On esg and sustainability
Goodby ESG, Hi Sustainability! (Vol.2, #4)
by Johnny Huang and Cary Krosinsky*
Goodby ESG, Hi Sustainability!
Following the U.S. presidential election, Donald Trump’s return to office has sent ripples through the global financial markets, particularly in the sustainable finance sector. Trump has openly criticized ESG (Environmental, Social, and Governance) investing, calling it a “waste of time” and claiming it undermines the competitiveness of American businesses. While his administration may signal a shift in federal support for ESG frameworks, recent conversations I’ve had with Wall Street insiders and executives from multinational corporations suggest that sustainability, as a broader concept, remains highly relevant. In fact, ESG as a term may lose prominence, giving way to a renewed focus on “sustainability” as the driving force in finance and business.
The Controversy Around ESG
ESG investing has seen explosive growth in recent years, attracting substantial capital as financial markets increasingly value sustainability metrics. However, this surge in popularity has also drawn significant criticism. Many financial leaders and corporate executives I spoke with pointed out that ESG frameworks have been frequently misused. Instances of “greenwashing” — where companies exaggerate their environmental efforts — and fraudulent practices in carbon credit markets have eroded trust in ESG reporting.
Even Republican policymakers, often critical of ESG mandates, acknowledge the importance of sustainable development in economic, environmental, and social dimensions. The issue lies not in the goals but in the rigidity and misuse of ESG frameworks. They argue that ESG, in its current form, often imposes impractical burdens on businesses, diverting attention from actionable and pragmatic approaches to sustainability.
Marketing Shift: From ESG to Sustainability
Given the growing skepticism, there is a noticeable pivot in how sustainability is being framed. From a marketing and communications perspective, “sustainability” is emerging as the preferred term. It carries broader, more flexible connotations, unshackled from the specific metrics and controversies tied to ESG.
Business leaders noted that genuine sustainability goals remain essential, regardless of political changes. For instance, the transition to cleaner energy is still a global priority, but under Trump’s administration, it may be reframed to emphasize energy independence and economic efficiency rather than strict emissions reductions. Similarly, infrastructure upgrades and manufacturing innovations can contribute to long-term societal benefits without being labeled as “green” initiatives under ESG. Even purely from a profit perspective, what business wouldn’t want its financial performance and market environment to be “more sustainable”?
Trump’s Impact on Sustainable Finance
Trump’s economic agenda, which prioritizes growth and deregulation, is likely to influence the future of sustainable finance. Federal ESG-related policies, such as mandatory non-financial disclosures, could be rolled back, while traditional energy and industrial sectors may regain support. However, this does not mean sustainability will disappear from the corporate agenda.
Executives I spoke with acknowledged that global capital markets remain committed to sustainability. Investors and consumers increasingly favor companies demonstrating long-term environmental and social responsibility. Moreover, pragmatic Republicans recognize that sustainability aligns with economic imperatives when framed around technological innovation and market-based solutions. This perspective could shape a uniquely American approach to sustainability, one that emphasizes economic value alongside environmental goals.
Global Momentum and Local Forces
Even if federal policies under Trump downplay ESG, international and local forces will continue to drive sustainable finance. The European Union has implemented robust green finance frameworks, such as its Taxonomy Regulation, while Asia has seen rapid growth in green bond markets. These global trends will maintain pressure on U.S. companies to adhere to sustainability principles to remain competitive.
Domestically, progressive states like California and New York, along with private sector initiatives, are likely to advance their own sustainability agendas. This dual pressure—from global markets and local actors—ensures that sustainability will remain a central theme for American businesses, even if ESG loses favor at the federal level.
Goodbye ESG, Hi Sustainability
The anticipated decline of ESG under Trump does not signify an abandonment of sustainable development goals. Instead, it reflects a necessary recalibration of how these goals are approached. The pivot to sustainability as a broader and more inclusive concept allows businesses to focus on achieving meaningful economic, environmental, and social outcomes without being constrained by the controversies surrounding ESG frameworks.
For investors, this shift represents an opportunity to prioritize transparency and long-term strategies over rigid metrics or overhyped marketing. For companies, it is a chance to redefine sustainability in a way that aligns with profitability, innovation, and resilience.
Conclusion
Trump's policy adjustments may accelerate this trend, but in the long run, the core drivers of sustainable finance remain market demand, technological innovation, and globalization. ESG may gradually fade, but “sustainability,” as a more flexible and inclusive concept, will continue to shape the future of finance and business practices.
“Goodbye ESG, Hi Sustainability!” is not just a farewell but a new beginning—a new era that balances economic, social, environmental and globalization needs. Just as Trump unintentionally fueled the rise of ESG investing during his first term, perhaps “Trump 2.0” will, in an unexpected way, propel the further development of sustainability.
* both authors are the co-founders of the Sustainable Finance Institute.