Time for an ESG strategy refresh?

Compared to the open plains in the first half of the 2020s, the ESG landscape has become more rugged in recent years. We are seeing organisations grapple with how shifting expectations, regulation and market realities reshape ESG strategy, reporting and engagement. 

Now is therefore a timely moment to appraise and recalibrate sustainability approaches in a rapidly changing world. Drawing on this experience, Duncan Campbell, Partner at Cognosis, explores how leaders can respond to the evolving ESG landscape.

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Understanding where the world is at now

A number of competing factors have complicated the ESG context.

Political polarisation and global regulatory divergence are bringing uncertainty, just as public fatigue and apathy are growing. In the UK, two thirds of the public shared a lack of interest in sustainability, while almost half said that lifestyle changes have made no discernible difference.

At the same time, the structural drivers behind corporate ESG remain strong.

Three-quarters of UK citizens are still concerned about climate change, while two-thirds of Amazon consumers said they prefer buying products with positive sustainable impact.

Companies continue to value the operational efficiencies, risk mitigation and cost savings of ESG. The lines between the ESG and company strategy are increasingly blurred, as sustainability becomes ever-closer aligned with business fundamentals.

Sustainability is a top-three priority among business leaders, with 83% choosing to increase investments and 66% seeing a favourable return on that investment. Whether reducing energy and water use, or sourcing recycled materials, the business and ethical graphs are moving in the same direction. 

Markets have mirrored the ambiguity around ESG

As recently as the first quarter of 2025, there were record quarterly outflows for sustainable funds of $8.6bn, while the number of new sustainable funds halved year-on-year. However, these figures could be viewed in the context of Donald Trump’s return to the White House. Would a post-Trump administration reframe the narrative around ESG once again?

Long-term predictions on impact investing remain robust, with sustainable assets under management (AUM) set to reach USD35 trillion by 2030 according to research from Bloomberg Intelligence.

Four principles for thriving in a changing ESG context

It’s worth emphasising that the current uncertainty around ESG doesn’t demand a total rethink or severe change of direction. However, now is a good time to step back and review sustainability goals and direction. These four principles will provide a practical framework to assess, refresh, then go again. 

1. Future proof with scenario planning

The only certainty about the next few years is more uncertainty. The political landscape, consumer and public attitudes and regulatory requirements could all look very different in 2030.

Scenario planning for a multitude of different outcomes is a worthwhile exercise in future proofing, helping companies to explore where the world is going.

But it’s important that scenario planning doesn’t become blue sky thinking, based on desired futures. Done well, it will challenge conventional wisdom in the organisation, build consensus for change and enable quicker adaptation if needed.  In combination with competitor benchmarking, companies can understand where and how their ESG strategy needs to flex and where contingency plans are needed to react to changing ESG regulation and sentiment.

Given the growing regional divergence in ESG attitudes, it can be useful to develop scenarios for relevant geographic regions for your business.

2. Head towards the north star

Setting a clear purpose at the head of an ESG strategy provides valuable direction for action.  

 Why are we doing this and what are the key problems we want to address?  

This constant point of reference will help ensure each decision stays true to the company values – a guardrail that is particularly important in times of uncertainty. When purpose underpins decision-making, any minor adjustments become faster and cleaner, and they create more value as a result.

In reality, companies often set a north star, but don’t then use it as a strategic asset. Given the current noise and distraction in the world, there’s no better time to review and refine your ESG north star.  Recent shifts by major corporates show how this “north star” recalibration is playing out in practice. 

Unilever, long seen as a leader in purpose-led ESG, has sharpened its sustainability direction through a refreshed Climate Transition Action Plan.  It focuses on fewer, more measurable priorities such as climate, nature, plastics and livelihoods, and linking these more directly to business performance.  

Similarly, Shell plc has revised elements of its energy transition strategy, moderating certain near-term emissions targets and rebalancing its approach around energy security, returns and transition investment. In both cases, the direction of travel remains intact, but the “north star” has been refined to a clearer, more practical guide for decision-making in a volatile context.

3. Plan globally, flex locally

Large multinationals must navigate different regulatory requirements across different geographies to maintain momentum and credibility. For example, BlackRock, the world’s largest asset manager, is applying a dual strategy that downplays ESG language in the US due to political resistance, while strengthening commitments in Europe where regulations and investor expectations are stricter.

Likewise, HSBC has shifted to a region-specific climate strategy, adhering to Net Zero commitments in the UK and Europe, but then adjusting its approach to reflect uneven global progress, particularly in Asia and other developing markets.

Business leaders can set global ambitions that are consistent with corporate values but then calibrate targets and focus areas at a local level. 

4. Prioritise goals based on material impact

It’s important to ensure that double materiality – a cornerstone of EU’s Corporate Sustainability Reporting Directive (CSRD) – is fully understood to maintain transparency and investor commitment.

Companies should assess sustainability through two lenses: how environmental and social issues affect their financial performance (outside-in) and how their operations impact people and the planet (inside-out).

The E, S and G comprise many different areas of focus, so prioritisation is critical to avoid over-reach. Identify which sustainability factors are material to the business (and along the whole supply chain too).

Creating a materiality matrix is a good place to start. This assessment will guide the design of new concepts and value propositions to drive the company forward, and provide a handy rubric for revisiting priorities as conditions evolve. 

Bring your strategic focus up to date

The long-term outlook for ESG can still be robust, given the pressures on the planet and the continued support amongst many groups in society.

The lines between the ESG and company strategy are increasingly blurred, as sustainability becomes ever-closer aligned with business fundamentals. High-performing companies are integrating ESG considerations into everyday decision-making, across procurement, capital allocation, product development and operations – rather than confining them to a specialist function.

Real-time data is enabling companies to move beyond retrospective reporting towards forward-looking management. By automating ESG data collection and monitoring, particularly across the supply chain, companies are reducing manual effort, improving accuracy and transparency, and allowing for faster intervention when risks emerge.

But there will be bends in the road and obstacles to cross. Reviewing and refining your ESG strategy and shifting your goals is not a sign of weakness or lack of commitment, it is a sensible response to an increasingly dynamic, uncertain and volatile world.