Is ESG Inherently Flawed? HBO’s Industry Wants Viewers to Decide

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(Bloomberg) — ESG, says one character on Industry less than a half hour into the show’s third season, is nothing more than a “utopian opiate for morons who believe in a better world.”

It’s a characteristically misanthropic introduction to the HBO/BBC banking drama’s latest series, which takes on the financial sector’s enthusiastic adoption — and later repudiation — of environmental, social and governance principles. It’s also the latest salvo in an existential question Industry has been raising since premiering in 2020, which co-creator Mickey Down characterizes as “whether you can be good in this world of finance.” 

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“It felt like a point that the show’s constantly trying to make, which is: Are these two things paradoxical? Can you be altruistic and can you also want to make money?” Down tells Bloomberg Green. “ESG felt like a really good arena to explore that idea.”  

Industry follows young recruits to investment bank Pierpoint as they navigate personal relationships, client connections and cutthroat corporate politics. By the third season, which just wrapped for US viewers on HBO and starts airing in the UK on BBC One and iPlayer on Oct. 1, the rookies have more responsibility. The season largely revolves around an initial public offering for Lumi, a renewable-energy company with dubious financials and an aristocratic founder/CEO (played by Kit Harington, of Game of Thrones fame).

Focusing on ESG was once seen as a sound way for companies to demonstrate their positive societal impact, and for investors to identify risks associated with poor management or environmental hazards. Pierpoint’s fictional interest in the category’s growth is exceedingly believable: At the end of last year, there were almost $3 trillion in assets in ESG- and sustainability-labeled funds. 

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But the show is also tapping into a very real backlash. Critics argue that ESG is now interpreted so broadly as to be almost meaningless, and that it opens the door for corporate greenwashing without forcing companies to actually change the fundamentals of their business. More practically, some say it’s an illiberal distraction from the finance sector’s true North Star: profit.

Industry’s real-world banking advisors don’t want to be identified, but Down and his co-creator Konrad Kay say that one of them, who has worked in senior banking roles on both the buy side and the sell side, was the brains behind this season’s ESG theme. 

“He thought that the biggest thing in the market and the most interesting thing to our purposes was ESG and the backlash towards it,” Down says. “We were already talking about doing an energy company, so it felt like a really good marriage of those two things.” 

Through Lumi, the show also unpacks ESG’s potential impact on Wall Street and Main Street alike. Pierpoint’s leadership is forced to reckon with the consequences of their investment strategy, while Lumi’s fate directly impacts regular people. “We wanted to suggest there were thousands of customers who will have their energy turned off if this thing goes kaput,” Down says. 

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Industry even visits a wry version of the COP climate conference in an episode that brings together characters from politics, investing and business, who descend on Switzerland via private jet while sipping cocktails and lamenting the lack of snow. One manager at an “ethical” fund drives an enormous SUV; another complains about flying coach. “Those are fun, pretty obvious ideas about the effect that climate change is having on the planet,” says Down. “It reflected the cynical way the characters think about it.”

Indeed, the season is full of cheeky lines that paint ESG more as clever marketing than substantive risk-management. A document crucial to the plot is printed “double-sided, for the environment.” A person of color is told (half-jokingly) that he got a leg up to make leadership less “monochromatic.” During an exchange about a startup that crafts credit cards from wood, one character quips: “Yeah, made by starving Iraqis. But they’re queer, so it’s ESG.” 

Despite this overt cynicism, both Down and Kay say it’s up to the viewer to decide whether ESG is inherently flawed. One friend of the show’s creators — currently a managing director at Goldman Sachs — is more bullish than his fictional counterparts at Pierpoint.

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“He was quite pro [ESG],” Down says. “He was like, ‘Yes, it gets corrupted and yes, people use it for their own ends, but really the underlying force behind it is a good one.’”

And in many ways, the digs and double crosses are of a piece with the overarching theme of the show, which has always sought to highlight how institutions — and capitalism — can corrupt. ESG is just one way of telling that story. “You could stand back and take a moral judgment and say that it’s evil people doing it. Or you could just say it’s just the way people who enter this kind of field are programmed,” Kay says. “Where is the weakness? How do I make money from it? That’s kind of how all of these industries function.”

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