In the current ESG environment, companies that do not play, sorry, do not stand a chance.

With the transition from Corporate Social Responsibility to Environmental Social Governance, “ESG” was supposed to show the straight and transparent way for companies to explain their business decisions around environmental, social and governance concerns and considerations.

ESG noncompliance is metastatic.

However, the use, misuse, and abuse of ESG have gone way off the corporate conscience track and wandered off course from an intended path that focuses on greenwashing, disclosures, Impact investing, Technology and Data-Driven ESG analysis, Emissions and Supply Chain Transparency models.

The continued hype of ESG has resulted in losing complete control of corporate behaviour with emotions and expression and started to behave strangely or abnormally instead of focusing on the primary controllable ESG issues like climate change, reporting, and emissions. When ESG goes off the rails, it functions differently than expected and causes a crash or other damage. Therefore, in many instances, the current ESG actions are often considered inappropriate or unacceptable compared to their intended standards. The ESG hype is likely to cause damage to the real purpose with the continued focus on non-living things, like machines, projects, or even political campaigns.

The beginning of the “ESG” movement for businesses was to focus on environmental, social and governance issues in business decisions. Across the globe, companies rolled out individual, ambitious campaigns towards net zero objectives; investment strategies ranged but often included transitions to green energy and divestment from fossil fuels.

However, since then, companies have focused on splashy ESG commitments to boost share prices and strengthen corporate reputations, failing to make any substantial changes, particularly in a time of growing public expectations around corporate responsibility.

The alphabet soup of ESG

ESG ambitions are functionally incompatible, making it challenging to apply them in practice. Environmental and social is about how we serve broader society. Governance is about how we generate returns. The environmental pledge could be a net zero plan. A social commitment could ensure that hiring is equitable. Governance refers to the corporate policy framework, like the CEO-to-employee pay ratio. Unsurprisingly, big investors and others are pulling away from bundling these three alphabets together.

ESG in overdrive

In 2024 and beyond, let us get back to basics so that companies can document and demonstrate their commitment to reducing Scope 3 emissions and dedication to ensuring accountability, transparency, and sustainability in every facet of their business, particularly in the supply chain.

The 2024 ESG trends stand on the brink of significant transformation, awareness, regulatory fortification, and investor prioritization. The 2024 ESG landscape of sustainable investing continues to evolve the environmental and social issues due to a surge in ESG policy and regulation to focus on growth and evolution.