Sustainability in the Spotlight: Why ESG Still Matters for Boards

The term ESG might be under pressure in some circles, but in boardrooms around the world, sustainability is still firmly on the agenda. Whether or not it is called ESG, the focus on long-term value, reputation, and responsible business practice remains strong.

According to Diligent Institute and Spencer Stuart’s latest report, Sustainability in the Spotlight, 96% of board directors globally expect their company’s focus on ESG to either continue or increase over the next five years. This trend holds despite political backlash, particularly in the US. The most notable result is not companies pulling back; rather, it is "greenhushing", a growing trend where companies continue their ESG work while avoiding drawing attention to it (Diligent Institute & Spencer Stuart, 2024).

Boards are doubling down on sustainability, even if they are being more cautious with the language. It is a reminder that ESG strategy is not disappearing. Instead, it is becoming more deliberate and embedded.

The Evolving ESG Agenda

Today’s sustainability priorities are wide-ranging. Studies have found that Diversity, Equity and Inclusion (DEI) and Climate Change remain top of the boardroom agenda. ESG, however, is no longer just about policies and positioning. There has been a clear shift in how directors view its role. It has moved from being merely a lever for growth to serving as a lens for risk management.

Not long ago, 40% of directors saw ESG mostly as an opportunity. More recently, that number dropped to 26%. Meanwhile, the number of directors who view ESG primarily as a risk mitigation tool has risen to 33%, which indicates that boards are becoming more pragmatic about embedding sustainability into governance (Diligent Institute & Spencer Stuart, 2024).

The World Economic Forum’s Global Risks Report, echoes this and continues to rank climate risk, geopolitical instability, and resource stress among the top threats facing businesses and societies (World Economic Forum, 2024).

Why Boards Continue to Prioritise Sustainability

So why are boards staying the course? Because ESG continues to deliver value in areas directors care about: reputation, talent, and trust.

In the data:

• 65% of directors said ESG enhances their company’s reputation

• 60% pointed to talent attraction and retention

• 52% said it helps meet customer expectations

Only 26% cited new revenue as a benefit, which highlights that ESG is a long-term value driver rather than a short-term win (Diligent Institute & Spencer Stuart, 2024).

At the same time, regulatory pressure is increasing. From the EU’s Corporate Sustainability Reporting Directive (CSRD) to the ISSB’s global standards, the direction of travel is clear,  and expectations are growing around rigour, transparency, and accountability.

A recent PwC survey of US corporate directors noted that although some boards are moving away from using the ESG label, most are still embedding sustainability into business strategy under different terms. Signalling a shift from branding to substance.

ESG Is Becoming Embedded in Governance

More boards are formalising their approach to ESG:

• 94% of companies now track ESG performance

• One in three boards have made governance changes to strengthen oversight (Diligent Institute & Spencer Stuart, 2024)

These changes include updating board charters, forming sustainability committees, and devoting more time to ESG in board meetings.

Director education is also on the rise. Thirty percent of boards have introduced ESG training, which reflects the recognition that sustainability literacy is now essential for good governance.

What This Means for the Future of Leadership

Sustainability is not going away. Although the way leaders approach it is evolving, the fundamentals remain: long-term value, stakeholder trust, and risk resilience.

This shift requires leaders across the organisation to become more intentional in how sustainability is governed and operationalised. Executive teams and boards must move beyond high-level oversight and ensure ESG considerations are embedded into strategic planning, risk management, and investment decisions. This involves asking sharper questions, seeking better data, and building accountability across teams.

Leadership teams will also need to reflect on their own capacity and readiness to engage with sustainability issues. Whether through professional development, recruitment, or changes to leadership structures, sustainability capability must be treated as core to good leadership.

At the same time, regulatory, investor, and societal expectations are rising. Leadership is being measured not just by what is promised but by what is delivered, and how transparently that delivery is communicated. Organisations that do not adapt risk being left behind.

In this context, the leaders who will shape the future are those who treat sustainability not as a communications exercise but as a core lever of business strategy, risk management, and performance.

To lead effectively, organisations need more than good intentions. They need the right frameworks, clear alignment, strong leadership, and practical tools to deliver.

References

Diligent Institute & Spencer Stuart. (2024). Sustainability in the Spotlight: Global ESG Insights for Boards.

World Economic Forum. (2024). Global Risks Report 2024. Retrieved from https://www.weforum.org/reports/global-risks-report-2024/

PwC. (2023). 2023 Annual Corporate Directors Survey. Retrieved from https://www.pwc.com/us/en/services/governance-insights-center/assets/pwc-2023-annual-corporate-directors-survey.pdf