Beyond ESG From Compliance to Conscience in a Fragmented
World
What if the frameworks meant to protect our planet and people were actually failing the very communities they promise to serve? Behind glossy ESG reports lie untold stories of exclusion, greenwashing, and systemic blind spots. This is not just a critique—it’s a call to reimagine ESG as a living contract for justice, regeneration, and shared power.
1. Chapter Title: When ESG Meets Its Limits
1.1
Subchapter 1: The Reckoning of a Framework Once
Promised
Environmental, Social, and
Governance (ESG)—once heralded as the triumphant banner of corporate responsibility—now
faces a moment of reckoning. Originally envisioned as a mechanism to integrate
ethical principles into capitalism, ESG has drawn billions in investment and
achieved widespread boardroom adoption. However, this surge has not translated
into the transformation it promised. Climate disasters persist, inequality
continues to deepen, and corporate greenwashing has grown more sophisticated
(Chen et al., 2023).
The disillusionment is not
limited to policy analysts or ESG critics. It is rising from the very
communities ESG was designed to uplift. Despite its proliferation, ESG remains
insufficient in addressing real-world crises. Instead of evolving into a unifying
force, it often serves as a reputational shield for companies prioritizing
investor comfort over public accountability. This chapter invites a fundamental
reconsideration: if ESG is to matter in tomorrow's world, it must transcend
compliance and become principle-driven.
The article series "Beyond
ESG: From Compliance to Conscience in a Fragmented World" proposes a new
journey, one that merges the structural guidance of ESG maturity models with
the lived realities of those marginalized by the current system. These two
currents, when intertwined, expose the cracks in ESG's implementation and
illuminate a path toward deeper responsibility.
1.2
Subchapter 2: The Drift from Principles to
Performance Optics
ESG's origins lie in its response
to ethical failures—oil spills, labour abuse, environmental degradation, and
financial corruption. It once embodied the aspiration to create a better
alignment between capital and conscience (Benhard, 2024). Early adopters
embraced ESG not as a trend but as a transformative lever for corporate reform.
However, over time, the integrity
of ESG has faltered. As capital markets adopted its framework, ESG evolved into
a tool for value extraction. Disclosures and scorecards became more about brand
polish than genuine progress. ESG metrics are now often used for marketing
strategies rather than catalyzing systemic change. According to Воронцова et
al. (2023), many corporations report on ESG to appease stakeholders while
disregarding community consent or environmental realities.
This superficial adoption masks a
serious issue: a widening gap between ESG ratings and real-world impact.
Compliance checkboxes have overtaken ethical imperatives. What remains is a
framework at risk of losing its soul unless it is reclaimed, restructured, and
reimagined to deliver equity-centred, transparent, and accountable change.
1.3
Subchapter 3: Reclaiming ESG Through Inclusion
and Moral Urgency
The disconnect between ESG
advocates and affected communities grows more visible each day. Reports from
Indigenous territories facing displacement by "green" energy projects
and from factory workers subjected to poor conditions despite lofty ESG
claims—demonstrate the urgency of integrating local truths into global
frameworks. These communities are not rejecting ESG's ideals; they are
demanding its fulfilment.
Reforming ESG requires us to move
beyond rating systems and back into the reality of lived experience. We must
pair technical ESG structures with community voices and civic ethics. As Wang
and Xia (2024) argue, corporate accountability should shift toward measuring
tangible, justice-orientated outcomes rather than merely focusing on
disclosures. True transformation demands prioritizing transparency, fostering
long-term resilience, and restoring the moral compass of governance.
Beyond ESG: From Compliance to
Conscience in a Fragmented World is not a call to dismantle ES but to
redeem it. To do so, we must abandon the illusion that metrics alone suffice. A
reimagined ESG must champion participatory governance, environmental justice,
and stakeholder-led innovation. As the planet faces compounding crises, the
cost of ignoring this transformation grows heavier.
1.4
Conclusion: ESG Is Not Dead, But It Must Be
Reborn
The future of ESG does not lie in
its abandonment but in its evolution. If it remains a corporate branding tool,
ESG will fail the very people it claims to support. However, if grounded in
justice, accountability, and inclusion, ESG can still become a powerful
instrument for planetary and social stewardship. The stakes are too high for
inaction. The time to move from metrics to meaning is now.
