By Ioannis Ioannou, Associate Professor of Strategy and Entrepreneurship at London Business School
There was a time, not long ago, when the corporate world spoke with confidence about Environmental, Social and Governance (ESG). Every major firm had a sustainability strategy. Reporting teams expanded. Investor decks were reworked. Boards set net-zero targets, and executives attended climate summits. The shift felt real—perhaps even irreversible.
But by 2025, that confidence has cracked. Across industries, ESG is under pressure. The acronym itself has become politically fraught. In the U.S., mentions of ESG in corporate reports seem to have peaked in 2023 and are now beginning to fall. Many companies are quietly removing the term from communications. Others are rebranding their efforts entirely. And still others—despite earlier fanfare—are retreating, scaling back, or going silent. The mood has changed dramatically. The backlash is no longer hypothetical. It’s here.
For sustainability professionals and corporate leaders, the question is no longer whether the backlash is happening, it’s much more of a matter of how does one respond to it. How does one hold the course when external pressures mount? How to lead when the ground beneath ESG feels less stable? And how to navigate the moment without losing sight of the long-term imperatives that made these efforts necessary in the first place?
Not just about language
What’s clear is that this isn’t just about language. Dropping the term ‘ESG’ doesn’t change the underlying pressures. Regulation may be in flux—the U.S. Securities and Exchange Commission (SEC) has rolled back climate disclosure efforts, and even in the EU, the Corporate Sustainability Reporting Directive (CSRD) is now subject to political pushback. But the material risks haven’t disappeared. Investors are still asking pointed questions about transition exposure and long-term viability. Consumers remain attentive, particularly in sectors like food, fashion, and mobility. And climate events—from floods to wildfires—are only accelerating. The pressures are still there. They’ve just become harder to talk about.
Corporate dissonance
This environment creates a strange kind of corporate dissonance. Internally, many companies are still investing in sustainability capabilities. The teams haven’t disappeared. The work hasn’t stopped. But externally, the narrative is quieter. The enthusiasm is muted. And the political risk of speaking too forcefully has, in some places, become too high. The result is a widening gap between what companies do and what they are willing to say.
Some of this is understandable. Boards are risk-averse by design. Executives are navigating a complex mix of stakeholder demands, activist scrutiny, and geopolitical turbulence. For some, stepping back from ESG is a protective measure—a way to reduce exposure, avoid controversy, or maintain optionality in uncertain times. But for others, the shift is more revealing. It exposes what was always fragile—commitments that were made when the wind was at their backs, but not designed to withstand resistance.
Abiding consensus on long-term value
In conversations with executives, I no longer hear much debate about whether sustainability matters. The consensus on long-term value remains. The science hasn’t changed. The regulatory signals haven’t reversed – with the exception of the US, of course. What I hear instead is anxiety. A sense of being caught between competing imperatives. On one side, the pressure to future-proof the business. On the other, the relentless logic of quarterly earnings, political scrutiny, and internal resistance. Executives are not asking, “How do we become more sustainable?” They’re asking, “How do I survive while doing this?”
Inside many companies, sustainability has become a proxy for deeper power struggles. Legal and compliance teams are playing defence, wary of litigation risk or greenwashing accusations. CFOs are cautious, worried about cost exposure and capital allocation. Strategy and marketing teams, sensing the shifting political landscape, are increasingly focused on avoiding reputational missteps. And CEOs? Many are simply trying to avoid making the wrong enemies. In this environment, sustainability decisions are no longer just about values or impact—they’re about control.
This makes the personal dimension unavoidable. I often ask senior leaders a simple question: What are you personally willing to take a hit on? Compensation, bonuses, board support? The hesitation is telling. Everyone wants sustainability. Fewer are prepared to pay for it. And fewer still are willing to take the political or professional risks that leadership now requires.
Popularity but not always conviction
We also have to confront a harder truth: not every company was ever serious about this work. ESG may have become popular, but popularity is not the same as conviction. Some firms adopted the language because it was fashionable, because capital was flowing, or because it provided cover during a reputational crisis. Now that the context has shifted, they are quietly backing away. But others—the ones who built sustainability into operations, governance, and strategy—are staying the course. For them, this moment is not comfortable. But it is clarifying.
Still, it would be a mistake to treat this as merely a corporate issue. Part of the backlash stems from a failure to build broader legitimacy. For years, the sustainability conversation took place among regulators, investors, and executives. But in doing so, we left out too many others. Workers, consumers, small business owners—many felt they were watching from the outside. The conversation became technocratic, filled with acronyms and abstraction. Net-zero by 2050, Scope 3 emissions, transition taxonomies. These terms may be essential, but they do not inspire. And when sustainability is framed as an elite project, it becomes easier for opponents to cast it as a threat to jobs, freedom, or even national identity.
We also underestimated the strength and sophistication of the counter-narrative. Fossil fuel interests and political operatives didn’t just reject ESG—they reframed it. As a cultural imposition. As economic sabotage. As a political ideology. And while they were telling that story—consistently, loudly, emotionally—we were speaking predominantly in compliance language. We made it too easy for disinformation to take hold. We didn’t build the coalitions we needed. And we waited way too long to respond.
Moving toward “strategic foresight”
So, what now? Retreating further won’t work. Nor will defensiveness. What’s needed is a deeper recalibration. A shift away from ESG as a branding exercise, and toward ESG as a form of strategic foresight. A way to anticipate disruptions, manage transition risk, and allocate resources for long-term resilience. That means tying sustainability more closely and convincingly to core business outcomes. To innovation, efficiency, talent, and market relevance. It also means being clearer about trade-offs. Not every initiative will yield immediate returns. Not every audience will be persuaded. But leadership under pressure is still leadership.
Thriving in this environment requires a different kind of courage. The courage to speak when silence feels safer. The courage to commit when consensus falters. And the courage to act when the political tide turns against you.
After the backlash
The backlash will pass eventually. So will the headlines. What will remain are the decisions being made right now—about what to prioritize, what to protect, and what to stand for. The firms that endure will not be those that retreat the fastest. They will be the ones that used this moment to clarify their strategy, recommit to their purpose, and lead with resilience.
The question is no longer whether ESG is under attack. It is. The question is what companies, and corporate executives will do when the spotlight moves elsewhere. When the pressure to perform persists but the attention to sustainability fades. Will they hold the line? Will they adapt without capitulating? Will they rebuild trust with those outside the boardroom?
And perhaps most importantly, when it’s no longer fashionable to talk about sustainability, what story will they choose to tell?
Dr Ioannis Ioannou
A leading expert in sustainability leadership and corporate responsibility, Dr Ioannis Ioannou‘s research provides valuable insights into the challenges and opportunities organizations encounter when developing sustainable business models. His award-winning academic work on strategic ESG integration, coupled with his focus on the investment community and financial markets, has established him as a thought leader in the field.