The Problem with ESG: A Flawed Framework?

John has spent over 50 years working with companies, NGOs, and policymakers to advance sustainability. While ESG was once seen as a step forward, he now believes it is holding businesses back from the real systemic change required.

“ESG was useful, but it was never the solution,” John explained.

“It was a risk-management tool, designed to help companies avoid reputational damage rather than drive fundamental transformation.”

The issue, he argues, is that ESG has been structured around individual corporate responsibility rather than systemic change. “Companies are told to ‘do less harm’ but aren’t incentivised to change the underlying economic system,” he said.

This is why many businesses publicly commit to ambitious sustainability goals but then quietly backtrack when market conditions shift. “Look at the recent reversals by companies like Mercedes-Benz, Ford, and even Unilever,” John pointed out.

“They made big climate commitments, but when profitability came under pressure, those promises were put on hold.”

The underlying market dynamics—what John calls the “magnetic fields” shaping business behaviour—have not changed.

“As long as markets penalise long-term sustainability and reward short-term gains, companies will continue to make decisions based on financial survival rather than long-term impact.”

Systemic Change Over Individual Action

John’s critique of ESG is not about abandoning corporate responsibility but about shifting the focus from individual companies to systemic market transformation.

He likens businesses to iron filings on a piece of paper, moving only in response to the magnetic forces beneath them.

“If we want real progress, we need to change the market dynamics that shape corporate behaviour—not just pressure individual companies to act responsibly.”

One example of this in action is the RE100 initiative, where major corporations like Google and Facebook have committed to 100% renewable electricity. “Over 400 companies have signed on, and their collective energy demand is greater than that of France,” John noted.

“That’s how you reshape a market—not by convincing one company at a time, but by changing the economics of an entire sector.”

This kind of market-wide shift is what John believes must replace ESG. “It’s not about making businesses slightly less bad,” he said.

“It’s about creating new economic forces that make sustainability the most profitable path forward.”

What Comes After ESG? Competitive Sustainability

If ESG is no longer fit for purpose, what should replace it? John believes the answer lies in competitive sustainability—a world where businesses compete not on how well they comply with ESG regulations, but on how effectively they drive systemic change.

“We need to build markets where sustainability is not just a moral choice but a financial advantage,” he explained.

“Imagine a world where the companies investing in climate solutions are the ones that outperform their competitors, rather than being penalised for short-term costs.”

One example of this is Sweden’s HYBRIT initiative, which is working to decarbonise steel production using hydrogen instead of coal. “The steel industry is one of the hardest sectors to decarbonise,” John said. “But if this technology scales, it could completely disrupt the market for carbon-intensive steel.”

Rather than relying on ESG reporting frameworks, John argues for market-shaping initiatives that drive industry-wide adoption of sustainable solutions. “We need to think in terms of economic tipping points,” he said.

“Once green alternatives become cheaper and more reliable than their fossil-based counterparts, the transition will accelerate.”

The Role of Governments: Rethinking Regulation

While corporate action is essential, John is clear that governments must play a bigger role in shaping sustainable markets. However, he believes the current regulatory approach is outdated.

“Most government policies around sustainability are designed to nudge companies towards better behaviour,” he said.

“But nudging isn’t enough when we need fundamental economic transformation.”

Instead, John advocates for bold interventions that rewire market incentives.

“We need policies that actively shape new industries—things like carbon pricing, large-scale subsidies for clean tech, and public-private partnerships that accelerate systemic innovation.”

Governments have done this before. John pointed to the post-WWII economic boom as an example. “After the war, countries didn’t just ‘nudge’ economies back to health—they built new economic systems from the ground up,” he said. “We need that same level of ambition for sustainability.”

Hope in an Era of Uncertainty

Despite his criticisms of ESG and the current state of corporate sustainability, John remains optimistic about the future.

“I’ve spent my career watching sustainability move from the fringes to the mainstream,” he reflected.

“We’re now at a tipping point where the next 10-15 years will see more change—good, bad, and ugly—than the last 50 combined.”

His advice for business leaders? Stop thinking in silos and start thinking systemically. “If you’re only focused on making your company greener, you’re missing the bigger picture,” he said.