2
Chapter 2: The ESG Illusion—Why Good Scores
Can Still Harm the Planet
2.1
Subchapter 1: High Scores, Low Integrity—The
Optics Trap of ESG
The illusion of Environmental,
Social, and Governance (ESG) credibility is unravelling before our eyes. Intended
initially to reward ethical conduct and responsible governance, ESG metrics
have, in many cases, morphed into a smokescreen for superficial compliance.
Polluting industries, including fossil fuel corporations, continue to secure
impressive ESG ratings not for their sustainable operations but for their skilful
disclosure, savvy public relations, and selective voluntary pledges (Yang &
Han, 2023).
Beneath polished sustainability
reports lie harsh truths that communities suffer from contaminated water,
polluted air, and irreversible ecological destruction. This contradiction
exposes a critical flaw: high scores often mask low integrity. When ESG
is reduced to optics rather than outcomes, it not only loses its moral compass
but also erodes public trust. ESG, at its core, should measure impact,
not intention.
ESG ratings frequently overlook
detrimental supply chain practices and marginalize vulnerable communities. This
misalignment has prompted an increasing number of calls to shift the ESG focus
away from investor assurance and toward meaningful, measurable outcomes that prioritize
environmental justice and social equity (Jin & Huang, 2023).
2.2
Subchapter 2: The Metrics Mirage—When Disclosure
Drowns Accountability
The current ESG scoring landscape
suffers from what scholars term the "metrics mirage", a
distortion where ratings become tools for perception management rather than
objective indicators of responsible behaviour. Due to inconsistent rating
methodologies, companies often receive vastly different ESG scores depending on
the rating agency, thus undermining the integrity of ESG assessments (Hughes et
al., 2021; Clark & Dixon, 2023).
This lack of standardization
enables companies to curate selective visibility. For instance, a global
fast-fashion brand might earn favourable ratings for its water-efficiency
campaigns while ignoring microplastic pollution and labour rights violations
that are deeply embedded in its supply chain. These inconsistencies enable
corporations to prioritize storytelling over substance, garnering accolades for
their brand identity while overlooking systemic harm (Dwibedi et al., 2024).
Significant violations such as
forced labour, environmental degradation, and Indigenous land dispossession often
remain invisible unless amplified by media or shareholder activism. ESG's
overreliance on financial materiality further narrows its lens,
evaluating social and environmental issues only if they endanger profit (Tilba,
2022). This inherently flawed logic treats justice as optional rather than
integral.
2.3
Subchapter 3: Beyond the Numbers – Towards
Double Materiality and Ethical Depth
To reclaim credibility, ESG
frameworks must adopt a double materiality approach, which measures both how
environmental and social issues affect financial performance and how a
corporation's actions impact the environment and society (Dwibedi et al.,
2024). This shift would reframe ESG from a branding device into a genuine
ethical evaluation tool.
Under this lens, a garment
manufacturer would no longer be assessed solely on emissions from its
headquarters but also on the toxic runoff from its offshore suppliers. ESG
would then extend beyond diversity statistics and green pledges, encompassing
worker rights, community protection, and historical redress for marginalized
populations (Tilba, 2022).
Such transformation demands not
only stronger metrics but also deeper engagement with stakeholders.
Incorporating empirical evidence, localized data, and community voices will
enrich ESG evaluations and foster greater accountability. As Hou et al. (2024)
and Horan et al. (2022) argue, comprehensive ESG assessments must reflect
systemic consequences and multi-perspective inputs—not just investor interests.
Moving forward, ESG frameworks
must move beyond superficial disclosures and adopt performance-based ethics
grounded in justice. Transparency, integrity, and accountability—not
branding—must become the pillars of ESG. Only then can ESG evolve from illusion
to impact.
2.4
Conclusion: From Illusion to Integrity—Reimagining ESG in Practice
The credibility crisis of ESG
demands urgent reform. If ESG scores continue to prioritize disclosures over
real-world accountability, they risk becoming complicit in sustaining harmful
systems under the guise of responsibility. True ESG must shift its emphasis
from scorekeeping to storytelling with substance and from investor
satisfaction to societal transformation.
Adopting a double materiality
approach, standardizing rating methodologies, and integrating marginalized
voices are not just ethical imperatives; they are structural necessities. ESG
can still fulfil its founding promise, but only if it sheds its illusion and
embraces integrity.
