The evolution of Environmental, Social, and Governance (ESG) disclosures

In the early 2000s, Environmental, Social, and Governance (ESG) reporting emerged as a practical business strategy, shifting from an ethical ideal following significant corporate scandals like Enron's collapse. The importance of transparency and governance became evident, catalysing ESG integration in finance.

Two key reports published in 2004, the UN-backed "Who Cares Wins" and the Principles for Responsible Investment (PRI), highlighted the benefits of including ESG in reporting for businesses seeking investment. This marked the beginning of a new era for ESG, with the establishment of frameworks like the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD).

By the 2010s, ESG was mainstreamed, with many companies aligning their strategies with the UN Sustainable Development Goals (SDGs) and stakeholder capitalism. A pivotal moment occurred in 2015 with the Paris Agreement, which set the foundation for global ESG efforts. Shortly thereafter, over 20 stock exchanges worldwide began issuing voluntary ESG disclosure guidelines under the UN Sustainable Stock Exchanges Initiative.

The European Union has been at the forefront of regulatory advances, launching the European Green Deal in 2019, aiming for climate neutrality by 2050. The EU has introduced comprehensive legal ESG frameworks like the EU Taxonomy and the Sustainable Finance Disclosure Regulation (SFDR). The EU Taxonomy Regulation, effective July 2020, set criteria to define “green” economic activities, guiding sustainable investments and combating greenwashing globally.

Globally, coalitions such as the Net Zero Asset Managers initiative, launched in 2020, align asset management with net-zero emissions goals, reflecting widespread commitment to reducing financial risks from climate change.

However, ESG reporting faces challenges, including regulatory uncertainty, especially highlighted by the U.S. SEC’s recent retreat from certain climate disclosure rules in 2025, and the complexity companies encounter in meeting evolving compliance demands across jurisdictions. Other practical hurdles include ensuring supply chain due diligence, enhancing internal ESG capabilities, and integrating ESG culture effectively within organisations.

Looking forward, future trends in ESG reporting emphasize increasing regulatory rigor and harmonization worldwide, shifting from mere compliance to strategic value creation, enhancing focus on social and governance factors, growing importance of double materiality and detailed impact assessments, and integration with broader sustainability goals such as the UN SDGs.

The 10-step ESG Health Check for project managers can help integrate ESG factors into projects. The European Union is working to create a regulatory authority to combat greenwashing and increase transparency, with financial disclosure norms becoming effective in March 2022. If all stakeholders rally around a single ESG standard, it could lead to a transformation.

Transparency on how ESG scores are compiled by rating agencies is lacking, making it difficult for investors to compare different investment proposals. A consensus is emerging about the need for a standard way of measuring ESG risk management.

In summary, ESG reporting has evolved from voluntary ethical disclosures to a complex, regulated, and strategically critical practice shaping how companies manage risk and value creation. While challenges in regulation and implementation remain, future trends point toward greater standardization, comprehensive impact measurement, and ESG as a driver of business performance and societal progress.

As ESG reporting evolved into a crucial business strategy, various fields, such as science, technology, and education, started integrating ESG principles into their operations, recognizing the relevance of environmental-science, sustainability, and climate-change for future lifestyle and investment decisions.
In the realm of finance, the emergence of ESG reporting revolutionized the way businesses attracted investments, with stakeholder capitalism and corporate governance becoming essential elements in the business-lifestyle nexus.
The entertainment industry and general-news media also began to play a significant role in promoting awareness about ESG initiatives, making them a tangible part of the public discourse, and influencing each individual's lifestyle choices and perceptions.
The increasing emphasis on ESG reporting has also influenced the broader business landscape, with companies recognizing the potential of ESG investing to create long-term value, and positioning themselves at the forefront of the sustainability revolution.
The evolution of ESG reporting signifies a shift in our collective mindset towards a more sustainable and responsible approach to business, finance, and lifestyle, demonstrating a growing global commitment to mitigating climate change and addressing broader environmental challenges.