A History of How Modern ESG Came to Be

While not a new concept or strategy, environmental, social and governance (ESG) programs are on the rise. Over the last couple of years, as natural disasters continued to pick up in intensity and COVID-19 brought rising income and healthcare inequalities to center stage, corporations have increasingly been pouring more focus into their own ESG measurements and practices in conjunction with their corporate social responsibility efforts, and more.  

Following is an excerpt from the whitepaper “Exploring Environmental Social Governance: A Beginner’s Guide to ESG Through a CSR Lens.” This excerpt focuses on the history of ESG as a pillar of CSR. Throughout the timeline, you will find links to explore each event further. While it’s not a completely comprehensive representation of all events that have shaped ESG (that would be a lot of pages!), it includes a series of events that we found to intersect well with our understanding of corporate social responsibility. 

As with the overarching concept of corporate social responsibility, the practice of ESG has an overlapping history that can be traced back to several key events. Rather than a single moment in time, ESG was born out of actions in the business community over several decades that culminated into our modern understanding of ESG today.

ESG History Timeline

Here’s a timeline with links to articles about significant events over the last century that helped form our current context:  

1950s & 1960s

Electrical and Mine Workers Unions started investing pension capital in affordable housing and health facilities.


Anti Vietnam War protests and the push for peace in the United States is well-known for the actions taken by University students and protesters, but also involved outspoken members of the business community. This quote, taken from the TIME article “Behind the Anti-War Protests that Swept America in 1968”, is a good example of that.  


A financial brokerage house, Paine Webber, Jackson & Curtis, went so far as to run an ad saying that peace in Vietnam would be “the most bullish thing that could happen to the stock market.

On the other side of business influence in the Vietnam War was the production of Agent Orange, a chemical weapon used by the United States Military and produced by several US based chemical companies. Companies involved in the production of Agent Orange are still facing lawsuits from victims, both US veterans and civilians from Vietnam, Cambodia, and Laos, to this day.  

Anti-war wasn’t the only movement that took place in the 1960s. This decade also saw the Black Power Movement, American Indian Movement, a further push for women’s rights, rights of farmworkers, and the Green Power Movement. You can read more on the protests of the 60s and 70s at American Archive of Public Broadcasting’s online exhibit, “Speaking and Protesting in America”.   


Milton Friedman introduces his Shareholder Value Theory. If you’re not familiar with Milton’s theory, you might remember it being quite the buzz in the world of corporate social responsibility last year as 2020 marked 50 years since the theory was first published in the essay “The Social Responsibility of Business is to Increase its Profits”. While still debated, there’s a growing consensus that business strategy should not just be about profit maximization. Companies that have a purpose that reaches beyond profit maximization at the core of their business strategy are seeing long-term, sustainable growth. ESG can be a pillar of a company’s CSR initiative.  

April 22, 1970

Inspired by anti-war movements and a deep concern for the environmental future of America, junior Senator Gaylord Nelson of Wisconsin rallied 20,000,000 (10% of America’s population at the time!) to come together to protest environmental destruction in what we now know as Earth Day. The first Earth Day led to a cascade of major steps towards conservation. According to Earthday.org, “by the end of 1970, the first Earth Day led to the creation of the United States Environmental Protection Agency and the passage of other first of their kind environmental laws, including the National Environmental Education Act, the Occupational Safety and Health Act, and the Clean Air Act.  Two years later Congress passed the Clean Water Act. A year after that, Congress passed the Endangered Species Act and soon after the Federal Insecticide, Fungicide, and Rodenticide Act. These laws have protected millions of men, women and children from disease and death and have protected hundreds of species from extinction.” Read more about the history of Earth Day.  


The concept of ESG continues to accelerate, especially around actions taken by the United States Government in the “Comprehensive Anti-Apartheid Act”, which outlawed any additional investment in South Africa.  

Additionally, this decade saw several environmental disasters at the hands of companies including a massive oil spill in Prudhoe Bay, Alaska. This disaster in particular lead to the founding of the Coalition of Environmentally Responsible Companies, also known as CERES. You can read more about CERES current activities in creating a sustainable future and about their Company Network. 

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The Domini 400 Social Index was created, which we now know today as the MSCI KLD 400 Social Index. This index was the first of its kind to track sustainable investment through a capitalization-weighted methodology. By 1994, investors had access to 26 sustainable funds, with assets of around $1.9 Billion.  


The United Nations Framework Convention on Climate Change, also known as the Earth Summit, convenes in Rio de Janeiro and 154 countries sign into an international environmental treaty aimed to curb environmental impacts across the globe.  


The work done in Rio de Janeiro is operationalized as the Kyoto Protocol, with 192 countries pledging to “committing industrialized countries and economies in transition to limit and reduce greenhouse gases (GHG) emissions in accordance with agreed individual target”. The protocol then went into effect in 2005.  

In the same year, the Global Reporting Initiative was founded in Boston. In their own words, the  “GRI (Global Reporting Initiative) is the independent, international organization that helps businesses and organizations take responsibility for their impacts, by providing them with the global common language to communicate those impacts.”  


The United National Global Compact is launched. This pact is “a call to companies to align strategies and operations with universal principals on human rights, labour, environment, and anti-corruption, and take actions to advance those goals”. Today, the Global Compact spans signatories from 13,000+ companies across 160 countries. You can learn more about the Global Compact.


Through the Global Compact, the report “Who Cares Wins- Connecting Financial Markets to a Changing World” was published in 2004 and provided guidelines for companies to incorporate ESG into their operations. Read the entire report here!   


The Sustainability Accounting Standards Board (SASB) is launched to standardize sustainability accounting and measurements across 77 industries. In their words, the mission of SASB is “to establish and improve industry specific disclosure standards across financially material environmental, social, and governance topics that facilitate communication between companies and investors about decision-useful information” SASB provides great information about their framework and other ESG frameworks.


At the United Nations Framework Convention, the Paris Agreement is brought to life, and at the United Nations General Assembly the Sustainable Development Goals were created. A previous iteration of the SDGs were the Millennium Development Groups- you can read more about the evolution and history of both of these goals here.   


There’s no doubt that the past year has accelerated the need for CSR and ESG. The COVID-19 pandemic brought economic disparities to the forefront and highlight gaps in healthcare systems and access across the world. The United States was forced to confront the continued impacts of systemic racism in waves of protests and dialogue that continues to shape 2021. Also in the United States, a contentious election highlighted voter rights and a deep divide in political beliefs. Across all of these areas, many companies were forced by consumers and investors alike to speak up, take a stand, and look internally at their own policies and workforce and reflect on their actions around diversity and inclusion and advancing social justice. Here’s an article that details the impacts 2020 had on ESG: Forbes- ESG Investing Came of Age in 2020 – Millennials Will Continue to Drive it in 2021.


Larry Fink, CEO of BlackRock, published his Annual Letter to Shareholders with a clear message- the time to act is now. ESG is a prominent theme throughout the letter and Fink examines the expected and unexpected impacts of the pandemic and how the business community can and should play a role in creating a better world.  

As we continue to press on into 2021, ESG related funds are breaking records and aren’t showing any indication of slowing down. The markets continue to show that when businesses do well by ESG measurements, they have the propensity to perform well from a financial perspective too.