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Is the Sustainability Agenda Dead?

  • raymondgreig
  • 2 days ago
  • 5 min read

The backlash is real. In the United States, President Trump signed an executive order on 20 January 2025 to withdraw the country from the Paris Agreement again, while also revoking parts of the previous administration’s climate architecture. In Europe, the mood has shifted too: the European Commission’s 2025 “Omnibus” package proposed to narrow the scope of corporate sustainability reporting and due diligence rules in the name of competitiveness and simplification. Read superficially, these moves look like evidence that sustainability has peaked and is now in retreat.


But that conclusion is too neat. Politics may be cooling on the language of ESG, yet the underlying pressures have not gone away. The IPCC’s Sixth Assessment Synthesis Report states with high confidence that climate change has already caused widespread adverse impacts and related losses and damages to nature and people. The World Bank has estimated that climate change could push between 32 million and 132 million people into extreme poverty by 2030, depending on the scenario. The IMF has modelled that without mitigation, global GDP per capita could fall by more than 7 per cent by 2100, while the Swiss Re Institute estimates GDP losses of up to 18 per cent by mid-century under a 3.2°C pathway. Whatever one thinks of the politics, the operating environment facing companies is becoming more volatile, more expensive and harder to insure, finance and manage.


That is why it is more accurate to say the sustainability agenda is being contested, not killed. The political shift is partly semantic and partly strategic. “ESG” has become a useful target for right-leaning politicians who frame it as elitist, anti-growth or ideologically intrusive. In the US, climate policy has again become a proxy war over energy security, industrial policy and cultural identity. In the EU, the debate is less about outright rejection than about burden: how much disclosure, how fast, and at what cost to business competitiveness. The result is not a simple rollback, but a reframing of sustainability through the language of sovereignty, growth and regulatory restraint.


Yet businesses do not operate in the realm of rhetoric alone. They operate in supply chains, insurance markets, capital markets and physical landscapes. Here, the evidence points in one direction: resilience matters more, not less. As Figure 1 shows, the International Energy Agency reported that global investment in clean energy reached approximately USD 2 trillion in 2024, nearly double the amount going to fossil fuels. Total global energy investment surpassed USD 3 trillion for the first time, with clean energy capturing two-thirds of the total. In 2018, the ratio of clean energy to fossil fuel investment was roughly 1:1; by 2024 it had shifted to nearly 2:1. That is not a sign of a dead agenda. It is a sign that markets are reallocating capital towards technologies and systems expected to remain viable in a lower-carbon, more resource-constrained economy.



Figure 1: Global energy investment, 2018–2024. Clean energy investment doubled while fossil fuel spending stagnated.


Investors are sending a similar signal. PwC’s 2024 Global Investor Survey, covering 345 investors across 24 countries, found that 71 per cent believe the companies they invest in should incorporate sustainability directly into corporate strategy, and 75 per cent said they would increase investment in companies actively addressing climate risks. Morningstar reported that global sustainable fund assets reached a record USD 3.2 trillion at the end of 2024, even though annual net flows fell to their lowest level since 2018. That distinction matters, and Figure 2 illustrates it clearly: the enthusiasm has become more selective and less slogan-driven, but the capital has not disappeared. It is becoming more demanding.



Figure 2: Global sustainable fund AUM and annual net flows, 2018–2024. Assets hit a record $3.2 trillion even as new flows declined sharply..


This helps explain the evolution now under way. For a decade, sustainability was often framed as a values-led corporate commitment: purpose, stakeholder capitalism, net zero, social licence. Some of that language overreached. It invited political attack, created room for greenwashing and encouraged companies to treat sustainability as a communications exercise rather than an operating discipline. What is emerging in its place is more prosaic but arguably more durable: sustainability as resilience, risk pricing, resource efficiency and strategic adaptation. That is less emotionally resonant, but it may prove more embedded.


There is a contradiction at the heart of the current moment. Public discourse suggests retreat. Boardroom behaviour suggests entrenchment. Many companies are speaking less loudly about ESG because the term has become politically charged, especially in the US. But they are still investing in renewable power, supply chain traceability, water security, scenario analysis and climate disclosure because these are now tied to cost, continuity and access to capital.


