Higher scores suggested prudent companies, and questions were raised by lower scores. For executives and investors, this must have felt like progress.
However, recent years have shown that strong ESG performance has not always translated into real-world resilience.
This article does not argue against ESG as an idea. It’s a look at how, in practice, systems designed to highlight risk sometimes became substitutes for judgement—prioritising measurement and signalling over deeper preparedness. Greenwashing can be seen as a prime example of this.
ESG frameworks aim to make invisible risks more visible. Environmental exposure, governance quality, and social impact used structured metrics and disclosures to bring these things into public view. Unfortunately, over time, what was meant to be diagnostic quietly became performative.
Scores are easy to compare. Improvements are easy to communicate. Disclosures can be audited, benchmarked, and packaged into great stories for investors. The incentive structure shifted accordingly. Attention then turned to what could be scored, rather than what might actually matter under stress.
This is a familiar pattern in complex systems: when measurement becomes the target, the underlying objective drifts. Risk management begins to optimise for appearances.
The collapse of Wirecard is often seen as an accounting scandal or a regulatory failure. It was both. But it is also a cautionary tale about the limits of formal governance signals.
On paper, Wirecard displayed many of the markers associated with modern corporate responsibility. Governance structures existed. Disclosures were made. Apparently, there were oversight mechanisms in place. Yet these signals failed to surface the company’s underlying fragility.
Subsequent investigations revealed that the system had validated form while neglecting substance. Oversight focused on compliance rather than challenge. Assurance processes reinforced confidence instead of testing assumptions. The failure was not that ESG frameworks caused the collapse. They did little to prevent false reassurance.
Wirecard was not an isolated case, nor was it confined to financial services.
Carillion’s collapse offers a different, but equally instructive, example. Carillion operated at the heart of public infrastructure, delivering complex, long-term contracts across construction and services. Again, governance structures appeared to be in place, and there was extensive reporting. External assurance existed. Yet these signals failed to surface deep structural weakness.
Carillion’s business depended on optimistic assumptions about future contract performance, aggressive revenue recognition, and limited error margins. Formal oversight mechanisms focused on process rather than sustainability of cash flow and risk concentration. Warning signs accumulated slowly, but there was no decisive action.
As with Wirecard, the failure was not a lack of information, but a failure to explore what that information meant. ESG-style indicators reassured stakeholders even as resilience eroded. The collapse exposed how easily structured reporting can coexist with fragile fundamentals.
The widespread reliance on carbon offsetting offers a similar dynamic. Offsets often improve environmental scores while distancing organisations from the hard work of systemic change. Responsibility is displaced into abstraction: emissions are balanced elsewhere, accountability becomes diffuse, and progress is declared.
Governance is one of ESG’s strongest pillars, and also one of its most easily misunderstood. Most frameworks are good at capturing structure: committees, policies, independence, and representation. They are far less capable of capturing human judgement.
Certain themes recur in crises. They are rarely the things that score well: redundancy over efficiency, depth over breadth, long time horizons, and moral courage. However, the response should not be to abandon ESG, but to demote it. Scores should inform judgement, not replace it. After all, sustainability, at its core, is about endurance. ESG helped bring important issues into view. But safety, resilience, and responsibility can never be fully captured by scores alone. Instead, we get the following:
These are difficult to standardise, harder to disclose, and resistant to neat quantification. Yet they are often decisive.
We should not abandon ESG; we should demote it. Scores should inform judgement, not replace it. They are starting points for questioning, not endpoints for assurance.
For executives, the most important questions may now sit just outside the framework:
So, it all comes down to endurance. We need to build organisations that can absorb shocks, adapt under pressure, and act responsibly when incentives are misaligned.
ESG helped bring important issues into view. But safety, resilience, and responsibility could never be fully captured by scores alone. The next phase will be quieter, less easily measured, but far more consequential.
