Data from capital markets, consumer surveys, reputation research and C-suite strategies converge on a single point: well-run environmental, social and governance (ESG) programmes create tangible financial, operational and reputational value—even as political scepticism intensifies and regulations are redrawn.

In the US, anti-ESG rhetoric has become a campaign staple; some high-profile companies have rolled back diversity targets, and several US states are experimenting with laws that penalise investors for pricing climate risk. Across the Atlantic, Brussels seeks to boost competitiveness by slashing bureaucracy through initiatives such as the Competitiveness Compass and the 2025 “Omnibus” package. Guided by the 2024 Draghi report and growing frustration with administrative overload, the EU aims to streamline rules while safeguarding the core objectives of the Green Deal.

The result is more noise, not a weaker case. Boards and communicators must craft ESG narratives rooted in solid evidence and attuned to political realities—messages that can withstand U.S. sceptics, satisfy European regulators, reassure global investors and earn the trust of stakeholders who demand demonstrable value.

This article is written by Bart Ladru ([email protected]) and Iman Zalinyan ([email protected]). Bart and Iman are part of RSM Netherlands Business Consulting Services, specifically focusing on Sustainability and Strategy. 

The Enduring Business Case for ESG – Four Lenses

  • Finance & Capital Markets

A recent study covering 4,319 listed companies reveals a persistent 110‑basis‑point gap in weighted‑average cost of capital between the top and bottom ESG quintiles (6.8% versus 7.9%) after sector and geography are considered. Lower funding costs show up in ratings as well: a major credit rating agency reports that negative ESG linked downgrades outnumber positive actions seven to one, the widest gap since 2020, underscoring the balance sheet penalty attached to governance or climate weaknesses.

Deal flow tells the same story. A cross-border study of more than 600 M&A professionals reported that 71% now treat ESG analysis as more important than 18 months ago, and 55% would pay a 1–10% premium for a target with mature ESG management. Respondents attributed the uplift to faster regulatory clearance, stronger brand trust and reduced litigation risk.

  • Customer Demand & Market Share 

Consumer behaviour mirrors these financing advantages. In early 2024 a 20,000‑person global survey found shoppers ready to pay an average premium of 9.7% for sustainably produced goods—virtually unchanged from the previous year despite inflationary pressures. A Harvard Business Review analysis argues that sustainability is on the verge of becoming a baseline requirement rather than a differentiator, warning laggards of accelerated share shift once that threshold is crossed. 

  • Reputation, Talent & Trust

Respondents in a 2022 survey rank “social responsibility”, including DEI—on par with product or service quality as the single most important driver of corporate reputation, underscoring how stakeholder expectations on sustainability, equity and inclusion now sit at the very heart of brand trust.

Inside the organisation, ESG is becoming a talent magnet. A workforce survey of nearly 23 000 Gen Z and millennial professionals across 44 countries finds that 20% have already changed jobs for environmental reasons, while 70% consider green credentials a factor of consideration when jobhunting. Reflecting the same shift on the employer side, a 2022 survey reveals that 21% of companies intend to prioritise ESG competencies in their next round of hiring—edging out traditional crisis management and disaster recovery skills.

C-suite commitments underline the trend. A 27 country survey of 2100 executives shows 85% increasing sustainability investment year-on-year—up ten points from 2023—while almost half have already embedded climate goals into their core business models instead of ringfencing them as pilots.

Reputation research stitches these findings together, showing that 77% of citizens want scientists and experts to lead business innovation; when companies launch new technology without transparent guardrails, societal trust collapses by more than 20 points. By publishing auditable ESG metrics, firms enhance their ability to attract and retain talent while also building public trust that can shield them from controversy.

  • Risk & Resilience

Robust ESG engagement also enhances operational resilience. Peer‑reviewed econometric studies show that such programmes dampen earnings volatility by both reducing the frequency of disruptive events and speeding recovery. Yet only 18% of organisations currently give ESG a meaningful seat at the resilience table. Supply chain research highlights what they are missing: firms with mature sustainability practices are better at mapping suppliers end to end, diversifying sourcing and embedding climate risk analytics—capabilities vital as droughts, floods and geopolitical shocks disrupt logistics.