“The real opportunity is in reshaping markets so that sustainability becomes the path of least resistance.”

John’s ultimate goal is to see business and sustainability fully aligned, not as opposing forces. “We need a world where the most sustainable companies are also the most successful,” he concluded. “That’s when we’ll know we’ve truly transformed the system.”

Conclusion: Moving Beyond ESG to a New Era of Sustainability

The era of ESG as a corporate box-ticking exercise is ending. What comes next is a deeper shift—one that moves beyond individual company efforts and focuses on changing the underlying market forces that drive corporate behaviour.

John’s vision is one of competitive sustainability, where businesses succeed not despite sustainability, but because of it. Achieving this will require restructuring incentives, creating new market forces, and moving away from incremental change towards systemic transformation.

“The future of business isn’t about who has the best ESG score,” John said.

“It’s about who is best positioned to shape the next economy.”

Breaking the Chicken-and-Egg Cycle in Climate Tech

Victoria underscored a key dilemma for climate tech startups: the high costs of R&D and scaling. “Climate tech is capital-intensive,” she explained.

“You need significant investment upfront for hardware, industrial machinery, and lab development. But without customers, you can’t scale to bring costs down. It’s a chicken-and-egg situation.”

This cycle slows the adoption of critical solutions like advanced batteries, green hydrogen, and other innovations needed to achieve global sustainability goals. While private funding plays a role, Victoria emphasised the importance of public intervention. “Governments must step in to bridge the gap, providing funding and policy incentives to move these technologies from the lab to the market,” she said.

Accelerating Connections with Data-Driven Scouting

Victoria’s work at Qurator, a B2B climate tech scouting platform, addresses this gap head-on. Qurator uses machine learning to identify and connect businesses with the most relevant climate tech solutions in just days. “Traditional tech landscape studies are expensive and slow, often taking months,” Victoria noted.

“We deliver actionable insights in 10 days, making it easier for organisations to find and adopt the right technologies.”

By streamlining the matchmaking process, Qurator removes friction, enabling companies to act quickly. “It’s about making sustainability solutions practical and accessible,” Victoria said.

Lessons from Climate Tech Startups

Victoria highlighted how many startups face barriers beyond funding. Scaling from lab prototypes to commercial products is fraught with challenges, including the need to demonstrate real-world reliability and integrate into existing systems. “Even when a solution works perfectly in a lab, it can fail in commercial settings,” she explained.

“That’s why building trust and offering clear value propositions are essential.”

She also pointed out the role of storytelling in driving adoption. “You can’t just talk about the technology itself. You need to show how it benefits people and businesses in tangible ways—whether that’s reducing costs, improving resilience, or enhancing reputation.”

Shifting Priorities Through Personal Experience

Victoria’s move into climate tech was inspired by personal experiences during the pandemic, including food shortages and extreme weather. “I started gardening out of necessity and quickly realised how interconnected our ecosystems are,” she shared.

“When rivers dried up and flash floods hit places like Germany, it became clear to me that climate change isn’t a future problem—it’s a now problem.”

Her lived experiences reinforced the importance of taking immediate, practical steps toward sustainability. “We don’t need to wait for perfect solutions. Small, meaningful actions can make a big difference,” she said.

A Collaborative Path Forward

Victoria envisions a future where collaboration between governments, businesses, and startups drives faster adoption of climate tech. “The public sector must fund early-stage innovation, while the private sector scales it,” she explained.

“It’s a shared responsibility.”

Her work at Qurator reflects this collaborative ethos. By connecting organisations with ready-to-implement solutions, she’s helping to remove the barriers that have long slowed the adoption of climate technologies. “Our mission is to ensure that the tools to combat climate change are not just available but used at scale,” she said.

Conclusion: From Ideas to Impact

Victoria Chen-Englert’s insights highlight the importance of focusing on implementation as much as innovation in climate tech. By addressing the barriers to adoption and fostering collaboration, her work bridges the gap between what’s possible in the lab and what’s needed in the real world. As she aptly put it, “The solutions are already here. Now, we just need to use them.”