Think Ahead: how companies should respond to ‘noisy’ ESG backlash

The past few months have not been the easiest time to be a Chief Sustainability Officer, or similar position.

A noisy backlash against ESG has taken hold in the US and further afield. The latest London Business School Think Ahead event tackled this challenge head-on.

Titled ‘Rethinking the sustainability playbook’, the live broadcast brought together Ioannis Ioannou, Associate Professor of Strategy and Entrepreneurship at London Business School, and Daniel Hanna, Group Head of Sustainability and Transition Finance at Barclays.

The panel explored the fundamental questions which underpin the attempts of businesses to become truly sustainable and attempted to reveal the difference between organisations that are genuinely preparing for the future from those that are simply responding to the latest market and political pressures.

Ioannis described the big task for business in stark terms: “How do companies integrate broader environmental and social issues into the way they do business, what are the organisational implications of doing so, and how are stakeholders such as financial markets looking at these companies, whether rewarding or punishing them in terms of how they integrate these issues?”

Hanna described his work at Barclays as “supporting the next generation of entrepreneurs that are coming through with real technologies that can drive resilience and efficiency but also having that ability to accelerate the low-carbon transition.”

He leads a £500m fund that backs climate tech, trying to deliver the so-called ‘missing middle’ of capital (between venture capital and major investment). This is part of a global effort to mobilise and facilitate as much as a trillion dollars of sustainable finance by 2030 (almost $100bn was raised in 2025).

A poll from the live viewing audience revealed that political and regulatory uncertainty was their main concern or obstacle in pursuing sustainability, but the pressure to deliver short-term returns was the second largest issue.

Hanna acknowledged that under private equity ownership, it would sometimes be easier to introduce new technologies without those short-term market pressures.

Ioannis felt that a balance could be struck on financial returns.

Hanna was optimistic. “I actually think this is possibly one of the most exciting times to be scaling climate technology,” he enthused. “In particular, AI is really turbocharging the interest of capital markets and private investors in some of these technologies.”

Choosing the UK over the US

Scaling up new businesses can still be a challenge, especially in Europe. Barclays tracks around 1,700 climate tech companies according to Hanna.

“When I talk to these founders… if you want to scale, it's going to be easier to do it in the US,” Hanna explained. “And that is a real shame because certainly within the UK, we've got some fantastic companies that have come out of universities.”

A question from the live audience asked how investors can tell if a company is genuinely integrating sustainability into its strategy rather than using it for marketing purposes. Ioannis was first to respond.

He continued to put forward three key questions needed to form an answer. ‘Does the organisation link sustainability with the commercial side?’, ‘Are costs being managed intelligently even as the company tries to raise the bar on its performance?’, ‘What trade-offs is this all creating and how are you resolving them?’

The final three issues are “process, structure, and leadership,” he continued. “Show me the evidence that the process makes you a better business... in the structure of the organisation, do you have a stakeholder dialogue or are you just dealing with activists whenever they protest?

“And last but not least: do the leaders understand this as a journey? Do they understand what level of maturity they are at? And do they manage this as a change management process?”

The discussion ended on a positive note. “I have a huge amount of admiration for the entrepreneurs that I work with in the climate space because I think not only do they have the courage to say, ‘Okay, I've got a new idea, I'm going to do it’, but they also say: ‘I'm going to do that in a system that isn't necessarily ready for the product’,” Hanna stated.

“I'm a big believer that the more you align sustainability with the drivers of the company, the more they are going to be sustainable in themselves and actually get more and more momentum.”

Ioannis also saw grounds for hope: “I think that we underestimate how much influence as employees we may have in organisations. You can create a bottom-up wave that ends up demanding this accountability from the organisation.

“I think we have seen that, especially with younger generations, who organise within organisations and demand that the organisation reflects their own values, beliefs, and has a positive impact in the world as opposed to destroying the world.”

And he offered a final thought, and challenge:

“We're going into a world where mitigation is not going to be enough. We have locked-in effects and we need adaptation as well… climate impacts are here and they are terrible and frankly on this path this is the best it will ever be.”

Hanna ended by returning to his first principle: “I think if you maintain the focus around creating value for your customers, creating value to your shareholders, creating value for your stakeholders and building resiliency into your organisation, it doesn't matter what label you give it, that is always going to be the right thing to do.”