Insurers are beginning to factor in this advantage. Early trials of 'ESG-indexed' property damage coverage offer slight premium discounts to firms that demonstrate climate-resilient facilities and strong human rights practices, suggesting a future where ESG efforts are built into how risk is priced and transferred.

Reputation as the Integrator of ESG Value

Corporate reputation is the connective tissue that translates ESG’s financial, customer, and resilience benefits into strategic advantage. In an economy where trust functions as a form of capital—for investors, regulators, and consumers—poor ESG performance erodes that trust, leading to higher capital costs, strained supply chains, and challenges in attracting or retaining talent. Strong ESG performance, by contrast, builds trust and reinforces the company’s credibility.

Firms that embed ESG into governance and communicate transparently signal reliability, preparedness for the future, and alignment with societal values—qualities that stand out in competitive markets. A credible ESG strategy is no longer a nice-to-have; it is a direct, manageable way to enhance reputation and convert it into long-term competitive strength.

Counter Currents in the United States

Yet even as these financial, reputational and resilience benefits become clearer, a political backlash in the United States is generating powerful counter currents. Political rhetoric has tightened the spotlight on ESG. A recent policy briefing describes how anti-ESG themes have become campaign staples in Washington, with proposals to strip sustainability language from federal finance frameworks and scale back support for renewable energy projects.

Boards are already feeling the chill. After a conservative social media campaign, a US-national retailer operating more than 2,000 outlets abolished its diversity office, retracted carbon targets and withdrew from LGBTQ sponsorships. Such reversals expose companies to a dual hazard: accusations of “politicised capitalism” from sceptics on one flank and charges of backsliding from investors, employees and consumers on the other.

Europe’s Recalibration, Not Retreat

Meanwhile, Brussels is simplifying, not shelving, its sustainability agenda. The 2024 Competitiveness Compass pledges a 25 % cut in reporting burdens while framing the “Clean Industrial Deal” as a growth engine. The Omnibus simplification package —driven by calls to restore EU competitiveness and to quell administrative overload— adopted in February 2025 removes about 80 % of firms from the scope of the Corporate Sustainability Reporting Directive (CSRD) and promises €1.6 billion in one-off savings alongside €4.4 billion in annual relief. Even so, disclosure remains the price of admission to the single market for the largest companies, but the rulebook is being trimmed to protect competitiveness.

The EU’s Omnibus package may ease the administrative weight of sustainability reporting, but it doesn’t dilute the economic rationale for ESG—nor remove the strategic imperative to act. Lower financing costs, improved deal terms, and stronger customer loyalty still accrue to firms with credible ESG delivery. What the Omnibus does offer is breathing room: a chance for companies to tailor the strength of their ESG commitment to both external exposure—such as regulatory reach, capital market expectations, and sector risk—and internal maturity, including governance capacity and data readiness. For some, this creates space to double down with integrated targets and verified metrics; for others, it signals a phased, fit-for-purpose approach anchored in materiality. The recalibration, then, is less a retreat than a repositioning—one that invites smarter alignment of ESG ambition with business reality.

Forward Thinking

Credible ESG commitments increasingly shape financing conditions, customer loyalty and operational resilience—while also fortifying corporate reputation. For European businesses, the recent regulatory recalibrations offer an opportunity—not to scale back—but to refine and better align ESG ambitions with business realities. Firms that set clear targets, ensure data integrity and communicate progress transparently can reinforce stakeholder confidence while navigating a shifting policy landscape.

The strategic case remains strong: ESG performance continues to influence financing conditions, customer loyalty, and operational resilience. Political pushback may feature in some jurisdictions, but in the European context, the broader trajectory still favours firms that integrate sustainability into core decision-making. In this environment, ESG is not merely a compliance exercise. It is a foundation for trust, a marker of good governance, and a lever for long-term competitiveness.

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