Why ESG and DEI still matter for long‑term business leadership
It may be politically contested, but for forward-thinking business leaders, ESG and DEI are still underutilised strategic tools for resilience, growth, and long-term value.
A few years ago, organisations and governments alike stressed the importance of Environmental, Social, and Governance (ESG). BlackRock CEO Larry Fink stated in his 2022 letter that “stakeholder capitalism is … capitalism”, and therefore, ESG should be a priority for business leaders.
Since then, ESG and Diversity, Equity, and Inclusion (DEI) have become weaponised terms, used by detractors as catch-all labels as growth inhibitors or evidence of a ‘woke’ society. Fink even rolled back from his previous position, with neither ESG and climate change referenced at all in his two most recent letters.
It might appear in a VUCA world – defined by volatility, uncertainty, complexity, and ambiguity – that ESG agendas have been deprioritised by business leaders, influenced by various factors including geopolitical uncertainty and a more hostile US administration under President Trump.
But should leaders still commit to sustainability and social responsibility agendas?
In short, yes. As someone who works at the intersection of commercial growth, marketing transformation, and inclusive strategy – as former Managing Partner at Red Star (dentsu X), overseeing £85m+ in annual billings across clients such as HEINEKEN UK, Polestar, and United Airlines – I’ve seen first-hand how these priorities are evolving inside large global organisations.
ESG and DEI, once described as virtue signalling concepts, have now become key operational buffers which offer businesses a lever to survive in a highly volatile global market.
It is no longer about what looks good for investors in an annual report or for consumers on social channels. Now sustainable and socially responsible business strategies are about the long-term health of the organisation. In this article, I list three reasons why leaders should continue to support such agendas.
Long-term positioning is crucial in volatile markets
The second Trump administration has made it clear it does not intend to follow an ESG agenda. Early in its term, US Government DEI programmes were abolished, while businesses in the private sector were encouraged to defund or scale back similar initiatives. The administration announced its intention to (again) pull the USA out of the Paris Climate Accord, formally withdrawing in January 2026.
This might signal the death knell for ESG initiatives. However, one should always consider democratic election cycles generally last 4 to 8 years, whereas businesses adopt long-term positions by focusing decades ahead. Businesses will have a critical role to play in the ESG arena long after Trump leaves office.
Empirical research, such as a 2023 study found in the Journal of Environmental Management, has proven time and again that businesses which focus on the triple bottom line are proven to deliver growth across a range of metrics. For leaders to pivot back on sustainable principles would be detrimental to the growth of the organisation.
Businesses must also still comply to a number of directives or risk breaking regulatory controls. The EU’s Corporate Sustainability Reporting Directive (CSRD) or California’s Climate Accountability Package cannot be ignored. Although the policy of the current US administration is hostile to sustainable behaviours, the ‘Brussels Effect’ of the CSRD ensures any business operating in the global economy must maintain these standards.
This ‘double materiality’ means leaders must remain committed to sustainability targets not only for the moral imperative but also for the financial impact it will have on the organisation.
Businesses must prioritise sustainability to protect supply chains and maintain operational resilience
Geopolitical instability has brought into stark focus the impact conflict has on energy supply chains. The impacts of the war in Iran on global oil prices and disruption to gas supplies due to the Russian invasion of Ukraine have highlighted the urgency to reduce fossil fuel dependency.
These conflicts have also led to the shortages of key materials used in multiple industries. This highlights the fragility of supply chains in a VUCA world, particularly for businesses who operate with ‘just-in-time’ production models.
Before, sustainable business practices might have aligned with the purpose (another weaponised word) of the organisation. But the impact on supply chains now means such practices are now centred on risk mitigation and resource efficiency. Leaders should be considering how sustainability can be a route to operational resilience, rather than a ‘nice to have’ added to the annual report.
Maersk, for instance, launched its Supply Chain Resilience Model to help its customers continue to operate when faced with myriad impacts. A notable initiative included its move towards green methanol-powered vessels, in part to mitigate the volatility in global energy markets. Green shipping was once seen as a regulatory burden, but in a VUCA world this long-term investment should be perceived as an operational insurance policy.
The pivot from inclusion to organisational excellence has never been more clear
DEI has become a contentious area for businesses seeking to be socially responsible. Underrepresented or marginalised groups have highlighted how businesses, once highly vocal in their demonstrations of corporate allyship, have now gone silent. This led to the cancellation or scaling back of community events which rely heavily on funding from corporations.
The Human Rights Campaign Foundation revealed there was a 65% drop in the number of Fortune 500 companies choosing to publicly document their DEI policies, from 377 organisations in 2025 to 131 in 2026.
While this makes for a sobering read, the business case for diverse and inclusive workforces remains as strong as ever. McKinsey evidenced that companies in the top quartile for gender-diverse teams or ethnic representation have a 39% higher likelihood of outperforming competitors.
Diversity is also critical for success, as discussed in a 2024 Forbes article. Heterogeneous teams are more likely to seek new routes to solve business challenges, be more creative and innovative, and have higher retention rates. Homogenous teams are prone to groupthink and to seek ‘easier’ solutions. These remain true regardless of the political climate.
Businesses have not completely sunset their DEI programmes. Organisations such as Walmart and Starbucks publicly announced a scaling back of their initiatives, but the reality is many of the changes have been modest.
Talent programmes have been rebadged under areas such as ‘inclusive culture’ or ‘talent optimisation’. This subtle reframing means it can continue to support diverse talent while deflecting external pressure from political activists. Leaders should understand the external risks associated with DEI, but also recognise there is still a strong business case – or even necessity – to cultivate a strong internal culture built on inclusive and diverse principles.
How can leaders lead when the rules keep changing?
ESG and DEI haven’t disappeared. They’ve become more complex, more contested, and in many ways, more critical to how organisations operate.
What has changed is the context. Leaders are no longer implementing these agendas in stable, supportive environments. They are navigating political pushback, regulatory fragmentation, and competing commercial pressures all at once.
The challenge, then, is not simply believing in sustainability or inclusion. It is making decisions when those priorities come into tension with short-term performance, shifting stakeholder expectations, or geopolitical realities. This is where leadership capability becomes the differentiator.
My experience in industry showed me how quickly these tensions emerge in practice – across markets, clients, and commercial decisions. But it’s also important to develop the frameworks to step back, critically analyse these dynamics, and make more informed strategic choices.
In particular, exploring how global business is shaped by sustainability, regulation, and stakeholder-driven models provided a more structured way to navigate what often feels like noise.
Because ultimately, ESG is no longer a question of whether to act. It is a question of how to lead when the answers are no longer clear-cut.
For those operating in today’s environment, that ability to manage complexity, balance competing priorities, and think long-term is not optional. It is essential.
