Amid political pushback and regional divides, investment in ESG remains a long-term bet driven by sustainability, transparency and innovation, writes Dan Byrne
Publicly, the battle over Environmental, Social and Governance (ESG) principles is heating up, and 2025 will be a make-or-break year.
US President Donald Trump’s 2024 victory, buoyed by agendas dedicated to combatting so-called “woke capitalism”, has thrown a wrench into the ESG movement in the United States.
But while some parts of the world are doubling down on anti-ESG sentiment, others—like Europe and Asia—are charging ahead with ambitious sustainability plans, so far unfazed by angry rhetoric elsewhere.
The conundrum surrounding ESG is that, for many people, it is all about politics. Much of the media will reinforce this viewpoint because it provides the juiciest angle, filled with conflict and the makings of a good story.
ESG goes much deeper than politics, however. The real decisions are made at quieter levels, where investment patterns continue and corporate strategies align with investor priorities.
Although it may not be as juicy, this is the main factor fuelling success or failure in ESG.
ESG investing in 2025
When it comes to investing, there is one main conclusion: ESG isn’t going anywhere.
You may have read many news articles—particularly over the last 18 months—discussing divestment from ESG assets and the dwindling popularity of ESG among stakeholders. These stories are true, signalling that ESG is taking a beating in some quarters.
If we zoom out, however, the numbers tell a different story.
As of late 2024, the global value of ESG assets is still expected to hit somewhere between $35 and $50 trillion by 2030, according to University of Chicago lecturer and Impact Engine Chief Investment Officer Priya Parrish, writing for Fortune last October.
In other words, the recent setbacks for ESG investment are small backflows, but the much more significant wave of overall ESG investment still exists.
Why the continuing surge? Investors are likely convinced that ESG-related investments are smart, long-term bets. Many of today’s ESG pillars involve adaptation, essential in governance thinking and good news for investors who always want clarity on how a company will succeed in five, ten or twenty years.
Even as critics argue that ESG is overhyped, woke or restrictive, a colossal chunk of capital remains, especially in Europe and Asia, where ESG investments are firmly entrenched.
Investors in the US will be much more cautious about ESG under Donal Trump’s presidency, but again, this is on the public political side, which we’ll explain more about below.
ESG and politics
The other firm conclusion is that the debate over ESG will not simmer down soon.
Trump’s return to power in the US means that everything related to ESG will face even more backlash and legal headaches. These can range from limiting ESG considerations in federal contracts to questioning corporate motivations. The critics are loud and emboldened, and they will motivate anti-ESG movements elsewhere.
Will they succeed? It’s very iffy.
You might have heard that the bulk of the world’s population went to the polls in 2024, including the UK, India and the European Union (EU)—as a whole and within certain member states such as France.
New governments with fresh mandates now exist in these places. Many will remain until about 2030, and most remain committed to ESG-related principles in some form.
The EU is doubling down, rolling out regulations such as the Corporate Sustainability Reporting Directive (CSRD) that demand greater transparency and accountability than ever before. In Asia, governments are leaning into sustainability to future-proof their economies.
The result? A fragmented world in which ESG is thriving in some places and under siege in others.
Five main expectations
So, are we likely to see governance professionals making key strategic decisions regarding ESG?
Unfortunately, there is no clear answer here because each company’s ESG strategy depends on factors including its goals, industry and national stakeholder mood.
However, we can make a few more general predictions right now:
- Regional divides will deepen. Europe and Asia remain ambitious about ESG and new regulations are coming into force. Meanwhile, the US and some emerging markets are grappling with political resistance. Expect the gap between these regions to widen, which is bad news for the boards of trans-Atlantic companies. Suddenly, they must ensure their business pleases two very different political regimes.
- Transparency will require upskilling. Many companies, particularly in Europe and Asia, will realise the need for new expertise on boards and executive teams. This is the only way they can hope to comply with the new reporting regulations they face. Because of this, ESG-related training will become more crucial.
- Tech will lead the charge. Artificial intelligence and blockchain are set to revolutionise ESG reporting. Think real-time monitoring of supply chains and automated sustainability audits. The future is digital because digital can make massive tasks more manageable, enabling companies to report with great depth and confidence.
- “Hushing” will be the new ESG language in the US. How does a company pursue ESG investment without angering its anti-ESG government? The answer is hushing, which means being quiet on a particular issue, no matter how devoted you are, for fear that being public will attract too much unnecessary criticism.
- Corporate activism will rise: Whether or not companies and politicians like it, the most polarised attitudes around ESG will mean more activism among investors. Boards must be prepared for this because aggressive activism can sometimes threaten their entire agenda.
The story of ESG is being rewritten in real-time. The loud political pushback in the media starkly contrasts with the continuing investment in sustainability, accountability and transparency.
Navigating all this is a considerable challenge for businesses, but there is also an opportunity for those who adapt quickly, embrace innovation and stay ahead of evolving regulations.
Dan Byrne is Content Manager at The Corporate Governance Institute
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