"A study indicates a decline in the use of 'ESG' (Environmental, Social, and Governance) terminology within corporate conversations"

In a surprising turn of events, both the Environmental, Social, and Governance (ESG) movement and the plant-based food market have seen a dip in popularity, according to Tim Hill, an account director for GlobalData, and Iain Twine, a partner at business consultancy FGS Global.

Hill notes that the plant-based food market has underperformed on expectations due to consumer scepticism, price sensitivity, increased competition, and media reports on health problems associated with ultra-processed food. A similar fate has befallen ESG, with the use of related terms like "environment", "climate", "governance", "social", "diversity", and "inclusion" peaking in 2021 and since decreasing significantly.

Google search data shows a mild decline in global searches for the term "ESG" since a peak two years ago, in March 2023. This decline can be partially attributed to a politically-driven backlash, particularly in the US, which has spread eastwards. Companies are reducing direct references to ESG in their communications to avoid controversy.

Twine comments that ESG needs to earn attention rather than just being given attention. He stated that ESG is not dead but needs to find its relevance again for companies to discuss it publicly. Companies have started using different terms, such as "responsible business" instead of "ESG", due to the negative connotations associated with the latter.

The trajectory of plant-based meat alternatives suffered a similar fate as ESG at a similar time. Renewable energy returns on investment peaked in 2021 but have underperformed oil and gas stocks since early 2022. Despite this, experts argue that firms that embrace long-term ESG values will thrive, as long as they can show how important sustainability is to the bottom line.

In a positive note, reported cases of greenwashing declined for the first time in six years in 2024, according to analysis by RepRisk. The global ESG investing market is projected to grow at a compound annual growth rate of around 18% from 2024 to 2030.

The number of times companies mentioned ESG themes decreased from 2017 to 2024, according to data shared by GlobalData. However, the information points toward a growing general trend among companies, especially in Germany, to increasingly integrate environmental and sustainability topics into their communications and business strategies.

Tim Hill also observed a parallel between the decline in ESG in corporate speak and the trajectory of renewable energy returns on investment. He noted that the plant-based food market has underperformed on expectations due to consumer scepticism, price sensitivity, increased competition, and media reports on health problems associated with ultra-processed food.

Despite the current downturn, both ESG and plant-based food markets are expected to rebound as consumer awareness and demand for sustainable options continue to grow. The key for companies is to find the right balance between profitability and sustainability, ensuring that their long-term ESG values are aligned with consumer preferences and regulatory requirements.