Future of ESG: It’s time to move beyond empty promises to real impact

Improving lives, helping neighbors, and preserving our planet are universally positive goals. Public companies have the resources to make a meaningful contribution, and many have embraced this responsibility through Environmental, Social, and Governance (ESG) programs. In addition to elevating reputation, effective ESG programs drive business value including top-line growth, cost reduction and employee retention. So why the backlash against ESG programs? I’d argue some of it can be attributed to the overuse of buzzwords we’ve created to describe these efforts.  

Jargon has always run counter to clear, straightforward communications, but when discussing politically charged issues this empty language can backfire. The most important thing leaders can do today is stop merely talking about ESG, and instead, focus on actions that communicate commitment and impact. 

The Corruption of ESG Language 

In an increasingly polarized society, too many people no longer see the substance behind these impact-driving programs and only hear empty rhetoric. That’s on us. Terms like "sustainable development," "carbon footprint," "inclusive growth," “triple bottom line,” and "social impact" have been casually tossed around, and through our overreliance, they’ve lost their meaning. 

Public trust in institutions is already at historic lows and when our words become hollow they widen that trust gap. Overuse of buzzwords while showing little progress or investment has led to cynicism about responsible business — too often seen as "all talk, no action."  

Ammunition for critics

Skeptics have adopted the term “virtue signaling” to describe performative efforts companies make to appear responsible or socially conscious with little to show for it. Unfortunately, there are plenty of examples to support their cynicism. 

The fashion industry often touts its dedication to sustainable practices yet continues to grapple with issues like labor exploitation and waste generation. We hear growing claims from the food and beverage industry about products being “all-natural” or “organic” while still containing high levels of sugar or preservatives. Most FORTUNE 500 companies claim to champion diversity but struggle with representation within their executive ranks. In healthcare we proclaim a commitment to health equity while women and other groups remain significantly underrepresented in clinical trials.  

The pressure for brands to appear publicly responsible has even led to scandal. In 2015 it was discovered a global automotive company engineered the software in many of their diesel engines to deceive emissions tests and artificially improve results, after years of promoting clean diesel as an alternative to hybrid and electric vehicles. 

The Shift to Action and Transparency

To rebuild trust, leaders must shift their focus. This means setting clear, achievable goals, advocating for investment, implementing well-planned strategies, and transparently reporting progress. Concrete actions will always speak louder than even the most eloquent words, and can in time, win back skeptics.

This also requires us to be honest about failures. The public has shown to be forgiving when companies fall short of their commitments IF they believe the company is as open about their failures as they are about their progress. 

Moving from Impressions to Impact

The days of relying on ESG to create buzz and convey importance have passed. People feel deceived by impressive claims and now demand more than rhetoric. 

This is why at my company, Medtronic, we’ve moved away from ESG language in favor of Impact. You can see this shift in our latest Impact report, published just last month. Inside you’ll learn how we’re concentrating our unique expertise in healthcare technology to address some of the world’s most critical health challenges including access and equity. You’ll see stories, statistics and progress toward our goals. 

As a business leader, I’m interested in getting results that will help us win in an increasingly competitive global marketplace, not playing name games. If you’re a leader, I’m urging you to lead by example and show that your dedication to sustainability and diversity goes beyond words. I might even suggest if your strategy needs buzzwords to sound important, it’s probably not a winning strategy in the first place. 

ESG isn’t just a trend; it’s an essential component of a responsible and forward-thinking business strategy. By ditching the buzzwords and focusing on meaningful action and real impact, companies can pave the way for a more sustainable, equitable, and successful future.