3
Chapter 3: Inclusion or Illusion? Who Gets to
Shape ESG Narratives
3.1
Subchapter 1: Narrative Capture and the Politics
of Visibility
The question of inclusion or
illusion lies at the heart of today's ESG discourse. While ESG frameworks
claim to uphold social responsibility, the individuals and communities most
impacted by corporate activities, such as Indigenous populations, informal
workers, and marginalized groups in the Global South, are often excluded from
shaping the very narratives that define ESG success. This exclusion renders ESG
a one-sided narrative, prioritizing the interests of investors and institutions
over those who bear the consequences of environmental and social degradation
(Schroeder & González, 2019).
The dominance of elite financial
centres in shaping ESG narratives has led to a form of narrative capture, where
curated stories displace authentic, lived experiences. Indigenous resistance to
land encroachment, women's leadership in informal economies, and the disruption
of coastal communities by "green" infrastructure remain hidden
beneath the surface of corporate reports. ESG progress is too often framed
through selective visibility, promoting compliance and partnership
announcements while masking labour exploitation or community displacement
(Zhang, 2025).
This narrative imbalance raises
questions not only about who benefits from ESG systems but also about whose
voices are legitimized. Without disrupting this pattern, ESG risks become an
exclusionary tool that reinforces the inequities it claims to resolve.
3.2
Subchapter 2: The Myth of Consent and the Limits
of Participation
One of the most pressing flaws in
current ESG practice is the misappropriation of consent. Community
engagement, though presented in sustainability reports, often reduces to
procedural box-ticking. Rather than securing genuine partnerships, corporations
pursue "Free, Prior, and Informed Consent" (FPIC) as a bureaucratic
hurdle. In many cases, consent is manufactured through selective consultations
or misinformation, as seen in extractive projects in the Amazon Basin (Zhang,
2025).
This form of manufactured
consent misrepresents ethical corporate behaviour and erodes trust.
Communities are portrayed as collaborators in ESG processes even as they
express discontent, lack decision-making power, or face intimidation. The gap
between reported "engagement" and lived experience is both broad and
damaging.
True inclusion demands more than
brief consultations. It requires redistribution of power. Without
ongoing dialogue and collaborative frameworks, ESG remains extractive and
performative. As Kim et al. (2019) emphasize, sustained inclusion must reflect
not only community presence but also their governance authority and knowledge
systems.
This deficiency also reveals the
inadequacy of a corporate-centric approach to ESG. The ethical legitimacy of
sustainability frameworks rests on the degree to which they centre and empower
those who live with the consequences rather than those who merely finance or
report on them.
3.3
Subchapter 3: Community-Led ESG – Toward Shared
Narratives and Equity
Amid the failures of tokenistic
engagement, community-led ESG initiatives offer compelling alternatives.
In Kenya, women-led solar cooperatives have revolutionized energy access while
retaining control over distribution and pricing. In Canada, Indigenous forest
management integrates traditional ecological knowledge with long-term
sustainability strategies, challenging dominant paradigms of external environmental,
social, and governance (ESG) evaluation (Schroeder & González, 2019).
These examples subvert the myth
that ESG must be dictated from above. Instead, they show that authentic
sustainability grows from the ground up. Local wisdom, contextual
decision-making, and collaborative governance form the foundation of
genuinely inclusive ESG models.
Redefining ESG thus requires a shift
from extractive consultation to co-creation. Zhang (2025) advocates for
reframing inclusion as a continuous process rather than a one-time check, emphasizing
that engagement must reflect the lived realities of the affected communities.
Trust-building, mutual accountability, and shared decision-making must become
structural features of ESG governance.
As Zhu and Zhang (2023) assert,
this reframing is not merely about diversity in representation. It is about
changing the architecture of power. By elevating Indigenous rights,
informal labour contributions, and women's leadership in climate action, ESG
can transform into a framework of justice, not just compliance. Such a
transformation calls for the relocalization of sustainability and the democratization
of impact assessment.
3.4
Conclusion: From Margins to Mandate—Reclaiming
the Narrative Power of ESG
If ESG is to move from illusion
to integrity, it must reclaim the narrative from institutional
gatekeepers and centre those who have been historically marginalized and
silenced. Effective ESG must not only invite communities to the table but also allow
them to co-author the agenda. This reimagined framework must reject superficial
indicators and instead prioritize ongoing participation, ethical
accountability, and shared stewardship.