The data on corporate disclosure reinforces this point. As Figure 3 shows, CDP’s disclosure platform recorded nearly 24,800 companies reporting environmental data in 2024, roughly three times the number in 2019. More than 740 financial institutions representing over USD 136 trillion in assets now request disclosure through CDP. Meanwhile, the IFRS Foundation reported in June 2025 that 36 jurisdictions had adopted or were finalising steps towards introducing ISSB Sustainability Disclosure Standards, representing approximately 60 per cent of global GDP. That is not abandonment; it is institutionalisation.



Figure 3: Companies disclosing environmental data through CDP, 2019–2024. Disclosure nearly tripled in five years.


So, is the sustainability agenda dead? Politically, parts of it are certainly under attack. The language is less fashionable, the consensus is weaker, and the compliance burden is being challenged more openly. But commercially and strategically, the agenda is alive because the underlying drivers are alive: climate volatility, investor scrutiny, energy system transformation, regulatory diffusion and the economics of resilience. The old sustainability story promised virtue. The emerging one promises preparedness. That may be less inspiring, but it is also harder to dismiss.


In that sense, the real shift is not from sustainability to non-sustainability. It is from sustainability as identity to sustainability as infrastructure. Companies that mistake the political backlash for a licence to disengage may find themselves exposed to physical risk, financing friction and strategic irrelevance. Companies that treat the backlash as a cue to become more disciplined, more evidence-led and more materially focused will probably be better positioned. The agenda is not dead. It is being stripped of some of its moral theatre and recast as a test of business durability.


Sources

 

Bioy, H. (2025, January). Global ESG fund flows increase in Q4. Morningstar Sustainalytics. https://www.morningstar.com/sustainable-investing/global-esg-fund-flows-increase-q4


CDP. (2023, October 18). Record 23,000+ companies disclose environmental impact through CDP [Press release]. https://www.cdp.net/en/press-releases/record-23-000-companies-disclose-environmental-impact-through-cdp


CDP. (2024). Charting the change: Disclosure data dashboard 2024. CDP. https://www.cdp.net/en/insights/disclosure-data-dashboard-2024


CDP. (2025a, April 17). CDP A List 2024: Only 2% of companies demonstrate market-ready environmental leadership [Press release]. https://www.cdp.net/en/press-releases/cdp-a-list-2024


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European Commission. (2025a). Corporate sustainability reporting. European Commission. https://ec.europa.eu/info/law/better-regulation/


European Commission. (2025b). Omnibus package. European Commission.


IFRS Foundation. (2025, 12 June). IFRS Foundation publishes jurisdictional profiles providing transparency and evidencing progress towards adoption of ISSB


Intergovernmental Panel on Climate Change. (2023). Climate change 2023: Synthesis report. IPCC. https://www.ipcc.ch/report/sixth-assessment-report-cycle/


International Energy Agency. (2024a). World energy investment 2024. IEA. https://www.iea.org/reports/world-energy-investment-2024


International Energy Agency. (2024b, June). Investment in clean energy this year is set to be twice the amount going to fossil fuels [Press release]. https://www.iea.org/news/investment-in-clean-energy-this-year-is-set-to-be-twice-the-amount-going-to-fossil-fuels


International Energy Agency. (2025). World energy investment 2025. IEA. https://www.iea.org/reports/world-energy-investment-2025/executive-summary


Jafino, B. A., Walsh, B., Rozenberg, J., & Hallegatte, S. (2020). Revised estimates of the impact of climate change on extreme poverty by 2030 (Policy Research Working Paper No. 9417). World Bank. https://documents.worldbank.org/en/publication/documents-reports/documentdetail/706751601388457990/


Kahn, M. E., Mohaddes, K., Ng, R. N. C., Pesaran, M. H., Raissi, M., & Yang, J.-C. (2021). Long-term macroeconomic effects of climate change: A cross-country analysis. Energy Economics, 104, 105624. (Originally IMF Working Paper WP/19/215.) https://www.imf.org/en/publications/wp/issues/2019/10/11/


PwC. (2024, December 4). PwC’s global investor survey 2024: Cautiously optimistic, investors expect growth. PwC. https://www.pwc.com/gx/en/news-room/press-releases/2024/pwc-2024-global-investor-survey.html



The White House. (2025a, 20 January). Putting America first in international environmental agreements. The White House.


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