One of the most cited quotes about modern business has to be the Ocean Tomo study that 90% of a company’s value now sits in intangibles. One of those intangibles is brand value. Brands of the world’s largest companies are worth billions of dollars. In fact, the top 5 brands listed by Visual Capitalist are worth over $1T USD. 

Part of running a sustainable business is understanding how to protect and navigate the complexity of this intangible and its related reputational risk. ESG can provide a framework for thinking through this as many brand issues manifest in the acronym. 

So, perhaps when you think “ESG is the devil,” you might completely miss this point. 

Once again, enter the world’s most petulant billionaire, Elon Musk. 

This past week, Musk accused the advertisers pulling out of X of blackmail with expletives worthy of backroom brawl. Since his takeover of Twitter, advertisers and major accounts have left in drips and waves, but when Elon Musk agreed with an anti-semitic Tweet, it was simply too much for many of the world’s most valuable brands to continue doing business with the platform. 

Does that make him a victim of blackmail or even extortion? In a free market, advertisers have a choice on where to direct their funding dollars, just like how they manage suppliers. If there is evidence of a high risk or reputational damage through association, customers will flee. These advertisers are X’s customers. When you lose a customer, a short-term response with long-term repercussions is to lash out at them. A more measured response is to reflect, seek to address concerns, and hope they come back. 

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Perhaps what is most baffling is X CEO Linda Yaccarino’s Tweet on the matter, citing “We’re a platform that allows people to make their own decisions.” It seems like for Elon Musk, that only applies to users and not his customers. In this pursuit of values in the free speech experiment with X, he is learning the hard truth of leading with values, which he thinks is ESG ironically enough (but it isn’t). 

So, no, dear reader, advertisers are not blackmailing X or punishing Musk. They are exercising quality governance practices against an ungoverned platform. It’s the business equivalent of walking away from a ranting lunatic on the subway. The lunatic can yell as much as they want, but no one is focused to sit there and listen to it. Let’s call it self-preservation, instead. 

This article is contributed by Matthew Sekol. Every week ESG News delivers smart commentary from ESG practitioners and experts to unpack issues of the day. Submit an article for editorial consideration for the ESG Unpacked series here: [email protected]