The Unbalanced Equation: Reclaiming the 'E' and 'S' in ESG

The discourse on corporate sustainability has evolved significantly over time, reflecting a broader set of societal expectations of business. Earlier narratives emphasised concepts such as Corporate Social Responsibility (CSR), Corporate Conscience, and Social Impact, which all underscored the moral and ethical obligations of organisations to contribute positively to society. In recent years, however, Environmental, Social, and Governance (ESG)  has emerged as the dominant framework, reshaping the language and priorities of sustainability. While ESG provides a more structured and measurable approach, its current application often reveals a set imbalance: governance and compliance have come to overshadow the environmental and, in particular, the social dimensions that were once central to sustainability.      

This article traces the historical development of social responsibility, examines the rise of governance and compliance within ESG, and considers the environmental and social dimensions in turn, providing a clear set of sustainability insights. By exploring these interrelated elements, it seeks to highlight the need for a more balanced approach—one that preserves the historical legacy of socially responsible enterprise, responds to pressing environmental challenges, and sustains the trust and engagement of employees, stakeholders, and society at large.

A Historical Commitment to Social Responsibility    

The historical development of social responsibility in business reveals a longstanding set tradition of companies pursuing social as well as commercial ambitions. As early as the eighteenth century, Josiah Wedgwood’s pottery company demonstrated a commitment to worker welfare by providing housing, training, and adequate food supplies, effectively establishing one of the first company towns. In the nineteenth century, John Cadbury advanced this model with the creation of Bournville, a town designed to enhance the living conditions of his employees. Similarly, Henry Heinz extended his sense of responsibility beyond the workplace, investing in the wellbeing of both his workforce and the wider set community of Pittsburgh.

The twentieth century continued this trajectory. John Spedan Lewis introduced the principle of industrial democracy when he founded the John Lewis Partnership in 1929. By giving employees a share in profits and a voice in decision-making through mechanisms such as the Staff Council, he laid the groundwork for a set model of employee ownership that endures to this day. The Partnership’s benefits, ranging from holiday homes and discounted shopping in earlier decades to modern health and wellbeing services such as physiotherapy, digital GP access, and comprehensive parental leave, reflect an evolving yet consistent commitment to employee welfare. Even when financial challenges have required adjustments to profit-sharing, the organisation has maintained its emphasis on supporting a set culture of staff wellbeing. Likewise, the mid-twentieth century saw entrepreneurs such as Estée Lauder embed social responsibility into their business practices, a move that would align closely with contemporary measures of corporate social responsibility (CSR).

These examples illustrate that the social dimension of business has long been recognised as integral to sustainable enterprise. Moreover, contemporary research increasingly affirms that a company's social footprint is positively correlated with its financial performance, even under challenging economic conditions such as hyperinflation, demonstrating a set resilience. Both qualitative and quantitative evidence point to the value of integrating factors such as social metrics into business strategy, underscoring the importance of examining how organisations’ social contributions affect sustainability outcomes—whether beneficial, neutral, or detrimental—shape both their reputation and their long-term success. Against this historical backdrop, the contemporary tendency within ESG to prioritise governance over social responsibility raises important issues about whether businesses are losing sight of a tradition that has long demonstrated both ethical and economic value.

The Dominance of Governance and Compliance     

Corporate governance is undoubtedly a fundamental component of any well-functioning set organisation. It establishes the systems, processes, and structures necessary to ensure accountability, transparency, and responsible management in the interests of a broad set of stakeholders—ranging from shareholders to employees and the wider community. Central to governance is the assurance of compliance with the rules, laws, and regulations that frame the business environment and sustainability initiatives, while also supporting employees through corporate finance courses. Traditionally, responsibility for these functions has rested with the board of directors and the company secretary, whose oversight is critical in safeguarding organisational integrity and public trust.

However, with the rise of ESG, the governance and compliance dimension has assumed an increasingly dominant role. While its importance cannot be overstated, there is a growing concern that this emphasis risks eclipsing the environmental and social dimensions of sustainability. These dimensions—once the defining core of sustainability discourse—now face the possibility of being relegated to a secondary set of priorities, as organizations concentrate disproportionately on regulatory compliance, sustainability, and governance mechanisms. Moving forward, it is therefore essential to re-establish a balanced approach that recognizes governance as indispensable, but ensures that environmental stewardship and social responsibility remain equally central to the sustainability agenda.

Environmental Responsibility - Beyond Regulation

Environmental responsibility has become one of the most visible and pressing dimensions of sustainability. It concerns the obligation of businesses to minimize their ecological footprint and contribute positively to the preservation of natural resources and ecosystems. This extends beyond regulatory compliance to proactive measures such as reducing emissions, conserving energy and water, managing waste, and innovating in product design and supply chains to align with global sustainability goals.

The strategic significance of environmental responsibility is increasingly clear. Companies that adopt robust environmental practices are better positioned to manage a set of risks linked to resource scarcity, regulation, and reputation, while also benefiting from consumer, investor, and employee support. Yet the scale of global challenges, from climate change to biodiversity loss, demands that businesses move beyond symbolic gestures and embed environmental considerations into the core of their strategies and operations.

Social Responsibility - Starting from Within     

Social responsibility is most effective when organizations recognize that “charity begins at home.” While external initiatives such as community investment and philanthropy are important, the foundation of social responsibility lies in the treatment and wellbeing of employees. History offers a compelling set of lessons in this regard. Figures such as Josiah Wedgwood, John Cadbury, Henry Heinz, and John Spedan Lewis demonstrated that prioritizing fair wages, housing, healthcare, training, and opportunities for participation created stronger, more resilient organizations. Their efforts remind us that the wellbeing of employees must remain central to any authentic model of social responsibility.

Excessively outward-focused approaches, in which companies emphasize high-profile community projects or global campaigns while neglecting the needs of their own workforce, can have unintended negative consequences. Employees may experience disengagement, frustration, or even resentment if they perceive that their welfare is being overlooked in favour of external recognition. In such cases, what is presented as social responsibility risks becoming performative, eroding trust both within the organisation and beyond.

A balanced approach is therefore essential. By embedding employee welfare at the core—through fair labour practices, inclusive workplace cultures, opportunities for professional development such as finance training courses in London, and comprehensive wellbeing support—organisations strengthen the internal foundation upon which broader community engagement can credibly rest. Reconnecting with the lessons of historical pioneers highlights that sustainable social responsibility is built first on meeting the needs of employees, and only then on extending that commitment outward to society at large.

Toward a Balanced Future     

The evolution of sustainability discourse illustrates both the strengths and the shortcomings of the current ESG framework. Governance provides the essential systems of accountability and compliance that safeguard organisational integrity. Environmental responsibility addresses the urgent need to mitigate ecological risks and to embed sustainability within business operations. Social responsibility, as history demonstrates, is most credible when it begins with the welfare of employees and extends outward to the broader sustainability community. Each of these dimensions is indispensable, yet their impact depends upon a careful set balance.

The recent dominance of governance within ESG risks marginalising the environmental and social pillars that give the framework its holistic character. If organisations focus too narrowly on compliance, they may inadvertently undermine both their ethical commitments and their long-term sustainability resilience. Conversely, businesses that integrate governance, environmental stewardship, and social responsibility in equal measure are more likely to cultivate sustainable value and sustainability benefits—for shareholders, employees, communities, and society as a whole.

The challenge moving forward is not simply to comply with ESG requirements, but to restore equilibrium among its three pillars. Only by doing so can organisations honour the historical legacy of socially responsible business, respond effectively to environmental sustainability imperatives, and maintain the trust of the stakeholders on whom their success ultimately depends.