It’s a few years ago, and the corporate world is buzzing with a new buzzword—ESG, or Environmental, Social, Governance. Boardrooms light up with talk of sustainability, and companies eagerly adopt voluntary frameworks like TCFD, CDP, and GRI. The focus? Mostly climate issues—carbon emissions, renewable energy targets, and the occasional green pledge to impress investors. It felt like a golden era of goodwill, where ESG was a badge of honor, a way to signal responsibility without too much pressure. Reporting was flexible, enforcement was light, and the whole thing had a DIY vibe—companies could pick and choose what to highlight, often using it as an internal strategy tool to shape their image behind closed doors. Overlapping frameworks added some confusion, sure, but there was a sense of possibility, a shared dream of a greener, fairer future.

Fast forward to today, and the landscape looks dramatically different. ESG isn’t just a trendy add-on anymore—it’s a non-negotiable pillar of business survival. The voluntary spirit has given way to mandatory disclosures under frameworks like the EU’s CSRD and the Transition Plan Taskforce (TPT). Climate risks still matter, but now nature-related risks—think biodiversity loss and water scarcity—share the spotlight. Transition plans and tangible sustainability outcomes are the new benchmarks, enforced with legal teeth and jurisdiction-specific requirements. Global standards have streamlined the once-chaotic patchwork of guidelines, and reporting doesn’t just sit on a shelf—it directly influences investment decisions and regulatory oversight. This isn’t the ESG of yesterday; it’s a robust, evolving system that demands accountability at every turn.

So, what sparked this seismic shift? Let’s dive into the journey from “ESG Then” to “ESG Now,” exploring the forces that drove the change, the challenges companies face, and how leaders can thrive in this new reality.

The Golden Age of ESG Then: A Voluntary Experiment

Back in the day—let’s call it the early 2010s to mid-2010s—ESG was a voluntary playground. Companies could opt into frameworks like the Task Force on Climate-related Financial Disclosures (TCFD) or the Carbon Disclosure Project (CDP) without much pressure. The Global Reporting Initiative (GRI) offered a broad canvas, encouraging firms to paint their sustainability picture. The focus was narrow, zeroing in on climate issues—reducing emissions, setting carbon targets, and maybe tossing in a solar panel or two. Risk disclosure was the buzzword, with an emphasis on how emissions might hit the bottom line. Guidance was principles-based, giving companies room to interpret and adapt. Enforcement? Pretty much nonexistent. If you overlapped scopes across frameworks or skipped a metric, no one was knocking on your door.

This flexibility had its charm. It allowed pioneers like Unilever or IKEA to experiment with sustainable supply chains or renewable energy without rigid rules. Reporting was more of an internal exercise, a way to align strategy with emerging stakeholder expectations. Investors might nod approvingly, but there were few consequences for half-hearted efforts. The result? A lot of glossy reports and bold promises, but not always the follow-through. Greenwashing crept in, and skepticism began to simmer as stakeholders noticed the gap between talk and action.

The Turning Point: Why ESG Had to Grow Up

What changed? Everything. By the late 2010s, the cracks in the voluntary model were showing. Climate change accelerated—wildfires raged, floods devastated communities, and heatwaves hit record highs. Nature-related risks, once sidelined, became impossible to ignore. A 2023 World Economic Forum report flagged biodiversity loss and water scarcity as top global risks, pushing companies to rethink their environmental footprint beyond carbon. Stakeholders—investors, regulators, customers, employees—grew restless. They wanted proof, not pledges. A 2024 PwC survey revealed that 72% of investors now demand measurable ESG outcomes, not just disclosures.

Governments stepped in. The European Union’s Corporate Sustainability Reporting Directive (CSRD), rolled out in 2023, mandated detailed ESG reporting for thousands of companies, with fines for non-compliance. The Transition Plan Taskforce (TPT), launched in 2022, pushed firms to outline clear paths to net-zero, covering both climate and nature. These weren’t suggestions—they came with enforcement mechanisms, from audits to legal penalties. Meanwhile, global bodies like the International Sustainability Standards Board (ISSB) worked to harmonize standards, reducing the overlap that once plagued ESG frameworks.

