Social and environmental business practices are the latest victim of hyper-politicization

America's wealth springs from a struggle in which hope beats fear and pocketbooks are more important than prejudices.

Lately, and a bit strangely, some of that struggle has revolved around an acronym that's been a part of business jargon for more than a decade but has barely crept into the broader public consciousness — ESG, which stands for environmental, social and governance.

ESG became an umbrella term for business practices that don't have an immediate bottom-line effect but are expected to over the long run. And until then, they produce other benefits, like less pollution or better relations with workers.

But since the pandemic, some powerful Republican consultants in Washington decided ESG held the potential for grievance and othering — and thus political gain. And now some big companies are finding that, indeed, no good deed goes unpunished.

Take BlackRock, the world's largest asset-management company, which has long been in the crosshairs of climate-change activists who think it should be investing more in clean energy. Lately, it's been targeted by conservative activists who think BlackRock chair Larry Fink has gone too far promoting the energy transition.

Or look at Target. For a decade, the Minneapolis retailer has sold rainbow-themed merchandise for Pride Month, which highlights and celebrates LGBTQ people each June. But this year, protesters stormed some stores to wreck the displays and called its hotlines to complain about what has seemed like a fairly innocuous idea in business — to make some money from a celebratory event. Target removed certain items from stores, which led LGBTQ activists to then criticize the retailer.

Well-known businesses have always been sitting ducks for people seeking to bring attention to their causes. But these days, more and more businesses are caught in pincers that tighten when the election cycle comes around.

"This is just the next frontier, the next place where somebody has to be aggrieved," said Jason Pattit, a professor at the University of St. Thomas Opus College of Business, who just finished teaching a corporate sustainability course. A colleague at a recent conference summed up the job of a CEO these days as "damned if you do and damned if you do," he added.

For generations, corporate philanthropy and political involvement tended to be localized. But the move toward national and international matters has subjected businesses to more criticism, said Jiao Luo, a professor who researches corporate reputations at the University of Minnesota Carlson School of Management.

"At this point in time, more of the agenda is about climate, or on the social side, gender equality and diversity. These are perceived by some people as a pretty liberal agenda," Luo said. "These are the undercurrents that are surfacing in this anti-ESG discussion."

Many companies approach ESG as an updated version of CSR, or corporate social responsibility. Two decades ago, institutional investors began to ask executives more and more about CSR as they tried to understand intangible risks at corporations. After climate change rose as an issue companies needed to face, the ESG moniker came about.

Companies subsequently created C-suite executives to guide ESG efforts. Investment firms created ESG funds for investors interested in more than just bottom-line performance.

This thinking appeared to peak in 2019 when Business Roundtable, a national group of CEOs, issued a new statement on the "Purpose of a Corporation" that said firms should benefit many interests, including workers and communities, not just shareholders. But then, the police murder of George Floyd in Minneapolis in 2020 became another impactful moment on the role of businesses in the greater good.

All along the way, there have been doubts about ESG. Last year, a former BlackRock executive published a book illuminating its internal debate about giving non-financial factors more prominence in investing.

Some firms are overly braggy about ESG. Companies that make themselves look better than they are on the environment, for instance, were said to be "greenwashing."

And there have also been excessive reactions by businesses to criticism about ESG. For instance, the head of HSBC Asset Management's responsible investing unit resigned under fire last year after giving a public presentation titled "Why investors need not worry about climate risk."

Even so, ESG efforts and pressures generally lead companies to be better. They lower their waste, improve the diversity of their workforce or become more responsive to shareholders. All of which usually leads to financial gain.

"Those efforts take a long time to build," Luo said. "If this criticism weeds out the superficial stuff, that would be a good outcome. But as the noise is going on, I would hope the firms don't think, 'Now we don't want to do anything.'"

I also worry that the anti-ESG push will take the pressure off companies to improve. And there's a danger CEOs will clam up about the nonfinancial risks their firms face and the chances they are taking.

"It's ridiculous to have to tell CEOs you can't talk about these issues other than burying them somewhere in the risks section of your [annual report]," Pattit said.