ESG is not woke capitalism

By Rufaro Bingura | 5h ago

Companies that treat ESG as a tick-box exercise or a marketing strategy will likely find themselves marginalised.

In recent years, Environmental, Social, and Governance (ESG) criteria have become central to corporate strategy, investment frameworks, and policy discussions across the globe. While some critics have dismissed ESG as merely “woke capitalism”, this viewpoint fundamentally misrepresents the nature and purpose of ESG. Rather than being an ideological exercise, ESG represents a critical evolution in how companies must operate to remain resilient, competitive, and relevant in the decades to come.

The origins of ESG date back to the early 2000s, when global institutions began recognising the need for financial systems to account for non-financial risks and opportunities. The United Nations’ “Who Cares Wins” report in 2004 was a key milestone, calling on financial institutions to incorporate ESG considerations into their investment decisions.

Since then, ESG has evolved into a globally recognised framework that helps assess how companies manage their impact on the environment, society, and internal governance. This framework encompasses everything from climate risk and carbon emissions to workplace diversity, data protection, and ethical corporate governance. It reflects a growing consensus that a company’s long-term success is linked with how it interacts with the world around it.

Dismissing ESG as an ideological or “woke” concept fails to account for the tangible, real world risks it seeks to address. Take climate change, for example. This is not a political debate. It is a material threat that poses significant risks to supply chains, infrastructure, agriculture, and the global economy. Similarly, poor labour conditions, lack of diversity, or weak corporate governance can lead to reputational damage, operational disruptions, and legal liabilities. Companies that overlook these risks are not just being socially negligent. They are exposing themselves to avoidable and potentially catastrophic consequences. ESG provides a structured lens through which businesses can identify, assess, and mitigate such risks well before they evolve into major crises.

In parallel with the growing recognition of ESG’s value, regulatory frameworks are changing rapidly. Governments and oversight bodies worldwide are introducing mandatory ESG disclosure requirements. In the European Union, the Corporate Sustainability Reporting Directive now requires companies to publish detailed ESG-related data. The United States has taken similar steps, with the Securities and Exchange Commission proposing new rules for climate related disclosures. Even across developing markets, financial regulators and stock exchanges are adopting ESG disclosure guidelines. This global regulatory momentum confirms that ESG is no longer a voluntary or peripheral issue. It is fast becoming a baseline expectation, akin to financial reporting.

Investor behaviour highlights the growing importance of ESG, as major asset managers now integrate ESG factors into their strategies not out of activism, but as a sound financial decision. ESG-aligned companies are often more transparent, better managed, and better equipped to handle long term risks, traits that investors are increasingly prioritising.

Bloomberg Intelligence has projected that ESG assets may exceed US$50 trillion by 2025, comprising more than a third of all assets under management. This shift is not about ideology. It is about aligning capital with sustainable, long term value creation. Beyond investors and regulators, consumers and employees are playing a critical role in pushing ESG forward. Today’s consumers are far more informed and socially conscious, often making purchasing decisions based on a brand’s environmental impact, ethical practices, or social commitments.

Companies that fail to meet these expectations face the risk of consumer backlash, brand erosion, and lost market share. Similarly, ESG is now a decisive factor for talent acquisition and retention. Millennials and Gen Z, who comprise a significant share of the global workforce, are increasingly choosing to work for companies that demonstrate purpose, integrity, and social responsibility. For employers, a strong ESG profile is not just about reputation, it’s a strategic tool to attract top talent and reduce attrition.

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The idea that ESG compromises profitability is one of the most persistent myths surrounding the topic. On the contrary, a growing body of research suggests that strong ESG performance often correlates with strong financial performance. Studies by institutions such as McKinsey and Harvard Business School have shown that ESG focused companies tend to outperform their peers in terms of risk adjusted returns, resilience, and access to capital.

These companies are often better prepared for regulatory changes, more adept at navigating social and environmental disruptions, and more agile in responding to stakeholder expectations. In other words, ESG is not about sacrificing profit. It’s about ensuring long term sustainability and shareholder value.

That said, the criticism of superficial ESG efforts, commonly known as greenwashing, is valid. There are certainly companies that adopt ESG language without meaningful action, using it primarily as a public relations tool. This undermines the credibility of ESG and feeds scepticism about its authenticity. To address this, companies must move beyond vague commitments and adopt transparent, measurable, and accountable ESG strategies. This involves setting clear targets, using internationally recognised reporting frameworks, engaging with stakeholders honestly, and reporting progress, even when it's imperfect. Authenticity and accountability are essential if ESG is to be taken seriously as a business imperative. For companies in emerging markets, ESG can be an especially powerful lever not just for compliance but for growth and innovation. These regions face unique challenges such as limited infrastructure, energy access issues, and socio economic inequality. ESG aligned strategies can offer solutions that also unlock new markets and business opportunities. For example, investing in renewable energy, sustainable agriculture, or financial inclusion initiatives can create long term value while addressing critical development needs. Rather than viewing ESG as a burden imposed by Western markets, companies in the Global South can tailor ESG to reflect local contexts, priorities, and opportunities.

This is particularly relevant for Zimbabwean companies operating in a context of economic volatility, evolving regulation, and increasing climate vulnerability. Zimbabwe’s unique combination of natural resources, agricultural potential, and human capital creates both challenges and opportunities for sustainable business.

Companies across sectors, especially in mining, agriculture, manufacturing, and financial services should view ESG not as a compliance requirement but as a value driver. By investing in cleaner technologies, responsible sourcing, inclusive employment practices, and transparent governance structures, Zimbabwean firms can attract impact investment, build credibility with global partners, and improve long term viability. Moreover, aligning with ESG standards can open doors to regional and international markets, where sustainable practices are becoming prerequisites for trade and collaboration. Proactively embracing ESG today will position Zimbabwean businesses to lead tomorrow not only as economic actors but as contributors to national development and regional stability.

Looking ahead, ESG will only become more deeply embedded in how companies are evaluated and trusted by society. Stakeholders at every level, from regulators and investors to employees and consumers will continue to demand greater transparency, ethical behaviour, and long-term thinking. Companies that treat ESG as a tick-box exercise or a marketing strategy will likely find themselves marginalised.

Those that fully integrate ESG into their strategic vision, however, will be better equipped to manage complexity, adapt to change, and lead with purpose. In conclusion, ESG is far more than a passing trend or a political buzzword. It is a necessary evolution in how businesses operate in a world defined by climate risk, technological disruption, and rising social expectations. While criticisms about performative activism and greenwashing are valid and must be addressed, dismissing ESG altogether is both shortsighted and strategically unsound. The companies that will thrive in the coming decades are those that embrace ESG not as an obligation, but as an opportunity to innovate, to lead, and to build a more sustainable and inclusive future.

Bingura is a sustainability and ESG consultant. These weekly New Horizon articles, published in the Zimbabwe Independent, are coordinated by Lovemore Kadenge, an independent consultant, managing consultant of Zawale consultants (Pvt) Ltd, past president of the Zimbabwe Economics Society and past president of the Chartered Governance & Accountancy Institute in Zimbabwe (CGI Zim). — [email protected] or mobile: +263 772 382 852.