The ESG Consensus Is Crumbling
The first months of this year were difficult. By the time Trump was re-elected, what had already been looming became undeniable: after a long hype phase where it felt like everything from dog food to nail polish came with a sustainability label, sustainability was politically dead.
Companies are dropping their CO₂ targets like hot potatoes and rolling up their rainbow flags– hastily, almost apologetically.
Against this background I struggled to prepare for upcoming lectures and speaking engagements on sustainability.
The story I had told for years – a story of ever-expanding corporate responsibility, from shareholder to stakeholder capitalism, and far beyond company boundaries – no longer held up.
In recent years, the case seemed straightforward: anyone who wanted to succeed economically – and anyone who wanted to be seen as respectable – took sustainability seriously. Preferably under the investor-friendly acronym ESG. Across all three dimensions.
ESG was considered a non-negotiable, all-in package. Criticism was quickly dismissed as regressive, ignorant, or even denialist. Reflection felt unnecessary – the topic was, normatively speaking, ‘settled.’
From Progress to Fragmentation
This certainty reminds me of Francis Fukuyama’s famous ‘end of history’ thesis, post–Cold War. He too declared the system competition to be over—won by a combination of democracy and market economy. And for a while, that’s how we treated ESG: as a package, a duty, a sign of progress.
But just as Fukuyama’s thesis has long since been debunked, reality has also overtaken the ESG narrative. China is investing heavily in renewables but remains defiant on human rights.
A clear example that shows: sustainability is not an indivisible package, but a framework that different actors interpret selectively – or entirely differently.
In the EU, ESG increasingly turned into a reporting routine and compliance machine – ideally automated, preferably by AI. There was little room left for genuine value discussions.
The backlash has now reached the political level. With the so-called Omnibus package, the EU is planning a noticeable softening of its sustainability requirements—such as relaxed reporting obligations under the CSRD. To me, this isn’t necessarily a setback, but rather an opportunity to bring substance and depth back to the topic—beyond box-ticking exercises and automated disclosure.
In stark contrast, sustainability in the U.S. has become an ideological battleground – caught in the crossfire of the culture war. The political right hijacked the ‘all-in’ logic: if decarbonization and diversity are framed together, they felt entitled to throw everything into one pot and call it ‘woke’ – and in doing so, they hit a nerve.
What Remains When Tailwinds Fade
In the U.S., sustainability is now being challenged in court: for instance, when net-zero alliances are accused of violating antitrust law, or when even considering ESG factors in pension fund strategies is framed as a breach of fiduciary duty.
This backlash cuts so deep because it exposes how much of the so-called consensus was based on wishful thinking instead of real engagement. And how much we – myself included, reluctantly – had come to treat sustainability as a given.
These shifts couldn’t be ignored in the classroom. So I tackled them head-on and added a new chapter to my teaching: The Sustainability Backlash.
Gemeinsam mit den Teilnehmenden diTogether with participants, we explored questions such as:
• How did sustainability become a cultural war issue?
• What does the withdrawal from net-zero alliances really mean?
• What role do politics and the judiciary play?
• Did those who reflexively dismissed every sustainability effort as greenwashing end up hurting their own cause?
One particularly striking example was Unilever. For years, their goals ranged from 100% sustainable sourcing and eliminating plastic to boosting consumer self-esteem (yes, ‘Self-Esteem’ was once an official objective). Today, their motto is: realistic sustainability – less ambitious, but doable.
Notably, this shift didn’t start with the political backlash. It became clear earlier that some goals were overly ambitious, investors were applying pressure, and the intended impact wasn’t materializing as hoped. That too is part of the backlash story: not just politics, but companies themselves misjudged the terrain. das gehört zur Geschichte des Backlashs: Nicht nur die Politik, auch Unternehmen selbst haben sich verschätzt.
Not Everything Belongs on the Label
I wish we hadn’t reached this point. But now that we have, there’s a chance in it too: to stop treating sustainability as an all-or-nothing bundle, and instead see it as a strategic task that calls for differentiated answers. Not everything needs to be on the label, but some things do belong in the business model which is built to last – even when the political winds shift.
Picture from roya ann miller on Unsplash