May 12, 2025
AUTHOR Nick Stone
While media headlines may suggest that ESG is dead, the reality on the ground tells a more nuanced story. Insights from a recent discussion with a financier highlight a period of retrenchment — not rejection — of ESG, both at corporations mostly impacted and particularly in the financial market arena.
"I would advise anybody who is working for Durham County Council on Climate Change initiatives, or Diversity Equity and Inclusion (DEI)…I think you all better really be seeking alternative careers, very very quick"
Nigel Farage MP, Leader Reform UK party, 2 May 2025
Starting in North America, and now observing similar trends across Europe, some institutions have publicly distanced themselves from previously stated ESG / Sustainability targets, but behind the scenes, many companies remain committed through energy efficiency and sustainability initiatives. The challenge lies not in intent, but in execution.
When ESG frameworks were codified into regulation, the data demands, internal reporting necessities, strategic decisions etc. quickly outpaced the infrastructure. Reliable and comparable ESG data remains patchy, and firms have had to incur significant cost and time to create the necessary infrastructure (staff, data collection, reporting) in order to scale up the need for compliance.
Capital raising linked to ESG has also taken a hit. As investor appetite shifts and political winds turn — especially in the US — many banks have re-evaluated their positions.
Some North American banks have exited the Net Zero Banking Alliance, citing political and regulatory pressures. Others across the globe have followed suit.
In Europe, banks are under growing pressure from NGOs, particularly in relation to their climate and sustainability practices. Signs of ESG fatigue are emerging. Cuts to ESG specialist teams and reduced demand for ESG-linked capital are now being reported.
There's also a noticeable shift in how companies address DEI (Diversity, Equity, and Inclusion). Some are stepping back from producing detailed or standalone DEI reports, opting instead for broader language and integrated messaging.
Is this a permanent retreat? Unlikely.
Many believe it’s only a matter of time before ESG returns to the spotlight as the strategic need for positive climate-related action won’t disappear — albeit with more intensity and focus.
As the next generation enters the workforce, bringing with them new expectations, ESG may yet experience a revival — leaner, sharper, and more grounded in measurable value.