As we navigate a fragmented
world, the legitimacy of ESG will be measured not by its rhetoric but by its
relationships. Real inclusion means building systems where the marginalized
are no longer afterthoughts but architects of the future.
4
Chapter 4: Broken Governance – Why the 'G' Is
the Weakest Link
4.1
Subchapter 1: Governance in Name, Not Practice
Governance The "G" in
ESG was intended to safeguard transparency, accountability, and integrity. However,
in practice, governance often proves to be the most compromised pillar
of ESG. Many ESG committees serve as symbolic artefacts, formed more to
satisfy compliance requirements than to drive meaningful reform. Audits are
often superficial and more ceremonial than corrective. Boards are dominated by
insiders, while those most affected – workers, local communities, and civil society
– are rarely consulted or represented in key decisions (Jin & Wu, 2024).
This hollow structure results in
a self-regulated environment, shielded mainly from external scrutiny.
Whistleblower protections remain weak, and shareholder votes on sustainability
are typically non-binding. These governance gaps reduce ESG to a performative
exercise, where ethics are proclaimed in policy but evaded in practice.
Without enforceable legal
standards, independent oversight, and public participation,
governance collapses into a public relations tool. As Li et al. (2022)
argue, governance must be grounded not only in formal codes but in mechanisms
that ensure accountability and justice. ESG cannot thrive in shadows. It must
be bound by law, empowered by participation, and accountable to the broader
public—not just shareholders.
4.2
Subchapter 2: Exclusion by Design – Who Governs
the Governance?
A deeper flaw in ESG governance
lies in its elite-centric architecture. Corporate boards tasked with
setting ESG direction are overwhelmingly composed of individuals from
executive, financial, or consultancy backgrounds. While such expertise adds
strategic value, it often lacks a lived connection to the environmental or
social challenges ESG claims to address. Rarely are Indigenous leaders,
grassroots activists, or union voices represented in governance structures
(Jin & Wu, 2024).
This homogeneity leads to governance
blind spots. Policies are shaped in high-rise boardrooms with minimal
insight into supply chain abuses, community displacement, or frontline labour
exploitation. Consequently, the decisions taken reflect investor priorities
while disregarding those most vulnerable to corporate harm.
Inclusion, when it occurs, is
often tokenistic. Committees might feature one woman or minority
representative more to signal progress than to reorient power. Governance then
becomes not a system of shared responsibility but a shield that sustains
exclusion under the guise of representation. This systemic disconnect erodes
trust and widens the accountability gap within ESG.
4.3
Subchapter 3: Rebuilding Governance—From
Formality to Justice
To restore the integrity of ESG, governance
must evolve from a performative protocol to a participatory power. This
shift begins by replacing voluntary, self-directed compliance with statutory
obligations. Governments must enforce environmental and human rights due
diligence laws and require companies to undergo third-party audits. The
European Union's Corporate Sustainability Reporting Directive (CSRD) and France's
Duty of Vigilance Law exemplify frameworks that mandate corporate
accountability across the value chain (Li et al., 2022).
However, legal oversight is
only part of the equation. Civil society, including NGOs, labour unions,
Indigenous communities, and youth organizations, must be actively integrated
into governance structures rather than being relegated to the role of observers
or critics. Their inclusion ensures that corporate decisions reflect diverse
perspectives and systemic equity, not merely market logic.
Community-led governance
initiatives offer a promising model for addressing these challenges. In many
contexts, local groups have devised monitoring mechanisms, stewardship
councils, and sustainability partnerships that are not only more legitimate but
also more effective. These efforts demonstrate that governance is not just
technical. It is moral and political.
As organizations recognize this
truth, they can reimagine governance as a dynamic system of shared
stewardship. Diverse voices must not only be heard—they must shape
decisions, set standards, and hold power. Transparent governance demands redistribution,
not just disclosure. It must replace secrecy with accountability, hierarchy
with dialogue, and tokenism with inclusion.
