Companies should double down on ESG principles, not retreat

Source: National Observer

Written By: Kari Kylo

Tangible, transparent actions like prioritizing recycled materials are how today’s leading companies demonstrate ESG in motion. Photo: readymade/Pexels

Environmental, Social, and Governance (ESG) principles were designed to help businesses align profit with purpose, offering a framework for companies to operate responsibly while addressing climate, social, and ethical risks. ESG has also served as a playbook to help businesses measure their long-term impact beyond short-term profits. Even as the debate intensifies, the core driver of ESG remains unchanged: that companies operate responsibly, transparently and sustainably.

But lately, corporate commitments to these values have been about as solid as wet papier-mâché.

Walking away from ESG, as four of Canada’s largest banks appeared to be signalling when they withdrew from the UN-backed Net-Zero Banking Alliance in January — mirroring similar exits by six of the biggest U.S. banks — is a short-sighted response. Abandoning these principles might ease short-term political pressure, but it’s a losing strategy for both long-term business resilience and the health of the planet.

So what might businesses do instead?

The solution isn’t to mask. It isn’t to draw the blinds, turn off the lights and hope folks walk by your home without notice. Empty promises and vague language are quickly flagged as whitewashing. Consumers are too crafty for that, and once your business has been painted with that brush, it’s very hard to earn back that trust. This goes for greenwashing as well, where companies often utilize vague language to attract environmentally aware customers and investors by creating a false impression of sustainability.

In fact, according to a 2025 survey from the Responsible Investment Association, greenwashing concerns are rising, with over half of respondents (54 per cent) acknowledging that it deters them from responsible investing compared to the previously reported 46 per cent.

Instead, it’s about telling your story through more transparent, verifiable, step-by-step action. 

Mountain Equipment Company is a business doing a great job. Its open disclosure of environmental impact, goals, and successes is clear, simple, and direct to the point: Here’s what’s happening, and here’s what we’re doing about it. 

Likewise, Nature’s Path’s brand and business strategy are tethered to ESG and show how it can not only be compatible with profitability, but a driver of it.

Microsoft’s commitment to becoming carbon negative by 2030 is backed by publicly available progress reports — a simple but powerful way to replace corporate jargon with measurable results. 

What’s important to note here as well is that they are telling us this story. We know it because they operate that way, believe in it and share it with us. 

Companies that embrace ESG as an operating philosophy in tandem with a marketing strategy are far better equipped to navigate public scrutiny and regulatory shifts. The Canada Pension Plan Investment Board, which manages over $500 billion in assets, updated its Policy on Sustainable Investing in 2025 to reinforce this fact, stating: “Our approach to sustainable investing is based on our belief that organizations that effectively anticipate and manage material sustainability-related factors and other long-term strategic issues are more likely to endure, and create greater value over the long term, than those that do not.”

As the ESG debate continues, companies that will earn and keep public trust are those whose actions withstand the spotlight, not flee from it.