Why Most ESG Efforts Are Corporate Kabuki—and How to Fix the System

Most ESG programmes are little more than corporate kabuki, fooling the public with feel-good illusions while real issues go unaddressed. And if you are doing it, you know very well you are doing it and either don’t care you are doing it, or don’t know what else to do. Your stakeholders likewise all know it is performative and, like you, either don’t care or also don’t know what to do.

I say kabuki because ESG programmes are generally shiny, impressive at first glance, but hollow underneath. Companies everywhere are touting their commitment to sustainability, social responsibility, and ethical governance, but a deeper look reveals ESG in its current form is mostly a smokescreen. Let’s get real: for many businesses, ESG is a marketing tool rather than a true commitment to positive change.

Many corporations slap an ESG label on just about anything that sounds remotely ethical or sustainable, expecting us to believe they’re moving mountains. This is performative at best and outright deceptive at worst. Companies rush to publish reports filled with numbers that look good on paper, yet their actual impact on real-world issues is minor or even negligible. There’re little teeth, little accountability, and, frankly, little interest in genuinely overhauling the way these companies operate. Take two seconds to examine the recruitment ads for ESG staff and you will find their very first criterion is always reporting, and you will find actual field experience let alone subject matter expertise does not rate a mention.

ESG Is Built to Satisfy, Not to Change

Here’s the uncomfortable truth: most ESG programs are designed to keep investors and the public content, not to drive real change. Investors want to see numbers, percentages, and charts that look impressive. They want to see growth, sustainability scores, and risk mitigation strategies. ESG scores have become part of the language of stock market analysis, a mere data point like profit margins or growth rates. Investors want to be able to applaud the CEO for “earning” that Fairtrade or Rainforest Alliance label they know will offer them a premium pricing strategy. But these scores rarely reflect anything substantial about a company’s real impact on the environment, society, or governance.

Take carbon emissions, a flagship ESG metric. Corporations tout their emission reductions, often thanks to clever accounting or carbon offsets. Rather than cutting emissions from their own operations, many buy “offsets,” essentially paying someone else to reduce emissions on their behalf. This lets them claim environmental progress without making any structural changes. It’s performative, feel-good symbolism that costs companies little, delivers a shiny report, and often results in zero real impact on the climate.

Social Responsibility: More Talk Than Action

The “S” in ESG, representing social responsibility, is just as shallow. Many companies proudly claim to have social programs that promote diversity, equality, and employee well-being. But scratch the surface, and you find little actual progress. And you will find even less attention being paid to the most fundamental things like human rights. Fuzzy is all it takes to get a passing grade with, for example, B Corp. Fundamental human rights don’s rate a mention. Corporations hire a few diversity officers, set up workshops, release statements about inclusivity, and check off boxes in their ESG reports. The problem is that these efforts often don’t address deeper structural inequalities within the company. Diversity becomes just another marketing slogan, not a meaningful change in how the company operates or treats its employees. Meanwhile human rights abuses like gender pay gap, unfair contracts and hours, bullying, harassment, discrimination, lack of freedom of assembly or association, go completely unaddressed.

In reality, many “diversity initiatives” are geared more toward shielding the company from criticism than actually fixing anything. Diversity and inclusion become part of the company’s image management strategy, something they can show off to avoid scrutiny. They tell you they’re building a better, fairer workplace. But is this the reality? For too many, it’s not. When people inside these companies start to question the depth of these initiatives, they’re met with resistance, because it’s easier to create the appearance of progress than to make it a reality. First rule of survival inside most companies is don’t ask the difficult questions.

Governance: A Weak Front in ESG

Governance—the “G” in ESG—is the least flashy, and perhaps the most important. Good governance is supposed to ensure that companies operate ethically, responsibly, and with accountability. The G is meant to create the framework within which the E and S can be tackled. It’s about having the systems in place to catch corruption, protect shareholder interests, and hold leaders accountable. It is also to make sure a company goes beyond reporting. But in practice, governance reforms are often superficial. Policies and committees are established, executives make promises, but it’s rare to see any meaningful change.

Why? Because governance reform threatens those in power. Real governance change would require transparency, accountability, and consequences for unethical behaviour. It would mean top executives answer not only to shareholders but to employees, to consumers, and even to society at large. But, for most companies, the governance component of ESG remains a weak attempt to look ethical without actually changing anything at the top. Too many boards are insulated, too many leaders go unaccountable, and too much of the power structure remains untouched.

How to Fix the Broken System

Fixing the ESG system requires shifting the focus from metrics and marketing to real, verifiable change. This means putting skin in the game. It means taking ESG out of the boardroom and making it an accountability mechanism rather than a brand strategy. It means engaging subject-matter exports not “seasoned” report-creators who wouldn’t know a human rights violation if it bit them on the arse.

Here are the basics of how to transform ESG from a buzzword to a genuine movement:

1. Link ESG to Executive Compensation: Real change begins when leaders feel it directly. If CEOs and executives had their compensation tied to actual, verifiable ESG outcomes—not cherry-picked metrics—there would be an immediate shift in focus. Make it simple: no positive VERIFIABLE environmental or social progress, no bonuses. This would be a game-changer for the entire concept of ESG, giving it the weight and accountability it currently lacks.

2. Prioritise Subject Matter Expertise Over Reporting Skills in ESG Hiring – Shift the primary hiring focus in ESG roles from reporting experience to deep expertise in specific fields like environmental science, human rights, supply chain ethics, and governance. By recruiting individuals with real-world knowledge and problem-solving skills rather than those specialised in generating reports, firms can drive authentic, actionable ESG strategies rather than focusing solely on surface-level metrics.

3. Make ESG Independent and Auditable: Independent auditing is the only way to ensure that companies aren’t playing fast and loose with ESG numbers. Every ESG report should be audited by an independent third party. Just like financial audits ensure a company’s finances are legitimate, ESG audits should verify the truth behind sustainability claims. If a company says it reduced emissions, let’s see the evidence. If it claims diversity initiatives, we should be able to see real, measurable changes in hiring, promotion, and pay practices. The single biggest problem here, however, is fraud; audit firms giving a green tick to their client because why risk the business? I know how to solve that, but that’s another article.

4. Stop the Carbon Offset Excuse: Emission reductions should be direct and measurable. Ban or at least restrict the use of carbon offsets as a cover for actual reductions. If a company wants to claim environmental responsibility, it should be required to reduce emissions from its operations and supply chain directly. No more outsourcing responsibility to distant projects with questionable impacts.

5. Prioritise Transparency Over Feel-Good Narratives: ESG should be about hard truths, not pleasing narratives. If a company has environmental or social issues, these need to be disclosed clearly, not hidden behind feel-good stories. It’s better for companies to be upfront about the challenges they face than to bury them in PR-friendly language.

6. Hold Companies Accountable for Failures: This is where the rubber meets the road. Companies that fail to meet their ESG commitments should face real consequences, whether through penalties, investor action, or even boycotts. It’s time we demanded the same accountability for ESG promises that we do for financial ones.

The Choice

ESG, in its current form, is mostly theatre. But it doesn’t have to be this way. We can demand real change. We can demand that companies treat ESG as a genuine commitment to do better, not as a shield against criticism. This requires tough choices, real accountability, and a willingness to stop putting a shine on things that are fundamentally broken.

So, next time you see a glossy ESG report, remember it’s likely just corporate kabuki—a carefully choreographed performance to distract, not to deliver real change. Real impact doesn’t come from a show; it comes from honest, accountable action. And until companies are willing to step off the stage and do the hard work, ESG will remain just a very colourful illusion.