If ESG is dead... long live ESG!

After a decade of rise, ESG is going through its most serious legitimacy crisis.

Discreet withdrawals of commitments, political criticisms, abandonment of labels: the signs of reflux are multiplying.

But behind this distrust, one observation: ESG has too often been reduced to a reporting exercise, forgetting its raison d'être: managing systemic risks and strengthening business resilience.

While the institutional consensus is cracking, the time is now for a Cultural Surge : Putting Sustainability Back On At the heart of decisions, action plans and business models.

It is under this condition that it will once again become a strategic lever.

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A Giant with Feet of Clay

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Since the 1990s, ESG has emerged as an analytical framework. Integrated into reporting, governance and extra-financial ratings, it has brought together regulators, investors and managers.

But between geopolitical tensions, energy crisis, and rising skepticism, Doubt sets in.

A question? The gap between growing technicality and concrete citizen concerns (employment, purchasing power, economic security). As @Ioannis Ioannou (LBS) ratings, The ESG Story Failed to Reach Society. It was quickly replaced by a simplistic, but powerful counter-narrative: that of an elitist, woke, liberticidal ESG.

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Professionals Break Their Favorite Toy

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Since the Trump era, a lot of players (companies, banks, investors) Have downgraded on ESG : disappearance in the annual reports, abandonment of Net Zero...

In the United States, the shift is mainly cultural and political.

In Europe, criticism targets over-regulation. The Draghi Report sounded the alarm about the “Green Deal Overload”, immediately followed by a promise of simplification. Ironically, these measures will... take the form of new guidelines.

Critics focus on two major texts:

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• The CSRD, described as a “bureaucratic delirium”: we forget that reliable reporting requires time. The implementation of IFRS standards did not elicit as much protests — although it was more complex.
  
• The CS3D, criticized as a competitive disadvantage... when it was precisely aimed at balancing the rules of the game against non-European companies.

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In both cases, The requirement for clarity on ESG impacts and risks Requires a review of the business model. It was this requirement — not the technical complexity — that bothered.

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ESG, creator of value: myth or reality?

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McKinsey (2024) has quantified the economic value of sustainability: Up to 18% of EBITDA At stake in certain sectors, between risk reduction and opportunity creation.

But too many businesses continue to see ESG as:

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• a report to be produced;
• or an expanded version of carbon-centered CSR.

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The true value of ESG, is to help leaders to Anticipate Systemic Transformations, strengthen their strategic agility, and preserve their right to operate.

In a world under energy, ecological and social constraints, sustainability is becoming a Key Competency, in the same way as purchases or finance.

It requires expertise, investments, and management. But in the medium term, it creates a competitive advantage.