When Inclusion Excludes: Rethinking ESG, Equity, and Modern Advantage

The Environmental, Social, and Governance (ESG) framework was born from good intentions. As investors and institutions began to evaluate companies not just by profits but by their impact on people and the planet, ESG emerged as a set of guiding principles. Within this model, the “S”—the social component—has carried the promise of a more just, inclusive world.

But what happens when inclusion itself becomes exclusive?

At the heart of ESG’s social mission is the belief that equality is not enough—that in order to truly level the playing field, we need equity, which may require different treatment for different groups. This is a compelling idea. Yet, when it’s reduced to hiring quotas and surface-level diversity metrics, ESG risks drifting from its original moral purpose into a kind of social engineering that can backfire.

The Problem with Quota Logic

In principle, ESG encourages organizations to remove the barriers that have historically kept underrepresented groups from leadership, influence, and fair treatment. But in practice, many companies have interpreted ESG as a call to “hit the numbers”—to staff executive boards, hiring pipelines, or marketing campaigns with just the right mix of race, gender, and orientation.

This approach mirrors the very biases it seeks to dismantle: individuals are again reduced to categories, and merit can become a secondary consideration. If an applicant’s identity becomes more influential than their qualifications, the system begins to resemble what it was designed to correct—a process of exclusion based on characteristics outside of one’s control.

This isn’t just theoretical. John Ralston Saul, in Voltaire’s Bastards, warned that the blind application of reason—when untethered from moral nuance—can cause institutions to reverse their own goals. ESG, in its most rigid form, may lead us toward this “moral poverty” he described: where the appearance of fairness overrides actual fairness.

What If We Treated Sports the Same Way?

Let’s run a quick thought experiment. Imagine Canadian hockey or American football teams operating under the same quota systems sometimes encouraged by ESG. What if a roster had to be 50% women, 30% Indigenous, and 30% LGBTQ+? That lineup might make for a diversity milestone—but could it compete at the same level?

In sports, the standard has always been performance. We’d balk at selecting athletes based on anything but skill. Why should it be so different when building a business, a research team, or a tech startup?

This isn’t a call to return to exclusion. It’s a reminder that inclusion without balance becomes its own form of injustice.

Who’s “Advantaged” Now, Anyway?

One of the more philosophical challenges in applying equity-based frameworks today is that “advantage” is no longer easy to identify.

ESG models often assume that certain identities—white, male, cisgender, able-bodied—automatically imply social advantage. But in our current economic reality, that assumption doesn’t always hold. A university-educated white man may be saddled with crushing student debt, earning minimum wage in a gig economy, or unemployed entirely. Meanwhile, someone from a traditionally underrepresented group may have inherited wealth, better professional networks, or access to support systems.

The line between “privileged” and “marginalized” is more blurred than ever, and using identity alone as a measure of advantage can produce policies that are both unfair and ineffective.

True equity requires more than good intentions. It requires careful listening, flexible thinking, and a recognition that modern hardship doesn’t always look like the past. It might wear a lab coat. It might have a LinkedIn profile. It might live in a downtown apartment but be one rent payment away from eviction.

California and the Policy Paradox

Take California as a real-world case. The state prides itself on progressive governance—ESG values baked into law. Yet, many of these same policies have made housing unaffordable, over-regulated development, and contributed to one of the worst homelessness crises in North America. Entire blocks of cities like San Francisco and Los Angeles are now filled with tent encampments. The irony is striking: policies designed to protect vulnerable people have created new waves of exclusion.

This is the paradox of social policy when applied without nuance. Trying to solve yesterday’s problems with today’s realities often produces tomorrow’s disasters.

A Call for Balance, Not Backlash

This isn’t a rejection of ESG. It’s a call to evolve it.

Yes, we need to challenge bias. Yes, we must remove barriers that hold back talented people simply because they don’t fit the mold. But we must also resist the temptation to fix inequality with mathematical symmetry. Social fairness doesn’t mean sameness. And equity should not be another word for favoritism.

If we’re going to build organizations—and societies—that are truly inclusive, we need to recognize that not all disadvantage is visible, and not all solutions work everywhere.