4.4
Conclusion: Governance as the Foundation of
Ethical ESG
If governance remains the weakest
link in ESG, then reform must begin there. The credibility of any
sustainability effort depends on its backbone, not its slogans, but its
structures. For ESG to live up to its transformative potential, governance
must evolve into a dynamic force that reflects justice, transparency, and
participatory power.
This transformation calls for
systemic change: rethinking who governs, how decisions are made, and what
values those decisions uphold. Only through genuine stakeholder engagement and
enforceable accountability can ESG move beyond illusion, becoming not a hollow
code but a living contract between business and society.
5
Chapter 5: Risk Is Not Enough—The Case for
Responsibility Over Reputation
5.1
Subchapter 1: The Risk Paradigm—ESG as Image
Insurance
In its current form, ESG often
operates within the confines of risk management logic. Corporations
adopt ESG principles not to catalyze systemic transformation but to buffer
themselves against investor backlash, reputational threats, and regulatory
scrutiny. ESG becomes a strategy for self-preservation rather than an
ethical compass. As Wang et al. (2023) observe, this short-term, defensive
posture reduces ESG to a branding mechanism rather than a tool for
long-term societal value.
This image-centric model prioritizes
quarterly earnings over planetary health and investor perception over community
dignity. The people most affected, such as farmers displaced by deforestation,
factory workers in exploitative conditions, or villagers facing water scarcity,
rarely factor into ESG scorecards. The logic becomes: How do we protect
ourselves from harm? Rather than How do we prevent harm to others?
This narrow framing has led to performative
compliance. Fossil fuel giants tout carbon offsets while expanding their
drilling operations, and fashion brands declare "ethical sourcing"
while their supply chains remain opaque and exploitative (Behringer &
Szegedi, 2016). These behaviours reveal a core weakness: ESG, built on
reputation management, cannot sustain ethical integrity or societal trust.
5.2
Subchapter 2: Reframing ESG – Responsibility as
Long-Term Value
The risk mindset not only
distorts ESG but also misses a key opportunity: responsibility is a
strategic asset, not a liability. Authentic ESG leadership begins when
companies move beyond short-term optics to long-term moral responsibility.
This requires reevaluating how success is measured, not just by returns alone
but also by regenerative impact, community trust, and ethical
resilience.
Research shows that companies
which embed responsibility into their operations often demonstrate greater
crisis resilience and stakeholder loyalty (Cheung & Lai, 2023; Wang et
al., 2023). Examples include investing in community-driven infrastructure,
practising regenerative agriculture, or prioritizing fair labour practices
beyond compliance thresholds. These approaches foster enduring relationships
that no brand campaign can substitute (Malini, 2021).
You (2025) argue that social
justice must be woven into corporate strategy, not appended as a
philanthropic afterthought. Governance should be about care and co-creation,
not control. Instead of asking, 'How are we seen?' companies must ask, 'Whom do
we serve?' This philosophical pivot transforms ESG into a relational model that
values people, the planet, and dignity over profit-centric metrics.
5.3
Subchapter 3: From Optics to Ethics—Redefining
Stakeholder Relationships
To evolve ESG beyond risk,
companies must shift from transactional reputation management to a
relational approach to responsibility. Traditional ESG approaches often
treat workers as cost inputs, Indigenous communities as legal obstacles, and
the environment as a regulatory burden. In contrast, a relationship-centred
ESG model views each stakeholder as a partner in coexistence and innovation
(Xu & Woo, 2022; Reynolds, 2024).
This reimagining demands that corporate
metrics evolve to account for human dignity, intergenerational
sustainability, and shared ownership of outcomes. It also requires profound
internal change: replacing control with trust, opacity with transparency, and
detachment with empathy. ESG becomes less about shareholder confidence and more
about ecosystem stewardship.
Moreover, corporations must
embrace constructive scrutiny, humility, and ongoing dialogue.
Authentic engagement is not about extracting community data for reports but co-developing
strategies that serve both business and society. This approach prepares
companies for a future where success is measured not only by scale but also by
the depth of impact and breadth of inclusion (Xu & Woo,
2022).
Responsibility, then, is not
simply ethical. It is essential for long-term survival. It bridges
corporate ambition with public legitimacy. When companies shift from managing
optics to embracing truth, ESG becomes a transformative framework
capable of navigating uncertainty, restoring trust, and regenerating value socially
and ecologically.
