Roundtable reflections: Is ESG dead?

“Is ESG dead?” we asked at our recent Responsible Investors (RI) roundtable in May this year. Short answer: no. But the conversation has matured – and climate physical risk is coming of age in methodology and assessment. The real question is: can investors afford to stop pricing real-world risks and externalities into decision-making?

Here are six takeaways from our RI Europe 2026 roundtable event.

1. New challenges, new opportunities: recognising system-level risk 

Climate scenarios are not forecasts, they are intended to allow us to think creatively and ask out-of-the-box questions. Participants at the roundtable demonstrated this nimble reasoning style when discussing the future through a system-level approach. For example, attendees asked to what extent are informal and out-of-office economies like construction and agriculture exposed to extreme heat and flooding? Questions like this help clarify and emphasise the interconnectedness of underlying systems that companies rely on (economic, environment, social).

As such, a system-level or ‘whole-of-economy’ perspective is gaining traction. This approach recognises systemic risks rather than focusing on risks specific to companies in scope. Systemic risks are not just ESG in nature and include other risks like AI, cyber security and geopolitics. For large asset owners with diversified portfolios and exposed to big chunks of the economy, this is highly relevant.

Ultimately, a system-level perspective cascades from beneficiaries to asset owners to asset managers. While asset managers still appear somewhat fragmented, asset owners are increasingly clear, and confident, about their role in shaping public policy discourse. While scenario analysis alone is not good enough to embed in strategic asset allocation and methodologies, narrative-based approaches can be more useful for systems approaches. This was supported by roundtable participants as a highly encouraging development.

2. Opportunity loss vs opportunity cost: reframing ROI

One approach is to view physical risk as ‘savings of investment’ rather than return on investment (ROI), shifting the focus to avoided losses rather than opportunity cost. Interestingly, the drivers of action differ: asset owners tend to respond to lived experience (e.g. extreme weather events) while asset managers are more often driven by client demand.

A practical, financially grounded framework discussed is an asset-class-agnostic approach that addresses the following aspects:

• How the asset generates revenue
• How climate affects that revenue generation
• The likelihood and degree of vulnerability
• The level of adaptation and resilience in place

As participants demonstrated at our roundtable, exploring how physical risk manifests across asset classes is a future-forward conversation. The direction of travel is unambiguous: we must integrate physical risk with at least the same urgency as climate mitigation.

3. Mandates and reporting: from intent to implementation

A core sentiment echoed amongst attendees, which cannot be overstated, is the importance of explicit client mandates. Clear intentionality must be matched with appropriate incentives, particularly when it comes to stewardship and advocacy. Without this alignment, expectations on value-added risk remain under-recognised and under-resourced.

Attendees also discussed the future of sustainability reporting and the importance of being more specific, deepening links to financial statements, and assurance. Addressing EU standards, reporting should be bi-lingual and seek alignment (e.g., ‘one report to rule them all’). On the upside, the roundtable noted that corporates are beginning to adopt sustainability reporting voluntarily, including in the US.

4. Labels and outcomes: shifting language

One development that garnered attention at the roundtable is increasing ESG integration in unlabelled funds. Companies may continue to apply rigorous ESG analysis and stewardship, but without attaching obvious sustainability labels and therefore potentially unwanted additional scrutiny.

At the same time, there is a move to reframe the narrative in more tangible, real-economy terms. Instead of jargon-heavy phrases like ‘climate transition’, language is shifting to concepts clients more readily recognised and that are less triggering for some parts of society in an increasingly polarised world – such as ‘energy security’ and ‘economic resilience’.

Participant consensus was that clients and beneficiaries respond most strongly not to abstract metrics, but to clear examples of real-world impact. Case studies – demonstrating how engagement has influenced company behaviour, reduced risk, or created long-term value – are often more powerful than percentages or scores.

This shift reflects a broader realisation: communication matters as much as methodology. If ESG is to maintain credibility, it needs to be explained in clear, accessible terms that resonate with different audiences.

5. Greenhushing: the risks of downplaying ESG

‘Green hushing’ is one of the latest buzzwords around how responsible investment is communicated. It’s a phrase describing companies that continue to integrate ESG considerations but deliberately tone down claims, labels or disclosures because increased scrutiny at regulatory, political or reputational level can feel like a trap. Stepping away from ESG language does not remove underlying risks – it simply makes risk harder to see. In practice, we are seeing fewer bold claims and more subdued language, even when underlying processes remain strong.

Roundtable participants drew parallels with the WWII era, when asbestos was widely regarded as a safe, versatile and practical material for everyday applications. The deadly ‘magic mineral’ was only fully banned in 1999 in the UK, despite ongoing scientific investigations, including a landmark report in 1928, that officially linked asbestos exposure to debilitating lung scarring. In a similar way, ESG analysis identifies and exposes hidden risk before it crystallises and causes harm.

Ignoring externalities can seem beneficial in the short term, as in the case of the lucrative mineral asbestos. Cheap to mine and with heat, fire, and chemical-resistant properties, asbestos fuelled the industrial revolution. Cost was low, returns appeared strong, and economic complexity was reduced. But the bill inevitably arrived: the long-term economic consequences of asbestos proved devastating and far outweighed the initial industrial benefits. In less extreme cases in today’s environment, costs may come in the form of regulatory penalties, stranded assets, litigation, or reputational damage.

Roundtable participants showed how this dynamic is currently playing out in the tech sector. Major technology companies that have rapidly grown are now being sued in court. Jurors recently found that both Meta (owner of Instagram, Facebook and WhatsApp), and Google (owner of YouTube) intentionally built addictive social media platforms. These examples illustrate that risks once viewed as peripheral are increasingly being recognised as having financial impact.

6. The enduring value of in-person networks: future discussions

From our lively and engaging roundtable experience it was clear that nothing quite replaces the depth of connection that comes from in-person interaction, whether formal sessions or informal conversations over coffee (or a vegan sausage roll). With ESG communication becoming more grounded in real-world outcomes, these in-person moments enable more candid exchange, faster alignment, and richer strategic thinking.

Looking ahead, there remains cautious optimism from all the discussions we had. We think that this reinforces that Responsible investment and ESG are not dead; if anything they are becoming more embedded.

We thank all the participants for their contributions to a lively discussion.

We also welcome the opportunity to continue and engage on new conversations, to explore how these themes and others should shape your own approach

Royal London Asset Management engages with companies as part of its responsible investment and stewardship strategy, aiming to drive long-term value for clients while promoting sustainable business practices. 

Our voting, engagement and advocacy activities are designed to be pragmatic, informed by research, evolving market insights and local best practice, and aligned with the long-term interests of our clients. These activities aim to enhance the value and integrity of our investment decisions. 

Please note that voting and engagement practices may not apply uniformly across all Royal London Asset Management funds or strategies, as each has distinct investment objectives. Please refer to the investment documents for specific details. 

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