When the term ESG (Environmental, Social, and Governance) debuted in the U.N.-sponsored “Who Cares Wins” report, it wasn’t virtue signaling. It was a warning: Ignoring climate change, social issues, or corporate governance questions risks undermining long-term company value.
Two decades later, that warning has become a proxy battlefield, with the United States at a political crossroads, walking back years of corporate action on ESG while Europe, China, and a growing number of jurisdictions are ignoring the Make America Great Again “anti-woke” backlash and charging ahead.
This article is your reporter’s guide to that fault line: where ESG came from; how it has been weaponized politically in the second Trump administration, and why the rest of the world sees it as essential infrastructure that cannot be repealed.
From ethics to asset allocation: The birth of ESG
2004: “Who Cares Wins” — ESG makes its debut
In 2004, the U.N. Global Compact released “Who Cares Wins: Connecting Financial Markets to a Changing World,” inviting some 20 financial institutions managing more than US$6 trillion to integrate environmental, social, and governance factors into core investment analysis. That effort has come to mark ESG’s birth as a tool to assess long-term value, not corporate virtue.
Roots in social movement investing
ESG did not spring from nowhere – it has deeper ethical roots, including the 1970s anti-apartheid divestment campaigns and the 1990s “triple bottom line” of financial, environmental, and social-factor framing described by John Elkington, a pioneer in corporate sustainability, all evolving into ESG as mainstream risk analysis.
By the 2000s, a wave of frameworks – PRI (Principles for Responsible Investment), TCFD (Task Force on Climate-related Financial Disclosures), GRI (Global Reporting Initiative) – laid the groundwork for ESG becoming more than optional disclosure.
ESG in the U.S.: The political voltage under Trump’s second term
2024 SEC climate-risk disclosure: A short-lived win
In March 2024, under the Biden-appointed SEC, sweeping climate-risk disclosure rules were finally adopted, requiring companies to disclose greenhouse gas emissions, climate-related risks, and board oversight. That felt like a turning point.
But by April 2024, these rules were stayed due to legal challenges from states and industry. And in March 2025, the Trump-appointed SEC voted (along partisan lines) to end its defense of those rules in court – a de facto pause of federal ESG obligations.
One commissioner called this retreat an “unlawful dismantling” of climate protections.
DEI and the rising backlash
Concurrently, executive actions and deregulatory moves under the second Trump administration have targeted DEI programs, declaring them “wasteful” and implicitly suspect as “preferencing.” Though legal challenges ensued, the chilling effect on universities, federal contractors, and corporations is real.
🡪 Story tip for journalists: Frame U.S. ESG coverage as both a legal tug-of-war and a broader narrative about ideological conflict over the role of business in social outcomes.
Europe: Simplification without retreat
CSRD: Europe imposes its ESG blueprint
Europe’s ESG strategy is regulatory, not rhetorical.
The Corporate Sustainability Reporting Directive (CSRD) – phasing in with reports based on 2024 financials, published in 2025 – mandates audited, standardized ESG disclosures for large firms, including many non-EU companies with EU market presence.
“Simplification Omnibus” – Streamlining, not rolling back
In February 2025, the Commission released a “Simplification Omnibus” proposing to reduce burdens: delaying deadlines, exempting thousands of smaller firms, and focusing due diligence on direct suppliers instead of entire supply chains. Estimated savings: €40 billion, with €100 billion allocated under a “Clean Industrial Deal” to support clean industry.
Crucially, EU leaders, amid growing global competition, argue this is adaptation, not de-escalation. Sustainability still underpins their strategic autonomy.
🡪 Journalistic lens: Reporters should note the distinction: simplification for competitiveness, not retreat from ESG goals.
China: Building green finance infrastructure
2025 green taxonomy: Clarity for capital
In summer 2025, the People’s Bank of China (PBoC) released a revised unified green finance taxonomy, effective October 1. It streamlines what qualifies for green bonds and loans, aiming to enhance liquidity, simplify project classification costs, and bolster cross-border alignment.
Harmonizing with global standards
China’s taxonomy shows increasing interoperability with international frameworks as it seeks foreign capital for green projects while steering domestic capital toward climate-aligned investments.
🡪 Suggested angle for coverage: ESG here isn’t voluntary. It’s state-steered finance architecture reshaping credit channels.
The global tectonic plates: ISSB, capital flows and jurisdictional momentum
ISSB: Emerging global common language for ESG
The IFRS Foundation's ISSB (International Sustainability Standards Board) is gaining traction. By mid-2025, 36 jurisdictions had adopted or were actively consulting on ISSB-based standards for S1/S2 climate and sustainability reporting.
This convergence helps multinational firms build one core data set and tailor it across global mandates, from EU ESRS to local ISSB implementations.
Money still talks
Despite the U.S. federal pause, investors, lenders, insurers, and customers continue to demand ESG data – and will look to alternatives (state-level rules like California’s, international standards, voluntary disclosures) to assess risk and resilience.
A reporter’s ESG toolkit: Beats, data and sources
Regulatory trail
- U.S.: SEC litigation, court filings, state responses.
- EU: CSRD timelines, Omnibus debates, Council and Parliament votes.
- China: PBoC taxonomy releases, finance ministry documents.
Data to watch
- Financial flows in ESG-branded funds (e.g., Europe still dominates sustainable fund assets; U.S. trails sharply).
- Bond issuance volumes: green bonds under taxonomy regimes.
- Company disclosures: actual vs. reported ESG performance.
Key storylines
- Legal showdown: SEC vs. climate rule defenders.
- Market reaction: investors’ shifts in capital allocation.
- Corporate adaptation: how multinationals are navigating patchwork requirements.
- Policy narratives: messaging from Brussels ("simplify, not scuttle") vs. Washington ("economic freedom").
Reliable sources to follow
- Primary sources: SEC press releases; EU Commission/Parliament documents; PBoC statements.
- News wires: Reuters (for breaking EU/China policy moves), ESG Today.
- Analysis: U.N. / GreenFDC reports for context on China; Vatican Global Compact / PRI documentation for ESG history.
Conclusion: A fractured but irreversible path
ESG began as guidance, matured into risk management, and has become financial infrastructure globally – even amid political pushback in the U.S. The Trump administration may have paused federal rulemaking, but markets and capital do not always follow Washington. Europe is refining its model, China is building a taxonomy toolkit, and ISSB spreads toward common language.
For business reporters: ESG today is a cross-disciplinary beat. It’s about finance, regulation, corporate governance and geopolitics. Cover it with data, diligence and global awareness.
This piece was produced in collaboration with the Global Business Journalism program at Tsinghua University. The program is a partnership between ICFJ, Tsinghua University and Bloomberg News.
Photo by Arash hedieh on Unsplash.
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