JUNE 23 — Walk into any ESG conference, and you’ll hear a familiar refrain: net-zero pledges, carbon credit markets, and circular economy buzzwords. We have created a world where “E” stands for everything, “G” stands for governance, and “S” stands for sorry, we’ll get to it next year. The uncomfortable truth is that the environmental dimension has cannibalised the social dimension of ESG. Meanwhile, governance — the lever that could fix this imbalance — often serves only to protect profits. If we are serious about sustainability, we must confront why this happened and how to force a more equitable marriage between people, planet, and profit.

Why the social dimension lost out? First, the environment is easier to commodify. Carbon has a price. Renewable energy has a return on investment. A tonne of waste diverted from landfill is measurable. But how do you price fair wages in a supply chain? How do you quantify the long-term value of a company respecting indigenous land rights? Investors love metrics, and the “S” resists neat spreadsheets.

Second, climate risk is systemic and visible. Floods, fires, and heatwaves make headlines. They threaten assets, supply chains, and insurance markets directly. Social risks — exploitation, rising inequality, labour unrest — fester quietly, then explode unexpectedly. By the time a factory strike or a human rights scandal hits the news, the stock has already tumbled. Boards prefer to manage what they can predict.

Third, governance has been twisted into a profit protector. Executive pay, board independence, and anti-corruption are essential, but too often “good governance” means maximising shareholder returns within the law. That excludes aggressive attention on social issues unless mandated. Governance without social teeth is just compliance with a tie.

The result is not just unbalanced — it’s dangerous. A company with perfect carbon neutrality but sweatshop labour is not sustainable. A bank financing green energy while redlining minority communities is not ethical. We are building a world of net-zero emission sweatshops, and patting ourselves on the back for it.

Moreover, ignoring the social dimension undermines environmental progress. Without just transitions — retraining fossil fuel workers, investing in affected communities — climate policy will face populist backlash. The yellow vests in France or the resistance to carbon taxes globally are warnings: people will reject green policies that ignore their livelihoods.

How to rebalance the three pillars. Reclaiming the “S” does not mean abandoning the “E”. It means recognising that social and environmental goals are inseparable. Here is how we start:

Mandate double materiality — Regulators like the EU, with the Corporate Sustainability Reporting Directive (CSRD), have begun demanding companies report not just how climate affects them, but how they affect people and planet. Other jurisdictions must follow. If a company must disclose its carbon footprint, it should also disclose its living wage gap, its workforce turnover, its community grievance mechanisms.

Link executive pay to social outcomes — Just as CEOs now have carbon reduction targets, they should have measurable social KPIs: reducing pay ratios, increasing board diversity, eliminating child labour in supply chains, or achieving audited health and safety improvements. What gets compensated gets done.

Create social taxonomies — Investors need a common language for social issues. Just as the EU’s green taxonomy defines environmentally sustainable activities, a “social taxonomy” could define what constitutes fair labour, inclusive hiring, or ethical supply chains. Without standards, “S” remains a feel-good paragraph.

Empower workers and communities in governance — German-style codetermination, where workers sit on supervisory boards, is one model. Another is requiring shareholder votes on major social policies like pay equity audits. When governance includes those affected by social failures, accountability follows.

Shift asset manager incentives — BlackRock, Vanguard, and State Street control trillions yet often vote against social shareholder proposals. Fiduciary duty should not be narrowly defined as short-term profit. Regulators and large pension funds must push asset managers to treat social risks with the same gravity as climate risks.

A call for integration, not competition. We did not arrive at environmental urgency by accident. Decades of activism, science, and regulation built that pillar. It is time to apply the same rigour to the social dimension. Not because the planet matters less, but because people are not separate from the planet. A worker denied a living wage cannot afford an electric car. A community poisoned by pollution but promised green jobs will not trust the transition.

The “S” in ESG has been silent for too long. Let us stop treating it as an afterthought. Let us build governance that serves society, not just shareholders, and let us remember that sustainability without justice is just a new form of extraction. The future is not either green or fair. It must be both.

* The author 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.