No Left, No Right—Just Forward with ESG

Last week, catastrophic floods swept through Valencia, Spain, leaving devastation in their wake: submerged homes, stranded families, and lives lost. Events like these are becoming all too common—a stark reminder of our planet’s growing fragility. Yet, as communities grapple with the immediate and often tragic consequences of environmental neglect, political debates about the place of Environmental, Social, and Governance (ESG) frameworks continue to distract from the realities before us.

ESG is often branded as the territory of the political left or attacked by the right, but this approach entirely misses the point. ESG is not about taking sides; it is about navigating forward. As the boundaries of our ecosystems are visibly strained, the need for companies to embrace ESG transcends any political ideology. The question is not whether ESG belongs in business, but how swiftly we can integrate it to address the pressing challenges we all face.

 ESG: Urgent and Beyond Externalities

 Some dismiss ESG as a passing trend, a short-lived response to social and environmental pressures that will eventually fade. Others attempt to dismiss its significance by arguing that it can be neatly integrated into existing economic theories and business frameworks. Both approaches miss the point: ESG emerged precisely because conventional models and practices have failed to address the complex, systemic challenges we now face, where environmental and social crises threaten the foundations of economic stability.

A traditional economist might argue that ESG is simply about addressing negative externalities—a concept long embedded in economic theory. But this view fundamentally misinterprets ESG’s scope and purpose. Traditional approaches address externalities through corrective measures, like taxes or regulations, that treat issues like pollution as isolated costs to be managed separately. ESG, however, demands that companies integrate environmental, social, and governance concerns directly into their strategic and operational decisions. It’s not about responding to issues externally but about embedding these factors within the core purpose of the business itself.

Moreover, ESG takes a systemic approach, addressing interconnected environmental, social, and governance issues rather than isolating each problem. While economic models might suggest a carbon tax to curb emissions, ESG considers how these risks intersect with supply chains, human capital, and social equity. Importantly, ESG promotes an anticipatory, adaptive approach that goes beyond pricing known risks. Traditional economics assumes externalities are manageable when quantifiable, yet ESG encourages companies to build resilience for uncertain future disruptions, such as climate impacts on supply chains or infrastructure. This forward-looking framework prepares companies to manage risks that remain unpredictable but increasingly likely.

The debate over whether ESG aligns with left or right political ideologies obscures these critical distinctions. ESG is not a partisan tool but a pragmatic framework for resilience and adaptation—an essential strategy in the face of our most pressing global challenges.

Challenges in Implementation: More Than “Left or Right”

Implementing ESG has undeniably been challenging. Standards, metrics, and best practices vary across industries, creating inconsistencies that make ESG complex and sometimes frustrating for both investors and companies. This “messiness” is often cited as a fundamental flaw of ESG, but it also reflects the scale and interdependence of the issues it addresses—risks that don’t lend themselves to one-size-fits-all solutions. Beyond these operational hurdles, however, one of the most significant obstacles to meaningful ESG progress has been political polarization.

In recent years, ESG has become entangled in political discourse, treated alternately as a left-leaning imposition or as progressive “virtue signaling.” This partisan framing is not only misleading but actively obstructive, reducing ESG to an ideological stance rather than a strategic necessity. Polarization over ESG isn’t just obstructive—it risks trivializing an urgent agenda by framing it in terms of ideological loyalty rather than practical necessity. Labeling ESG as either “leftist overreach” or “right-wing appeasement” deflects from its central purpose: to equip companies to manage interconnected risks that have material consequences for operations, value chains, and investment returns. In other words, politicizing ESG undermines its practical utility by focusing attention on surface-level labels rather than on the structural resilience it can provide.

 Reducing ESG to ideological “virtue signaling” or dismissing it as regulatory overreach risks transforming it into a symbolic exercise, instead of treating it as a strategy to address increasingly critical business challenges. Environmental degradation, social tensions, and governance breakdowns cannot be effectively managed if ESG is seen as a partisan choice rather than a necessary risk management tool. While political positions may shift, the underlying risks ESG addresses—from climate volatility to labor inequalities—persist and grow.

 To move past these ideological roadblocks and truly address the underlying challenges of ESG, we need coordinated action across all sectors. Only through collective engagement can we make ESG a force for meaningful, enduring change.

