current
ESG Uncertainty
Despite growing public concern about environmental issues, companies face pressure to balance sustainability with profitability, leading to uncertainty around ESG commitments.
Timeframe
near-term
Categories
Impact areas
Detailed Analysis
2024 has been a year of conflicting signals for ESG. Companies face criticism for scaling back sustainability ambitions while simultaneously reaffirming their commitment to a more focused approach. "It was a year which saw major companies being criticised for ‘paring back’ their sustainability ambitions… and those same companies then declaring they remain committed, but to a more focused, realistic set of priorities." This tension between profitability and sustainability is exacerbated by geopolitical conflicts, inflation, and the integration of AI. "Growth and profitability - impacted by geopolitical conflict, inflation and the integration of AI, to name a few - command more urgent attention in the boardroom than sustainability." Despite this, the upcoming Ipsos ESG Council report indicates that ESG is fundamentally changing business operations. However, legislative complexities, such as the CSRD in Europe, and the postponement of environmental regulations create further uncertainty.
Context Signals
The FT film 'Who killed the ESG party?' and article 'ESG is Dead. Long live ESG' highlight the tension between profitability and sustainability.
The CSRD in Europe requires extensive reporting on ESG factors, creating a burden for businesses.
Postponement of EU deforestation law and potential amendment of the 2035 ban on internal combustion engine cars add to the uncertainty.
Edge
The term 'responsible business' may offer a less polarizing alternative to ESG, resonating with a wider range of stakeholders.
Engaging consumers in the sustainability journey can accelerate progress and create new market opportunities.
Companies that successfully integrate sustainability into their core business strategy will gain a competitive advantage.
