Behavioral ethics in an age of ESG

We are entering an era of  unprecedented Environmental, Social and Governance (“ESG”) imperatives  This could be hugely beneficial  to millions of people in many ways. But those involved in ESG efforts (and others) need to be aware of the dangers of “moral licensing.”

As described in Rational Wiki: “Moral licensing or self licensing is a cognitive bias that occurs when a person uses their prior ‘good’  behavior to justify later bad behavior, often without explicitly using that logic. The effect has been demonstrated in numerous psychological studies.^[1]“

For instance, as noted in  an article in the Irish Times: “One experimental study found people ‘are more likely to cheat and steal’ after purchasing green products than after purchasing conventional products.”

I should stress that this is not a reason to do less when it comes to ESG efforts. But it is worth knowing about from a risk assessment perspective and may be worth mentioning in training.

Also, moral licensing is relevant not only to ESG-related work but also to the work of governmental bodies, charities and other non-profits.

Finally, here is an earlier post on this issue.