ESG Resilience in a Crisis: Potential or Illusion?

Global markets are entering a new round of uncertainty. Geopolitical tensions, interest rate fluctuations, and economic slowdown are a complex mix that tests the resilience of investment portfolios, including companies with Environmental, Social, and Governance (ESG) labels. If examined further, how does ESG resilience against various pressures?

Recent data from S&P Global shows that the S&P 500 ESG Index was able to record comparable performance, even outperforming the conventional S&P 500 index in some periods. With low tracking error and managed risk, this index shows that the approach is not only sustainable, but can also support portfolio stability. This phenomenon should serve as a mirror to measure the durability of similar indices in the Indonesian market, including the JCI ESG Sectoral Index.

Figure 1. Data Index S&P 500, 2020.

Source: S&P Global, 2020.

When Wall Street Retreats: Crisis or Strategy Correction?

Despite the positive performance of the data, the world of ESG investing is being shaken politically. A Bloomberg article (2025) revealed how a number of major US banks such as Goldman Sachs, Citigroup, and Morgan Stanley simultaneously withdrew from the Net-Zero Banking Alliance. This move raises a big question: is ESG losing relevance?

The answer is not straightforward. The retreat of these financial institutions is more a response to domestic political pressure, not evidence of the financial failure of the ESG approach. In fact, many see this as a moment of redefinition—the ESG should return to its strategic roots, not just corporate symbolism or a marketing tool.

Building Resilient and Contextualized ESG

To improve ESG resilience, companies need to adopt a strategic approach that is not just symbolic (tick the box), but comprehensive and integrated with the core business model, some of the following principles can be a guide:

• Determine sectoral materiality

Achieving relevant principles starts with a keen understanding of the issues that most impact the industry. So companies need to conduct ESG materiality audits to identify the most relevant issues for their industry and stakeholders, and develop internal policies based on the principles of transparency, accountability and sustainability.

• Build integrated ESG governance

To make commitments systemic, the principles must permeate strategic decision-making, risk management, and finance-including supply chains, energy strategies, people management, and corporate governance. By building strong and collaborative governance, companies will be better prepared to deal with external pressures such as new regulations, institutional investor demands, or geopolitical dynamics as reflected in Wall Street’s decision to back away from climate commitments. This is where ESG is no longer just a risk mitigation tool, but a strategic resource to create long-term competitive advantage.

• Measure, verify and communicate responsibly

An important step in strengthening ESG implementation is to ensure that all initiatives are clearly measured, independently verified, and transparently communicated to stakeholders. For this, companies need to adopt credible reporting standards such as the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), or Task Force on Climate-related Financial Disclosures (TCFD) for climate reporting.

In addition, engaging independent third parties to verify or assure sustainability reports will increase investor, regulator and public confidence. Responsible communication is not just about sharing data, but also about building a narrative that is honest, consistent and impact-oriented.

This strategic approach not only addresses market and regulatory demands, but also builds long-term business resilience. Because ESG principles are not a destination, but a journey. Want to start an ESG initiative? Consult Maxima Impact Consulting and start your sustainable transformation journey today!