Jill Ridley-Smith

The war in Iran has exposed the irony of the anti-ESG movement in the US. Its proponents chose to ignore that the E is about more than just the environment; it includes energy security, supply chain resilience and the long-term costs of fossil fuel dependency. This was all lost in the recent extreme politicisation of ESG, demonising being “woke” and reinstating the precedence of shareholder over stakeholder value.

Trump’s agenda aligned politics with short-term corporate self-interest, giving license to firms to cut the cost of their investments in the energy transition, and to drop green-tape initiatives that slowed the pace of doing business. Like others, I’ve seen sustainability budgets slashed, emissions targets paused and ESG relegated downwards on the Board agenda.

This all looks hollow now as the current crisis highlights the commercial fragility from concentrated energy dependency. Firms that quietly maintained their energy diversification programmes (including reducing their Scope 2 emissions) as risk management are sitting in a structurally far better position right now. The E in ESG was always a hedge against exactly this kind of shock.

Energy transition isn’t just a climate story. In the current environment it’s a supply chain story, a geopolitical story, and increasingly a cost of capital story. Boards that treat it as a compliance or communications exercise miss the strategic signal.

So what are the forward-looking questions for CFOs and Boards?

• What risks are currently unpriced in your energy cost assumptions?
• Do your governance frameworks have the tools to see them?

The question worth sitting with: does the anti-ESG movement actually serve shareholder interests? Or does it trade long-term resilience for short-term political convenience?  I suspect that question will get louder over the next 12 months.