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Earlier this month, I was interviewed by Nikkei Veritas, a weekly financial newspaper in Japan, on how ESG investment headwinds in the U.S. are growing ever stronger, and what Japanese companies might expect. 

The article features insights from myself and Japanese attorney Masato Homma, who touches upon how Japanese companies could approach ESG as the field continues to expand its reach on the global stage. 

In the second part of the interview, I address increasing skepticism over ESG’s flawed and vague definition; how the war in Ukraine has created backlash over ESG legislation in the U.S. due to rising fossil fuel costs; and how companies can employ an effective ESG strategy rather than “greenwashing.”


The English translation of the article is provided below.


ESG Headwinds in the US: Thoughts from a Legal Expert for Japanese Companies The Definition Is Vague – Think Specifics With John Quinn, Quinn Emanuel Urquhart & Sullivan. Nikkei Veritas, Jan 14, 2023.

ESG investment headwinds in the US are getting stronger. Extreme moves have been made in Texas, including the enactment of a state law that prohibits financial institutions found to have refused to invest in fossil fuels from doing business with the state and state-related institutions. This includes financial institutions headquartered outside the US. We asked attorney John Quinn, Head of a major US law firm, about criticisms of ESG, and a Japanese attorney, Masato Homma, on what steps Japanese companies should take.

-In the US, anti-ESG movements have become prominent, with the attorneys general of 19 states, including Texas, complaining to investment management giant BlackRock about its ESGoriented investment policy. What is behind this movement?

“After the Russian invasion of the Ukraine, the energy crisis became more acute in Europe and elsewhere, and the importance of fossil fuels has been reaffirmed. The states’ moves may indicate [their view] that it is not appropriate to avoid investing in fossil fuels.”

“There have been changes in investment strategy as well. There was a significant shift in the last 5 years or so, with more money shifted to investment in the ESG realm. However, the footing is beginning to head in the opposite direction. It was unclear whether funding performances were sufficient to focus investment choices on ESG. Even companies that say they are working in ESG areas did not necessarily have evidence that they were socially or environmentally ‘good.’ There were rising expectations for ESG investments but also a school of thought that government action on the issue that should happen was lagging.”

-It seems like you have concerns with ESG

“ESG is a poorly-defined concept. The title suggests that there are three elements but most of the discussion focuses just on environmental issues. More than 600 evaluation organizations worldwide are said to be analyzing corporate ESG commitments, but there is no common standard for how to measure or rank achievements. If different evaluation methods are used, then corporate activities are simply being judged subjectively.”

“While credit ratings by rating agencies are said to be almost identical, some studies show that ESG scores use similar criteria a little more than half the time. This is because different rating agencies have different measurement methods and perspectives. The disparate ratings may make it difficult for companies to undertake ESG initiatives responsibly.”

– With the focus on ESG still high, it is a risk also to not consider ESG issues in businesses or investments.

“Rather than thinking of ESG under a large umbrella, companies need to identify what risks they specifically face. For an example, an oil company should consider the environmental risks. Healthcare company should consider the risk of personal data leakage. Narrowing down ESG to specific risks that a company or industry has, and disclosing specific measures to deal with them, will provide meaningful information. If companies evaluate ESG issues based on objective and comparable criteria, they will be able to prevent companies from “greenwashing.”

John B. Quinn graduated from Harvard Law School in 1976. He established the Quinn Emanuel Urquhart & Sullivan law firm in LA with three other attorneys in 1986. Quinn Emanuel is one of the leading firms in the US. They are also experts in competition law as well as finance and construction-related litigation.