ESG in 2025: Everything Should Go?
By Chris Bowman, Content and Strategy Director
Why now is the right time to invest in ESG communications
ESG in 2025 is a much-beleaguered acronym. The high tide of its popularity seems to have been and gone, with ebbing interest in environmental, social and governance as both an investment theme and a set of guiding principles for business.
Yet it persists, in a variety of regulations, in consumer preferences, and the investment theses of various investors. Perhaps most directly relevant to marketing and communications, it persists in the headlines of the business press. Even if those headlines are skewing more negative, this demonstrates that it is still a topic that audiences engage with – and therefore expect businesses to engage with too.
Shifting sands: the case for caution
What headwinds assail ESG at the moment? That’s a long and complicated list. But – at risk of straying into politics – there’s a few headlines we can sketch out.
In the US, most prominently, the tide has definitively shifted against ESG with the new administration. Heavy recent fire has been concentrated on Diversity, Equity and Inclusion (DEI) – an ‘S’ cornerstone for many companies – but environmental concerns are also deprioritized. In his last term, President Trump withdrew the US from the Paris Agreement and has pledged to do so again, amid other deregulatory initiatives and the encouragement for the country to ‘drill baby, drill’.
However, even if it is an outlier in some respects, the US is arguably not unique in shifting away from ESG. In Europe, the European Commission recently adopted a package of proposals that are set to drastically reduce the scope and extend the timelines of key ESG regulations such as the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDD).
This feels like an abrupt volte-face for the bloc, which had previously prided itself on its sustainability leadership. It is a particular curveball for the approximately 80 percent of companies previously in-scope under CSRD that are now removed. Though simplifying the compliance burden is no doubt a relief, many will have been gearing up to engage with ESG data suppliers and roll out reporting initiatives, and will now be wondering what to do with the efforts and resources invested so far.
Of course, companies can adapt. But they will be wondering whether this is the first pulse in a wave of changes, and whether it is best to hold fire on investing in or talking about ESG until stability returns.
Everything is different, nothing has changed: the case for continued investment
Of course, as a communications agency with an ESG specialism, we have a vested interest in convincing you to keep up investment. However, this is born out of sincere conviction as well as commercial self-interest. Hear me out.
The name of the game is alignment.
Regulations may roll back and the critics may clamor, but there are still many parties interested in ESG performance.
First, there are investors. We know both from research and conversations with our clients that, though numbers may be dropping, there remain substantial numbers of investors in both public and private markets which care about ESG.
For a company looking to raise capital, it matters that they find investors with broadly similar approaches to ESG. A company that performs well on ESG is more likely to find a willing ear in an investor who feels the same, and a company that performs poorly or is not concerned by ESG will not want to waste time wooing ESG investors that are unlikely to bite or will saddle them with onerous reporting requirements if they do.
In short, companies want to attract investors that are a good fit for them. Therefore, having a clear, upfront and transparent ESG message will help streamline the process and attract the right ears and eyeballs, whether a company is ESG enthusiastic, agnostic or uninterested.
And of course, the same goes for other stakeholder groups. Customers who care about ESG will want to buy from companies which reiterate and stand by their ESG goals and credentials as others are retreating. Partners, who have their own strategies and reporting to consider, want to know where companies stand before engaging on joint initiatives.
How to talk about ESG in 2025
Every company’s situation, strategy and voice is unique, so there can be no one-size-fits-all answer to this question. However, there are some helpful signposts.
To take a UK example, the FCA’s sustainable fund labels, which come into effect this April after a temporary reprieve, offer an idea of how to shape an ESG narrative – and not just for investment funds.
The new rules ban funds from describing themselves as ‘sustainable’ unless they adopt one of four new labels, each of which carries specific requirements. These labels are ‘sustainability focus’, ‘sustainability impact’, ‘sustainability improvers’ and ‘sustainability mixed goals’.
To (over) simplify, ‘focus’ refers to investments that are defined as environmentally and/or socially sustainable; ‘impact’ refers to investments aimed at improving a measurable and predefined social or environmental impact; and ‘improvers’ refers to assets that have the potential to improve their environmental or social performance over time, but are not necessarily ‘sustainable’ today. Mixed goals refers to a fund that targets more than one of the other three labels.
These labels provide an outline of different ways to talk about ESG and sustainability, whether marketing a fund or talking about an individual business. There will be some mission-driven companies that aim to change the world, or a portion of it (impact). There will be others without the same sense of mission that nonetheless aim to minimize harm by focusing on sustainable products and practices (focus). And there will be those which don’t target obviously green or sustainable products or practices at all but are mindful of their responsibility to improve performance over time (improvers).
By understanding which category they fit into, a business can go a long way to answering the ‘oh god what now’ question with respect to ESG communications. They don’t need to be whiter than white or greener than green, they just need to be clear and transparent about what they aim to achieve.
Companies should also take a moment to reflect on what they consider to be sustainable. For example, traditionally shunned by the ESG world, there is a growing chorus calling for defense companies to be considered responsible given the heightened state of global conflict (see: UK, France).
Agree? Disagree? Either way, putting out a transparent message allows companies to find stakeholders that align with their view, without anyone wasting their time or feeling conned.
Reflect a moment: what is ESG anyway?
Remember: more than any specific set of values (woke or otherwise, if you go in for that sort of thing) ESG is about information flows – expanding the universe of relevant datapoints for stakeholders beyond the merely financial. They can choose to use or disregard that information as per their preference and strategy, but in all cases are best served by transparency and standardization. That is ultimately what ESG regulations, ratings and reports are all about – and it boils down (largely) to effective communication.
This is not to say that developments can be ignored. Things have changed, which means the gleaming comms plan drawn up just last year or the one before probably needs updating, or at least reiterating to confirm its continued relevance for the organization.
And as a final point, it may be difficult to quantify, but there is a value in integrity. Companies that turn on (and for) a dime don’t win trust or build brand equity. Whether accelerating, abandoning or adjusting their approaches to ESG, companies will build long-term value with relevant stakeholders by taking this moment to convey a clear, consistent message on where they stand and why.
Want to revisit your ESG communications strategy in light of recent trends? Get in touch with our ESG team.
Key takeaways:
Q: Is ESG dead?
A: No – pushback is fierce and the pace of change is slowing – or in some cases even reversing – but ESG is still a going concern.
Q: Should we stop/scale back ESG communications?
A: Far from it. As the ESG environment changes, your stakeholders will want to know where you stand in light of those developments. Whether you’re pushing ahead, entering a holding pattern, or scaling back, the fact remains you need to communicate what you’re doing and why to your key audiences to retain trust and relevance.
Q: How do I talk about ESG in 2025?
A: There is no one size fits all approach, but recent regulations can offer ideas on how to categorize and describe your ESG efforts in ways that align with audience expectations.
About the author:
Chris Bowman is an Associate Director at Aspectus and co-leads Aspectus’ ESG services. His experience is primarily in the energy and financial services sectors, and Chris specializes in brand strategy and messaging. He recently completed a short course on Sustainability Communication Strategies from the LSE.
