in 2019 for “Startup Governance” (University of Pennsylvania Law Review) and “Corporate Disobedience” (Duke Law Journal); and in 2017 for “Regulatory Entrepreneurship” (University of Southern California Law Review, co-authored with Jordan M. Barry).

Pollman is the co-author of Business Organizations: A Contemporary Approach (with Alan Palmiter & Frank Partnoy, West Academic Publishing) and co-editor of the Research Handbook on Corporate Purpose and Personhood (with Robert B. Thompson, Edward Elgar Publishing). She serves as a co-director of the Institute for Law & Economics at Penn Carey Law. In addition, she serves on the Corporate Laws Committee of the American Bar Association and is a research member of the European Corporate Governance Institute. She has served on the National Business Law Scholars Conference Board and the AALS Business Associations Executive Committee. She has received the Harvey Levin Memorial Award for Teaching Excellence (2022) and the LLM Prize for Excellence in Teaching (2021).

Before joining the Penn Carey Law faculty, Pollman taught at Loyola Law School, Los Angeles, and was a visiting professor at the University of Sydney and UC Berkeley School of Law. She was previously a fellow at the Rock Center for Corporate Governance at Stanford Law School. She practiced law at Latham & Watkins in Silicon Valley and Los Angeles and served as a clerk for the Honorable Raymond C. Fisher of the Ninth Circuit Court of Appeals. She earned both her BA and JD, with distinction, from Stanford University.

The FC Justice, Law, and Capitalism Talk Series is curated by Saura Masconale, Freedom Center Associate Director and Assistant Professor of Political Economy and Moral Science, and Simone Sepe, Freedom Center Faculty, Chester H. Smith Professor, and Professor of Law and Finance.

For more information, contact Saura Masconale.