5.4
Conclusion: From Risk Shields to Moral Compasses
The future of ESG hinges on a
crucial pivot: from risk avoidance to responsibility-led governance.
The question is no longer whether ESG protects corporations from harm; it is
whether ESG can effectively mitigate harm. It must ask whether corporations
protect the people and ecosystems they depend upon.
To be meaningful, ESG must be
rooted in justice, care, and shared responsibility. This evolution requires
companies to discard cosmetic compliance and adopt ethical engagement.
Only then can ESG shift from a façade to a foundation empowering inclusive,
sustainable, and accountable futures.
6
Chapter 6: ESG Reimagined—A Manifesto for
Regenerative, Just, and Transparent Systems
6.1
Subchapter 1: From Corporate Checklists to Civic
Contracts
The time has come to reimagine
ESG not as a branding tool or checklist but as a civic manifesto. If environmental,
social, and governance frameworks are to survive and remain relevant amidst
compounding climate, equity, and accountability crises, they must be
fundamentally rebuilt. ESG must transition from the realm of voluntary
disclosures to a rights-based legal framework, one led not by consultants or investors
but by communities that bear the brunt of social injustice and environmental
collapse (Bhattacharya & Sachdev, 2024).
In this new vision, ESG becomes a
constitutional framework rather than a marketing script. Workers,
communities, and civil society actors must have legal standing to challenge ESG
violations, and employees must co-author ESG goals, not merely execute them.
Nature, too, must be viewed not as a resource to be exploited but as a
rights-bearing entity that requires protection and advocacy (Lagodiyenko,
2024). This reframing encourages corporations to treat ESG not as an external
pressure but as a public obligation rooted in democratic ethics.
True transformation demands that
ESG be anchored in enforceable law and powered by open, accessible
data. Transparency must invite scrutiny, not just celebration. With this
foundation, ESG 2.0 becomes a regenerative, just, and accountable system that
centres on people and the planet, not merely on portfolios.
6.2
Subchapter 2: Digital Transparency and
Participatory Governance
A cornerstone of this reimagined
ESG is open data transparency. Digital tools, such as blockchain, remote
sensing, and open registries, can democratize access to ESG metrics, enabling
real-time monitoring of emissions, labour violations, and supply chain
practices (Gao et al., 2024; Xie et al., 2024). However, technology alone is
not a solution. If implemented without consideration for equity, digital ESG
reporting may perpetuate existing inequalities, excluding those without access
to digital platforms or the necessary technical literacy (Li et al., 2024).
To counter this risk, companies
must embed community-centred digital infrastructures. Countries like
Chile have pioneered open-access environmental registries, enabling grassroots organizations
and citizens to engage directly in environmental monitoring and enforcement
(Bhattacharya & Sachdev, 2024). These models reflect a shift in corporate
responsibility from top-down disclosures to community co-governance.
Participatory governance is
equally essential. Case studies from Norway and Colombia demonstrate how
industries can foster trust by engaging with Indigenous communities, pension
funds, and local councils in meaningful dialogue and shared decision-making
(Sari, 2025). These examples answer a critical question for ESG: Whom do we
serve? In ESG 2.0, governance is not about protecting investor risk. It is
about co-creating just futures.
6.3
Subchapter 3: Regeneration as the New Standard
The evolution of ESG must also
include a shift from harm mitigation to active regeneration. Corporate
responsibility should not end at reducing emissions or publishing DEI reports.
Instead, companies must commit to restoring ecosystems, rebuilding
social fabric, and repairing historical injustices (Esparza et al.,
2022). This forward-looking ESG framework calls for investments in
biodiversity, Indigenous land stewardship, community wealth-building, and
circular economies.
Rather than treating
responsibility as an annual compliance review, corporations should adopt ongoing
regenerative commitments that reflect holistic values. As Markova-Karpuzova
et al. (2024) argue, ESG success should no longer be measured solely in carbon
or compliance but in the quality of lives improved, ecosystems restored, and
systems made more just.
This is not merely aspirational.
It is a new operating ethos for corporations. ESG must evolve from a
tool of performance optics to a living practice rooted in equity
and shared humanity. Companies that adopt this regenerative lens build
resilience, earn long-term trust, and shape markets not just by value but by
values.
