Is ESG Dead? Here’s What I’m Hearing From The Businesses Actually Doing The Work

Blog from Senior Sustainability Director Stephanie Wall

Two years ago, you couldn’t open a business publication without reading about ESG. Today, the conversation has shifted. You’re more likely to read about ESG fatigue, political backlash, or another fund quietly dropping the three letters from its website.

So, let me ask it plainly: is ESG dead?

I work with management teams in lower mid-market businesses every day, trying to make ESG practical and useful to the people actually running the business, not just reportable. And the more of those conversations I have had, the clearer something has become.

What businesses are rejecting is a version of ESG that never really worked for them in the first place.

The conversation changed. The fundamentals didn’t.

Political pushback, reporting overload, frameworks multiplying faster than anyone can use them. I understand why management teams, already stretched, already juggling a dozen competing priorities, looked at ESG and wondered whether it was actually moving the needle on anything that mattered to their business.

But here is what I keep seeing on the ground. The underlying pressures that ESG is designed to help businesses manage have not gone away. Customers are still asking hard questions about supply chains and climate commitments. Insurers are pricing risk differently. Regulators haven’t stepped back. And the talent market, particularly for the skilled people that growth businesses depend on, hasn’t stopped caring about where they work and why.

The businesses that stepped back from ESG didn’t make those pressures disappear. They just stopped having a framework for managing them.

This is not just a Palatine view. Sustainability leaders meeting at the World Business Council for Sustainable Development’s annual conference earlier this year arrived at a similar conclusion: in the wake of the backlash, sustainability has been reframed into an argument for resilience and investibility. As one delegate observed, today’s negative externalities are tomorrow’s risks, and the day after tomorrow’s portfolio losses. The businesses ignoring ESG pressures today are not making them disappear, they are just storing them up.

Gary Tipper, our Group Managing Partner, puts it plainly: “I’ve been in private equity for over 30 years. The businesses that manage these things well – their energy costs, their governance, their people – are just better businesses. It’s not complicated.”

A simpler frame

In the last year, we have changed how we talk about ESG with management teams. We have stopped leading with the acronym and started asking three questions instead. How  can this business run more efficiently? Where is it exposed to risk it hasn’t fully mapped? And where can the way it operates unlock new opportunities for growth?

Efficiency. Security. Growth.

Strip away the jargon and that is what ESG is actually about. Efficiency shows up in energy costs, waste, and how resources are used. Security covers governance, supply chain integrity, cyber risk, and the licence to operate. Growth is about whether the business can win customers, attract talent, enter new markets, and ultimately exit well.

We now use this as a practical diagnostic when we start working with a management team, identifying the two or three factors that could genuinely affect whether their business grows, stalls, or sells well, and building a plan around those. Not a generic checklist. Instead of talking about a materiality matrix nobody looks at again after year one, we use a focused set of questions that connect directly to the commercial plan.

The shift in language matters more than it sounds. Talking about scope three emissions in a board meeting for an SME is not useful. Talking about what their top three customers are about to start asking in procurement reviews, that gets attention.

Where the value shows up

The honest answer is that ESG value is not always easy to isolate as a single line item. But in my experience, it shows up consistently across three parts of a business’s life. Operating costs come down when energy, waste, and resource efficiency are taken seriously. Revenue becomes more defensible and in some cases actively grows, when a business can answer ESG questions in tenders and procurement processes credibly. We have portfolio companies that have won contracts specifically because they could demonstrate strong governance, supply chain transparency, or a credible climate plan. One of our portfolio companies recently set a Science Based Target in direct response to a requirement from their largest customer – without it, they risked losing the contract entirely. This is not an isolated case. As large enterprises respond to their own reporting obligations and net zero commitments, they are increasingly passing ESG requirements down their supply chains and for many SMEs, their biggest customer is now their most significant source of ESG pressure.

At exit this becomes even more visible. Buyers are running ESG due diligence as standard. A business that has left governance gaps, climate data, or people risks unaddressed ends up answering difficult questions under time pressure at exactly the wrong moment. The numbers bear this out. Research by the PRI, Bain and NYU Stern, drawing on more than 400 investors globally, found that firms effectively integrating sustainability into their strategies achieve up to a 6-7% uplift in exit multiples alongside a 6% increase in portfolio company revenue. That is not a marginal difference.

As Gary puts it: “Every buyer we speak to is asking these questions now. The businesses that can answer them confidently are in a completely different conversation to the ones that can’t.”

So is ESG dead?

Not even close. But the version that deserved to be challenged – abstract, compliance-driven, disconnected from how businesses actually operate – I’m happy for that version to be left behind.

What I see replacing it, in the management teams I work with who are getting this right, is something more grounded, more focused and more commercial. ESG is a way of asking whether a business is running efficiently, whether it is exposed in ways it hasn’t noticed yet, and whether it is positioned to grow. These questions are not new, but ESG, done well, just helps you answer them with clarity, and earlier.

That is not a values conversation. It is a business one. And after a decade of having used it with management teams across the UK lower mid-market, I think it is one of the most useful conversation we have.