Put to the test

As the latest instalment in the continuing saga of US political conflict over ESG, this week’s is one of the biggest.

The Financial Times reports that the president, Joe Biden (pictured), is “on course” to issue a “veto” allowing the Department of Labor to continue with rules that permit fund managers to integrate ESG factors in their investment choices. The move is expected after two Democrat senators said they would vote with Republicans in an attempt to block the rules.

Jon Tester, a Democrat senator for Montana, says in a statement that he believes the new rule “undermines” retirement plans for “working Montanans” .

“At a time when working families are dealing with higher costs, from health care to housing, we need to be focused on ensuring Montanans’ retirement savings are on the strongest footing possible.”

The move highlights how polarised ESG has become in the governance of US companies—and potentially how reliant some Democrats are on conservative votes.

Tester’s statement comes in the same week that The Wall Street Journal speculated that attitudes to ESG would become a presidential election issue. Tester appears to be testing that theory.

Bolder and wiser?

Despite all the recent bad news, FTSE 250 directors appear bullish about takeovers. According to research by investment bank Numis, 94% expect to undertake “some form of M&A” in the coming year.

The same proportion also said they expected “financing conditions” to improve through the year.

According to Stuart Old, head of M&A at Numis, last year’s M&A activity was “mixed”, with global economic woes affecting markets. “These forces continue to weigh on the market this year, yet there seems to be a confidence in the boardrooms of UK plc with respect to M&A.”

Have a word with yourself

So it seems AI, and in particular ChatGPT, is already having an impact on governance. Eco-Business, a specialist publication, has persuaded the AI tool to write an ESG report, though it does have experts who suggest “that the message and tone” of ESG reports need to be “carefully crafted”.

Elsewhere, the Sustainability Board’s Frederik Otto asked ChatGPT to write an article on boards’ preparedness for ESG and says it was “better” than succinct and clear. He also managed to generate a charter for a boardroom sustainability committee and says he got a “clear and usable document”.

We asked ChapGPT whether humans or AI were the best writers. It sat on the fence. “Humans and AI have different strengths and weaknesses when it comes to writing,” it says. We’ll need to think this over.

We also got it to draft a corporate governance code and, let us tell you, it isn’t anywhere near as long as most of the available codes elsewhere.