Arthur D. Little (ADL) recently released the 2025 edition of its ongoing CEO Insights study: “Proactively Embracing Change.” Based on in-depth conversations with global business leaders, the research reveals that CEOs are responding to today’s volatile geopolitical and economic landscape not with hesitation, but with confidence and decisive action. This Advisor, the second in a series exploring key themes from the research, outlines strategic actions CEOs should take to maximize the value of environmental, social, and governance (ESG) investments, turning external pressure into business performance and long-term impact.
Opportunity or Threat?
Essentially, organizations across every industry have caught up with early adopters and made ESG part of their core business operations and strategy, a process potentially accelerated by growing compliance needs. ESG is no longer dealt with in isolation or at a business-unit level. Although welcome progress, this trend means ESG initiatives are now judged alongside other business priorities — they have to enable competitiveness and deliver ROI.
In many cases, CEOs do not see ESG as a good investment that can provide new opportunities, viewing it instead as a necessary (for now) evil, with activities focused on those areas where consumers and governments are demanding action. Indeed, consumer pull as a factor for investing in ESG dropped by 20% between 2024 and 2025. This shift mirrors the wider world as governments and consumers balance trade-offs between sustainability and economic considerations. Many governments have deprioritized ESG, sometimes for ideological reasons, or delayed deadlines around sustainability, such as by moving back targets to phase out the sale of internal combustion engine vehicles. For many customers, their biggest priority is remaining financially sustainable, rather than buying along ESG lines.
Maximizing ESG Investments
As the ESG trend evolves, CEOs should take four actions to maximize the business impact of their ESG investments:
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Reinforce stakeholder engagement. Engage more deeply with stakeholders, both to understand their evolving expectations regarding ESG and to communicate the company’s strategy and ongoing initiatives. Stakeholders include institutional investors, customers, suppliers, and employees.
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Reaffirm ESG commitment and communicate transparently. Publicly reiterate the company’s commitment to ESG principles, emphasizing their integration into core business strategies and operations. CEOs should be prepared for questioning in the wake of the actions taken by the US administration. At the same time, they need to be prepared to openly share their information and targets on public platforms such as EcoVadis.
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Align strategic and ESG targets with financial targets. Ensure that ESG initiatives are fully aligned with financial objectives, whether that means creating revenue streams, delivering cost savings (e.g., through improved energy efficiency), or contributing to sustainability (e.g., renewable energy), innovation, or financial performance. The more ESG is questioned in the general debate, the more important financial arguments are. Adapt business models to leverage ESG for competitive advantage, such as through innovations in the circular economy.
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Use firm but flexible resource allocation. Allocate resources dynamically to ESG initiatives, ensuring they are flexible enough to adjust to changing business priorities and economic conditions. CEOs must be ambidextrous but remain steadfast in their overall principles, once the organization has reaffirmed its commitment. Not unlike R&D spend, ESG investments are often long-term. So it is tempting to cut costs, particularly when it suddenly appears more politically advantageous to do so, rather than sticking to values and the greater good. Losing sight of your values (or corporate soul) can be dangerous, and being seen as paying lip service to ESG or cynically changing direction is toxic to a company’s culture and reputation.
Delivering the value of ESG requires action through a wide portfolio of solutions, which fit into three broad categories:
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Unlocking the value of sustainability. This includes scenario/strategy formulation to understand the financial risk and opportunity of ESG, risk assessment around current product portfolio, carbon management (including the benefits of available credits and offsets), KPI setting, and sustainability reporting.
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Innovating for sustainability. This includes climate adaptation, tech foresight, building circular business models, accessing sustainable financing, and adopting low-emission fuels and/or clean-tech solutions.
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Enhancing livability and quality of life. This includes embracing new opportunities around decommissioning infrastructure, sustainable cities, housing and tourism, and food security.
The most relevant areas for investment depend on a company’s industry, circumstances, and strategy. However, even as ESG as a concept is under pressure, there are a range of opportunities for businesses to both improve their own performance and the world by focusing on areas that deliver value to themselves and their stakeholders.
