JUNE 18 — Three letters, ESG, have ignited a movement that is reshaping global finance, supply chains, and corporate strategy at breakneck speed. Why has ESG caught on so fast? Is it truly advancing the world’s sustainability agenda? The rapid rise of ESG is not purely altruistic. Three forces are driving this train.

First, money talks louder than morals. Asset managers like BlackRock, Vanguard, and State Street now control over US$20 trillion in assets guided by ESG criteria. Why? Because they have seen the data: companies with strong ESG performance often show lower cost of capital, fewer regulatory shocks, and better long‑term resilience. In a volatile world, sustainability is becoming synonymous with risk management. 

Second, the talent war. Gen Z and millennials — who will make up 75 per cent of the workforce by 2030 — are voting with their feet. They refuse to be cogs in a machine that is destroying the planet or ignoring social injustice. Companies that cannot show a credible ESG commitment lose young talent to competitors who can. That scares the C‑suite.

Third, regulation is coming—fast. The European Union’s Corporate Sustainability Reporting Directive (CSRD), the SEC’s climate disclosure rules, and emerging mandatory due diligence laws across Asia mean ESG is no longer optional. It is becoming a license to operate. Business leaders have realised: adapt now, or be forced to adapt painfully later.

So yes, self‑interest is a big part of the ESG boom. But, self‑interest, properly aligned, can move mountains. The true role of ESG in advancing the world’s sustainability agenda is not to be the final solution. It is to be a translator and an accelerator.

For decades, sustainability lived in NGO reports and UN conferences. Grand goals like the Sustainable Development Goals (SDGs) were noble but remote from quarterly earnings calls. ESG has done something remarkable: it has translated “saving the planet” into the language of business — risk, return, reputation, resilience.

That translation has unlocked capital at a scale government alone could never provide. When a pension fund demands that a portfolio company reduce water intensity or disclose board gender diversity, that changes real behaviour on the ground.

But, ESG is only a compass. It points toward a better direction. It is not the destination itself. Too many companies treat ESG as a checklist or a ratings game: install one female board member, publish a glossy climate pledge, buy some carbon offsets, and declare victory. That is ESG theatre, not sustainability.

The true role of ESG in advancing the world sustainability agenda is threefold:

ESG exposes hidden liabilities that traditional accounting misses. A company with poor water management may look profitable today, but when drought shuts its factory tomorrow, the market will finally see the cost. ESG pulls that future risk into the present.

Trillions of dollars are now flowing toward cleaner, fairer, more transparent businesses. That starves yesterday’s extractive, exploitative models and feeds tomorrow’s regenerative ones. Over a decade, that will reshape entire industries.

ESG reporting, for all its flaws, creates a paper trail. Once you measure and disclose your carbon emissions or your gender pay gap, you cannot un‑know that data. Stakeholders — investors, customers, activists — can hold you to it. That is how pressure builds.

However, if ESG becomes merely a branding exercise, it will not advance sustainability — it will delay it. Because it gives the illusion of progress while the machinery of environmental destruction churns on.

So, what must change? Three shifts. First, mandatory, comparable standards. The work of the International Sustainability Standards Board (ISSB) to create a global baseline is essential. Without standardisation, ESG remains a beauty contest.

Second, enforce real consequences. When a company lies about its ESG performance, it should face the same fraud penalties as lying about its financial performance. 

Third, focus on material issues. Not every ESG factor matters equally for every company. For a water utility, the “S” and the “E” are existential. For a tech firm, governance and data privacy may dominate. The sustainability agenda advances fastest when companies drill into their material impacts, not just what looks good in a brochure. ESG serves a deep business need — to navigate a world of climate shocks, social unrest, and regulatory upheaval. It is simply pragmatic.

ESG is a bridge. It can carry us from the old economy — indifferent to inequality — toward a genuinely sustainable one. But bridges do not build themselves, and they do not guarantee arrival. We still need courageous regulators, honest activists, ethical investors, and citizens who refuse to settle for glossy lies. But the true role of ESG is not to make business look sustainable. It is to make business be sustainable. And that journey has only just begun.

* Professor Datuk Ahmad Ibrahim is affiliated with the Tan Sri Omar Centre for STI Policy Studies at UCSI University and is an Adjunct Professor at the Ungku Aziz Centre for Development Studies, Universiti Malaya. He can be reached at ahmadibrahim@ucsiuniversity.edu.my

** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.