The bursting of the ESG bubble is actually a good thing for sustainability. Here’s why, according to Julia Vol.
Over the past decade, ESG became synonymous with corporate sustainability. What started as a compliance and reporting tool for transparency turned into an end in itself. If you work in the field, you’ve seen it – reporting drove action, not the other way around.
Instead of embedding sustainability into their core operations, companies focused on what needed to be reported. Sustainability managers weren’t shaping strategy; they were responding to ESG checklists. This led to absurd PR stunts: fast fashion brands boasting about solar panels while producing billions of disposable items; or banks talking big on green finance while driving fossil fuel expansion. Even sugar and tobacco companies scored high ESG ratings just for using renewable energy and having diverse boards, all while continuing to harm public health.
Why? Because ESG and corporate sustainability were never genuine leadership priorities. I’ve been on the inside across multiple companies – sustainability teams constantly fought to justify investments, only to see initiatives scrapped when they clashed with profit margins.
Now, with ESG regulations rolling back and funds drying up, the bubble is bursting. Reduced transparency and fewer funds for renewables aren’t great, but let’s be honest – these mechanisms never delivered meaningful environmental progress anyway. Can you name a single corporation that has touted its sustainability efforts and actually achieved an absolute reduction in emissions or footprint over the past five years? I can’t.
CSRD and similar regulations forced companies to disclose data, but they never required real improvement. As long as companies submitted reports, they could keep polluting without consequence, all while earning ESG credentials to maintain business as usual.
So now what?
The end of the ESG bubble forces companies to make a real choice: truly commit to sustainability by rethinking business models, revenue sources, and entire industries to create long-term, sustainable operations; drop the greenwashing and admit to being an unsustainable business instead of pretending otherwise.
Over the next few months, the masks will come off. Some companies will abandon the charade, while others will finally focus on what truly matters and figure out how to get there.
Julia Vol is head of partnerships at the Modern Agriculture Foundation and founder of communications agency Make a Splash.
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