 A Framework for Resilience: Building Systems Change

Moving ESG forward requires a fundamental shift in how companies, governments, investors, and individuals approach sustainability. This is not someone else’s responsibility—it is everyone’s. ESG cannot be relegated to isolated efforts or left solely to corporate initiatives or governmental mandates. Each stakeholder, from policymakers to business leaders, investors, and everyday consumers, holds a unique role in driving ESG as a force for resilience and equity. Only through this shared commitment can we create an environment where ESG principles are more than aspirational goals—they become the standard for responsible, sustainable growth.

A just transition means that as we drive ESG forward, we must ensure that the economic, social, and environmental benefits are shared equitably across all segments of society. Achieving this requires more than adjusting corporate strategies; it demands a commitment to inclusive practices that prevent vulnerable communities and workers from bearing disproportionate burdens. Companies, governments, and investors must be proactive in aligning ESG goals with social equity, recognizing that sustainable development cannot occur at the expense of fair labor practices, community health, or economic opportunity.

First, governments and regulators must work toward establishing global ESG standards, building on the strides made by CSRD and ISSB. Unified reporting frameworks would provide companies with the clarity and predictability they need to implement ESG consistently across markets, reducing the compliance burdens associated with a fragmented landscape. Importantly, these standards should be designed to promote equitable outcomes, including considerations of fair labor, community engagement, and social justice. Clear, just standards will not only make ESG practices more coherent but also create a level playing field, allowing companies to compete on sustainability merits while prioritizing social inclusion and environmental stewardship.

 Investors also play a pivotal role in promoting a just transition. By moving beyond short-term financial metrics and supporting companies that are genuinely committed to both ESG and social equity, investors can drive the momentum needed to make ESG a cornerstone of business strategy. Sustainable investing is more than a trend; it is a fundamental shift in risk assessment that requires investors to prioritize long-term viability and inclusivity over immediate returns. Investors have the power to prioritize companies that address environmental and social dimensions holistically, influencing corporate behavior toward fair wages, ethical sourcing, and community empowerment. In doing so, they contribute to an economy where resilience and inclusivity go hand in hand.

 Individual behavioral change is equally crucial in overcoming ESG inertia and promoting equity. Consumers have the power to influence business practices by demanding products and services that align with sustainable and just values. Every choice—from the products we buy to the companies we support—sends a signal to the market. When individuals prioritize justice and sustainability in their decisions, they create incentives for companies to adopt genuine ESG practices and reduce “greenwashing” risks, pushing organizations toward a more inclusive approach to sustainable business.

 Finally, companies themselves must commit to embedding ESG principles deeply into their strategic vision with a holistic view that incorporates fairness and inclusivity. This means moving beyond symbolic gestures and adopting a mindset that treats sustainability as central to risk management and competitive advantage, while also ensuring that corporate decisions support fair labor practices, inclusive policies, and community welfare. Leaders must reimagine traditional models of success, aligning corporate goals with long-term resilience and social responsibility. This shift may require restructuring incentives, redefining performance metrics, and fostering a culture of transparency and accountability at every level of the organization.

 If we can approach ESG as a collaborative, inclusive, and non-negotiable framework for resilience, we open the door to significant, lasting change. The complexities and challenges of ESG will not disappear, but with a unified sense of purpose, shared responsibility, and commitment to justice, we can overcome the inertia that holds it back. Moving forward, ESG must be seen not as a political choice or a fleeting trend but as a pragmatic path toward a sustainable, equitable future.

 When governments align policies with global ESG standards, investors prioritize long-term resilience, companies embed social and environmental considerations deeply into strategy, and individuals make conscious, sustainable choices, we begin to transform the system itself. Each of these elements contributes to a system-level change that redefines how value is created, shared, and sustained in a global economy. ESG, then, becomes not just a tool for individual resilience but a blueprint for a resilient, just, and adaptable economic system.

The stakes are high, but by breaking through the noise of political discourse and embracing ESG as a shared framework for resilience and justice, we can begin to build a resilient system that works for everyone—an economy that is not only adaptive but equitable, forward-looking, and sustainable.

Prof. Ioannis Ioannou