6.4
Conclusion: Toward ESG as a Right, Not a Rating
The path forward for ESG demands structural
reinvention, not cosmetic adjustment. If ESG is to be more than a façade,
it must transform into a civic, regenerative, and justice-driven framework.
This vision begins with law, is built through participation, and is sustained
by transparency. It must serve not only shareholders but also communities,
ecosystems, and future generations.
True ESG is not a rating. It is a
right. It does not merely reflect values; it protects them. Through
rights-based accountability, participatory governance, and regenerative
practice, ESG can become a global compass, one that guides institutions,
rebuilds trust, and fosters equity in the face of rising fragmentation.
7
Chapter 7: Final Thought – Toward a Living ESG
That Serves All
7.1
Subchapter 1: From Critique to Compass – A Call
Forward, Not a Takedown
This series is not a takedown. It
is a call forward. The critiques and case studies throughout these chapters
offer more than disillusionment; they unveil a roadmap for institutional
renewal. It is a call to regulators to legislate with conscience, to investors
to seek more than short-term returns, and to communities to claim a seat at the
decision-making table. ESG, flawed though it may be, still holds vast
transformative potential.
For ESG to serve the future, it must move beyond metrics and toward meaning, from symbolic compliance to structural change. Its legitimacy depends not on how well it reports but on how deeply it reforms—with and for the very people most affected by corporate actions.
The transition to ESG 2.0 rests on a more profound philosophy: that people-centred justice and environmental stewardship are not conflicting goals but interdependent imperatives. This requires systemic changes in corporate governance, stakeholder engagement, and policy reform guided by equity, ethics, and a long-term vision (Chopra et al., 2024).
7.2
Subchapter 2: Rethinking Responsibility – From
Performative Compliance to Ethical Commitment
Today's ESG often mirrors a
fragmented reality, projecting ambition while distorting the truth. It reduces
justice to a checkbox, equity to a slogan, and sustainability to a marketing
pitch. Despite the initial promise, ESG has become entangled in metrics that
measure what is easy rather than what is essential.
7.3
Subchapter 3: Democratizing Governance—Inclusion Beyond Financial Corridors
If ESG is to fulfil its
potential, it must be governed democratically, not technocratically. ESG 2.0
must extend stakeholder participation beyond elite financial corridors into
inclusive, deliberative spaces where local communities, youth movements, labour
unions, and Indigenous councils hold real power (Clementino & Perkins,
2020).
Case studies from Latin America and Scandinavia reveal the effectiveness of participatory governance in ESG implementation. Such frameworks ensure that sustainability is not imposed from above but co-created from below, aligning economic growth with ecological and social resilience (Sari, 2025).
7.4
Subchapter 4: Regenerative Imperatives –
Healing, Not Just Minimizing Harm
The ESG of tomorrow must go
beyond harm reduction to embrace regenerative economics. Companies must shift
from extractive models to practices that restore biodiversity, renew
communities, and redress historic injustices (Giannopoulos et al., 2022). Regeneration
is not a trend. It is an ethical standard.
This transition necessitates a recalibration of ESG metrics to encompass contributions to community wealth-building, intergenerational justice, and cultural revitalization. Blockchain for transparency, circular design for sustainability, and community-led evaluation frameworks for equity are just a few of the tools ESG 2.0 can employ (He, 2024).
By replacing passive compliance with proactive commitment, ESG becomes not an obligation but a movement anchored in justice and propelled by empathy. The stories of communities, not just shareholders, must shape the sustainability scorecards.
7.5
Subchapter 5: The Movement Ahead – Designing
Systems That Serve
The time has come to transform
ESG into a living framework of ethical action. This means embedding mutual
respect, humility, and co-responsibility into corporate practice. It means recognizing
that a sustainable future must be co-authored by the communities most impacted.
This journey is not about perfect metrics but meaningful transformation. It asks companies to redefine success not by market capitalization alone but by the trust they build, the harms they heal, and the futures they co-create.
As Wang (2024) and Koblianska et al. (2024) suggest, the next era of ESG must align financial logic with moral logic. This is not idealism. It is an essential evolution of capitalism in a world increasingly shaped by ecological limits and social fractures.
In conclusion, our pursuit of ESG 2.0 must centre on inclusive design, shared governance, and regenerative practices. The world does not need another reporting framework. It needs a justice framework, an ESG that not only counts carbon but also counts on people.
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