Has ESG Lost its Sparkle?

I find it concerning to see the value of Environmental, Social and Governance (ESG) being brought into question through misinformation about its validity, claims that much of it is "woke" orientated, and the fact that some corporations have chosen to step back from environmental and social commitments. To a point where some are claiming this as proof ESG has “run its course.”

However, much depends on perspective.

Despite the above narrative, many larger businesses and corporations are committed to ESG and related sustainability reporting frameworks. Not only because they are legally bound to do so, but because they believe in doing the right thing. So, although some may think ESG is on the wane there are still many businesses committed to a more responsible business model and its importance will likely gain momentum in the future.

So, considering the above it is easy to see why it may create confusion, as it does not reflect the daily challenges of managing a small or medium-sized enterprise. Consequently, many businesses perceive ESG as an obligation rather than an opportunity that benefits their operations.

But when we take out the noise of corporate box-ticking and start to think from first principles we can start to understand that ESG is a practical framework for building and running a responsible, resilient business.

So, what are the first principles?

Simply put, they are defined as:

• Environmental
  This refers to how efficiently resources are used, how waste is handled, how well costs are managed, and how effectively strategies are put in place to deal with environmental and climate-related challenges.
• Social
  Refers to the manner in which employees are managed, customers are served, relationships with suppliers are maintained, and trust is established within the surrounding communities in which the business operates.
• Governance
  This is about clarity, transparency, and integrity in decision-making. It means having robust structures and processes that ensure accountability, manage risk, and build trust. Both within your team and with those you serve. Strong governance empowers organisations to act ethically, comply with regulations, and adapt confidently to change.

Why this matters to SMEs

ESG strengthens three things every SME depends on:

• Credibility – Trust grows when values and actions align
• Resilience – Understanding risk enables adaptation
• Stakeholder Value – Long‑term success depends on shared benefit

To us, success depends on purpose and stakeholder value, with leaders who prioritise these outperforming those seeking quick wins or recognition.

So, embedding ESG into strategic planning rather than treating it as a bolt‑on makes perfect sense. Especially when it’s aligned with continuous improvement seen in quality, risk, and ISO-based management systems.

So, what should SMEs do?

Start with honesty.

• Review your current environmental impact, social practices, and governance arrangements.
• Identify what is genuinely relevant to your organisation, not what a framework suggests should matter.
• Use this insight to evaluate risks and opportunities that inform meaningful, proportionate sustainable development plans.
• Prioritise action at a pace that suits your business, your people, and your resources.

When SMEs apply this approach with discipline, it improves the whole business. Not just its ESG credentials.

In Summary

When stripped of trends, pressure, and politics, ESG resolves into something familiar:

"A way of thinking that helps businesses build credibility, resilience, and long‑term value."

For SMEs, the opportunity is clear:

• Use frameworks as guides, not rulebooks
• Anchor decisions in purpose and stakeholder value
• Build strength through continual improvement
• Communicate openly and act consistently

In a world where some organisations retreat, SMEs can quietly lead by doing what they’ve always done best. Running good businesses, well.

Call to Action

If ESG feels confusing, burdensome, or disconnected from day‑to‑day reality, it may be time to reframe the conversation.

Start with first principles.

Focus on what matters.

And build a business that works. Not just today, but for the long term.

Get in touch to explore how Coaction Solutions can help turn ESG from noise into genuine strategic value