The real risk of ESG pullback? Losing your customers

In our charged political, business and consumer landscape, the term “ESG” remains a hot-button issue. Many brands have scaled back their ESG commitments, delayed their sustainability goals and softened their public-facing initiatives.

In the public sector, the SEC has abandoned its proposed rule requiring companies to disclose their greenhouse gas emissions and other climate risks, and the EPA plans to eliminate its long-standing Energy Star program.

The unsupportive atmosphere and critical funding cuts have made it difficult for companies to hold strong on sustainability-related commitments. For example, PepsiCo recently pushed its net-zero emissions target from 2040 to 2050, citing a changed regulatory landscape. BlackRock, once a vocal proponent of ESG investing, has distanced itself and withdrawn from the Net Zero Asset Managers initiative.

These moves reflect a broader trend: 80 percent of companies are adjusting their ESG commitments to avoid political backlash. And while these decisions may be driven by short-term risk mitigation, the mission behind ESG to build a more sustainable, inclusive and resilient future is far from gone in the eyes of consumers.

It’s important to acknowledge this shift without dwelling on it. The real story lies in the opportunity it creates for brands to lead with purpose and connect more deeply with their audiences. This moment presents an open door for leaders – and those who step in now will not only fill the vacuum but redefine how value is created, measured and grown.

Consumers aren’t buying ESG; they’re buying better

Consumers are not evaluating brands solely by ESG alignment. Instead, they’re making decisions based on the impacts they experience. They’re asking: Does this brand understand me? Improve my life? Align with what I care about?

After surveying over 7,000 consumers, PA Consulting found that 86 percent of consumers expect brands to play a crucial role in driving positive social change.

In fact, they’re willing to put their wallets behind brands that they feel are shaping a better future. Younger US consumers are willing to spend at least a 26 percent premium on sustainable features of entertainment experiences, aligning with PA’s finding that 77 percent of consumers lose respect for brands that put profit before the planet. These aren’t soft preferences; they’re signals of a shifting marketplace.

What this should tell brands is that sustainability drives demand when it supports a broader offer: better experiences, smarter design and deeper alignment with consumers’ values. On its own, sustainability is not always a primary motivator. But when integrated into the brand experience, it can become a powerful multiplier.

For brands feeling pressure to stay quiet on issues of sustainability and social progress, research suggests that they are actually alienating their customer base. Instead, they should invest in doubling down on holistic sustainability offerings that center around the consumer.

What leading brands are doing differently

Consumers want products and brands to reflect their values, and transparency that they can trust. They’re not looking for ESG reports, they’re looking for brands that show up in ways that matter. And they’re not quiet about their expectations. Their wallets follow.

To take advantage of consumers’ desire for a better future, brands do not need to launch a flashy sustainability campaign or simply talk about ESG. Instead, they should focus on deliberately designing for sustainability by embedding it into operations, product development, and customer experience. Sustainability is part of that equation, but it doesn’t stand alone. Rather, brands need to incorporate sustainability commitments into customer-facing business practices, processes, and operations. That’s what consumers are responding to: not brands that talk ESG, but brands that design for the full, human experience.

Take The Honest Company, for example. It maintains a “NO List” of over 3,500 ingredients it refuses to use in its products, uses post-consumer recycled materials and enforces a strict supplier code of conduct. This isn’t just a gesture; it’s a standard. Parents want the best for their children, and The Honest Company successfully delivers the best of both worlds: sustainable offerings that benefit both the consumer and the world at large.

Meanwhile, Rivian is winning not only because it’s electric – but because it combines high-performance design, ethical manufacturing, a digital-first experience and a human-centered communications approach. These aren’t just ESG metrics – they’re part of a broader, aspirational value proposition.

The best way forward lies in consumer-centered sustainability

For leaders questioning how to best respond to this moment without alienating investors or overextending resources, there are several actionable strategies you can take:

• Focus on integrating sustainability into everyday touchpoints. Whether it’s recycled packaging, carbon-neutral shipping or ethical sourcing, embedding ESG into consumer-facing elements will allow them to see and feel the impact.
• Use data to identify which issues matter most to your audience. Aligning your offerings with consumer values will make them feel as though you’ve tailored ESG to their individual needs.
• Avoid jargon and communicate with clarity. Consumers reward honesty and consistency over perfection. Leading brands are transparent about their goals, progress and challenges.
• Weave sustainability into the fabric of your business strategy. It's not a compliance exercise, but a driver of innovation.

Shape; don’t stall

Whether or not the term “ESG” survives, the principles behind it are here to stay. Consumers are demanding more from the brands they support, and they’re willing to reward those that lead with integrity and purpose. By tapping into consumers’ specific desires, brands can identify which aspects of sustainability are most important to their customers.

Brands don’t need to choose between profitability and sustainability. The next move isn’t to start over; it’s to step forward. Reframe what ESG means inside your business – not as reporting, but as value creation – by folding it into corporate activity to build rapport, trust and long-term relationships with customers.

Shaping a better future isn’t a side mission; it’s the smartest move a brand can make.

This was first published in Sustainable Brands.