The rise and fall of ESG and building back belief
Something has shifted in how large companies talk about responsibility, and it has happened at such a pace that the pattern is now impossible to miss.
Diageo has pulled responsible drinking and diversity measures out of executive pay. Apple has quietly dropped the ESG modifier from its bonus scheme. Salesforce has removed ESG measures from its own bonus plan entirely, and Starbucks has stripped the explicit DEI reference from its long-term incentive plan, though a broader "talent" metric tied to workforce representation still sits inside its annual bonus, and one major shareholder is now pushing the company to remove that too. BT has scrapped diversity targets from its manager bonus scheme, Haleon has removed gender diversity targets from executive pay, and Burberry has pushed its net-zero deadline back a full decade. Seven very different companies, seven very different sectors, and the same underlying decision taken largely independently within the space of about eighteen months. In the round, it reads like it’s ‘all change’ on the ESG bus.
Three drivers, not one
The obvious question is why, and the honest answer is that no single explanation covers all seven. It is worth resisting the latest political story, because the actual drivers are more varied, and more interesting, than a simple culture war narrative.
The first driver is shareholder pressure, and it reaches well beyond these seven. BP's retreat from its renewables targets, for example, happened under direct pressure from Elliott Investment Management, which built a near five per cent stake and pushed for tighter financial discipline and less climate spend. Elliott is no stranger to the drinks sector either, having built a stake in Pernod Ricard, Diageo's closest rival, back in 2018 with the same playbook: sharper focus, tighter capital discipline, less patience for weak returns.
Activist investors of this kind rarely object to responsibility in principle, only to anything competing with shareholder return for management's attention, and ESG-linked pay is simply because it is so visible in a remuneration report.
The second driver is legal exposure, originating mainly in the US but reaching well beyond it. Since the Supreme Court's 2023 ruling against race-conscious university admissions, conservative legal groups have brought a steady stream of challenges against corporate diversity programmes, and a number of companies have concluded that formal diversity targets are now a greater legal liability than a reputational asset. This is a new risk calculus rather than a values shift and treating it as ideology misses what is actually driving the legal advice boards are receiving.
The third driver gets the least attention and is probably the most important: ESG measurement is genuinely difficult to do well. Researchers at MIT Sloan compared ratings from six major agencies and found the correlation between them averaged around 0.54 to 0.61, versus 0.92 between Moody's and Standard & Poor's on the same companies. Two well-resourced raters can reach close to opposite conclusions about how responsible the same company is. A remuneration committee building a formula on that kind of noise would always produce a number nobody trusted, just as in Diageo's own figures, defensible only once the committee overrode it with judgement.
Not the opposite of responsibility
None of this means these companies have suddenly come to their senses and rediscovered that they exist to make money, however tempting that narrative is. A company protecting its licence to operate, its ability to keep selling, hiring, and honouring its social contract with the markets it depends on, is still practising a form of responsibility. It has just stopped pretending that responsibility can be reduced to a formula in a pay policy. Revenue growth and a functioning licence to operate are closer to a precondition for responsibility than its opposite, since an unhealthy company has far less capacity to fund anything else.
It would be unfair, and inaccurate, to dismiss the case for ESG entirely. Investors representing something in the region of $139.6 trillion in assets under management have signed up to the UN's Principles for Responsible Investment. There is a serious, well-evidenced argument that companies which manage their environmental and social impact well tend to manage everything else well too, and that climate risk is financial risk under a different name.
Genuine advocates for ESG are not asking companies to subordinate profit to virtue; many make the same argument as this piece, that responsibility done well is good business. Where they are right is that caring about these issues was never the problem. Where the model broke down is that it let companies prove that care with a formula, and a formula can be satisfied on paper long before anything changes in practice.
The backlash that never came
Yet none of the seven companies I’ve mentioned above has faced anything like a serious backlash: coverage, yes, but no boycott, no shareholder revolt, no dent in the share price traceable to the ESG decision itself. That isn’t proof nobody cares about responsible drinking, diversity or climate targets.
Indeed, the experience of Target, the major American retail corporation, shows the opposite is also possible: when it scaled back its DEI commitments in 2025, it faced a sustained consumer boycott involving more than 200,000 people, ten weeks of declining foot traffic, and on a single day, the 28th February, Target’s stock got wiped out to the tune of $12.4 billion.
I believe the difference lies in visibility: Target's commitments were consumer-facing and tied to identity politics in a way a drinks company's incentive plan or a tech company's bonus modifier is not. The lesson here is that backlash tracks how publicly a commitment was made and how visibly it is withdrawn, not whether the issue matters, or what we call the gap between a stated commitment and what people actually believe.
A belief gap, not a governance footnote
That is where the communications challenge sits, and it’s bigger one than most of these companies appear to have grasped. A quiet technical change to a remuneration formula rarely stays quiet once a business journalist gets hold of it, and the narrative that fills the silence is rarely the governance explanation the company would have chosen. Every one of these seven businesses is betting that the public, investors and its own workforce will read "we removed the formula" as distinct from "we stopped caring." That is a belief gap, not a governance footnote, and it is not a safe one to leave open. Belief has to be earned, repeatedly and specifically, through what the company actually shows rather than what it once measured.
Is the pendulum swinging back, as Gary Nagle, the chief executive of Glencore said in 2024? Perhaps, but the pendulum implies a system that will swing right back again once the political weather changes, and that undersells what is happening here. A better description is a market correcting for a decade of enthusiasm that outran its own measurement tools.
The honest version of the story is not that responsibility stopped mattering to seven very different companies at almost the same moment. It is that formulaic, poorly measured ESG targets turned out to be a fragile way of proving it, and boards are now working out, unevenly, what a more credible version of the same commitment looks like.
Adam Aljewicz is head of media at SPQR and a former reporter and editor at the Wall Street Journal, and editor at the UN’s Principles for Responsible Investment (PRI)