The stakes got higher. Reporting shifted from an internal tool to a public scorecard, influencing investment flows and regulatory decisions. BlackRock’s Larry Fink, once an ESG cheerleader, started urging companies to deliver results, not just rhetoric. The voluntary era was over—ESG had to mature.

READ MORE: Can You Lead Through the ESG Reset?

ESG Now: A Mandatory, Multidimensional Reality

Today’s ESG landscape is a far cry from its voluntary roots. Mandatory disclosures under CSRD and TPT require companies to cover both climate and nature-related risks, from deforestation to freshwater depletion. Transition plans—detailing how firms will shift to sustainable operations—are no longer optional; they’re scrutinized for credibility. Jurisdiction-specific requirements add layers of complexity, with the EU, UK, and US each tailoring rules to their contexts. Legal obligations come with enforcement muscle—fines, reputational hits, and even delisting risks for non-compliance.

The scope has broadened too. While climate dominated ESG Then, ESG Now embraces a holistic view. Biodiversity, soil health, and social equity sit alongside carbon metrics. A 2024 McKinsey study found that 65% of companies now track nature-related impacts, driven by financial materiality—think supply chain disruptions from water shortages. Global standards, like those from ISSB, streamline integration, making ESG a unified language across borders.

Reporting’s role has flipped. Once a quiet internal exercise, it now shapes investment portfolios and regulatory policies. A 2024 Bloomberg analysis showed ESG compliance swayed $2.1 trillion in investment decisions in the first half of the year alone. Stakeholders aren’t just watching—they’re demanding transparency and action, and companies that lag risk losing trust.

The Challenges of ESG Now: Navigating the New Normal

This evolution isn’t without hurdles. Mandatory reporting demands resources—time, expertise, and budget—that smaller firms struggle to muster. A 2024 KPMG survey found 58% of mid-sized companies cite compliance costs as a top concern. The complexity of jurisdiction-specific rules can feel like a maze, with differing deadlines and metrics across regions. And the broadened scope? It’s a double-edged sword. While it reflects reality, it stretches teams thin, pulling focus from deep action to broad reporting.

Greenwashing risks persist, too. With stakes higher, some firms might polish their transition plans without substance, inviting scrutiny. Stakeholders are savvier than ever—Edelman’s 2024 Trust Barometer noted 67% of consumers can spot inauthentic ESG claims. Then there’s the enforcement gap. While legal mechanisms exist, consistency varies, leaving room for uneven accountability.

Yet, these challenges are also opportunities. Companies that master ESG Now can build resilience, attract capital, and win loyalty. The key? Focus and execution—qualities a Sustainability Materiality Map can amplify, as explored in OneStop ESG’s resources.

Leading Through ESG Now: Strategies for Success

So, how do leaders navigate this new ESG reality? Start with compliance as a foundation. Understand CSRD, TPT, and local rules—OneStop ESG’s training programs can demystify these. Next, integrate holistically. Embed ESG into strategy, not as an add-on. Use transition plans to align operations with sustainability goals, leveraging OneStop ESG’s marketplace for innovative tools like climate-smart tech.

Prioritize transparency. Share both wins and struggles—Edelman’s data shows 63% of people trust companies that admit setbacks. Build capacity. Invest in teams to handle broadened scopes, from nature impacts to social equity. Finally, leverage data. Robust metrics, backed by OneStop ESG’s event insights, turn reporting into a competitive edge.

This isn’t about perfection—it’s about persistence. Companies like Microsoft, with its carbon-negative pledge, or Nestlé, tackling water risks, show how ESG Now can drive innovation and trust.

The Future of ESG: A Vital Framework

ESG Then was a voluntary experiment, full of promise but light on pressure. ESG Now is a vital framework, shaped by mandate and maturity. It’s not just about surviving regulations—it’s about thriving through them. As risks grow—climate crises, social unrest, governance failures—ESG’s evolution ensures companies stay relevant.

This shift demands effort, but the payoff is real: resilient businesses, engaged stakeholders, and a legacy of impact.

Stay ahead with OneStop ESG Events, your hub for the latest in sustainability leadership.

Explore OneStop ESG Educate for tailored training to master materiality and ESG strategy.

Discover cutting-edge tools for sustainable innovation at the OneStop ESG Marketplace.