Beyond the Backlash: The Case for ESG in African Markets

In the past year, the backlash against ESG has become impossible to ignore. What once dominated boardroom agendas and investor pitches is now being questioned, ridiculed, and in some regions, outright rejected. The epicentre of this rejection is the United States, where 24 Republican-led states have taken steps to restrict ESG integration in public investment decisions. Chatham House called it “a mobilization by the political right,” bolstered by fossil fuel lobbies and culture war rhetoric. But the backlash isn’t limited to U.S. politics. Globally, stakeholders are rethinking whether ESG has truly delivered on its promise.

In the first quarter of 2025, $8.6 billion was pulled from ESG funds—the largest outflow on record, according to the Institute for Energy Economics and Financial Analysis. At the same time, The Conference Board found that a majority of corporate executives are retreating from the ESG label altogether. Over 50% reported rebranding their sustainability efforts under new terms like “responsible growth” or “impact,” wary of the political and reputational baggage now attached to the acronym.

And honestly, some of this makes sense.

For years, ESG has often been treated as a compliance exercise, a glossy label, a line item on a report. Funds and businesses ticked boxes without fully engaging with the complex realities ESG was meant to address. Greenwashing ran rampant. AI-driven tools and templated dashboards became the norm, promising efficient data capture and seamless ESG reporting. But in many cases, those tools replaced critical thinking and real contextual understanding. The result? Companies believing they had identified their risks, without ever truly doing the work.

Yet ESG was never about marketing. At its core, ESG is about identifying and mitigating the environmental, social, and governance risks that directly influence a company’s performance and long-term viability. And nowhere is this more vital than in African markets.

Here, the stakes are uniquely high. Africa is home to 8 of the 36 global biodiversity hotspots, and over 70% of Sub-Saharan Africa’s population lives in rural areas dependent on natural ecosystems. At the same time, many of the world’s poorest communities are based on this continent. These communities are often ignored in corporate strategies until things go wrong. In this context, ESG isn’t just about doing good. It’s about managing real, material risk.

One of the first field research projects I ever did was with a mid-sized palm oil concession in West Africa. The company was losing up to 40% of its product due to theft, spillage, and internal negligence. They couldn’t understand why and had largely accepted it as just the way things are when doing business in Africa. It was seen as part of the risk premium, rather than a solvable problem.

I spent three months embedded in the operation, conducting interviews, surveys, and community consultations. We found layers of issues that hadn’t been acknowledged, let alone addressed. A school the company had built as part of its CSR efforts stood empty, without a single teacher. Tribal dynamics within the management structure bred tension and mistrust on the factory floor. And there was no local procurement system in place, meaning nearby communities had no tangible stake in the business’s success.

Through this research, we co-designed a new strategy: developing a local supply chain, restructuring internal management systems, and creating engagement forums that reflected the complexities on the ground. It wasn’t easy. It required listening, humility, and long hours in spaces often ignored by corporate risk assessments. But within a year, product losses dropped to around 15-20%. That’s a significant operational gain, driven by understanding social dynamics and doing the kind of in-depth risk work ESG was always meant to support.

This is what ESG looks like when it works in Africa: deep research, local partnerships, and long-term thinking. It isn’t about frameworks built in Washington or Brussels. It’s about context. It’s about grounding decisions in the realities of rural economies, informal labour systems, fragile ecosystems, and complex histories.

So yes, the backlash may be a necessary reckoning. It’s exposing the shallowness with which ESG has sometimes been approached. But in Africa, ESG - regardless of what we choose to call it - remains essential. Whether you call it sustainability, shared value, or corporate responsibility, the underlying principle stands: if you don’t take your social and environmental context seriously, your business will carry that risk, whether you report on it or not.

Now is the time to do ESG differently. Not because the acronym is trending or experiencing a backlash, but because it’s the only way to build businesses that last.

References

Chatham House (2024). Is ESG dead? The backlash and the way forward.

Institute for Energy Economics and Financial Analysis (IEEFA) (2025). Global Sustainable Fund Flows Q1 2025 Report.

The Conference Board (2025). ESG Outlook: Corporate Responses to the ESG Backlash.

World Economic Forum (2024). The ESG Movement at a Crossroads.

United Nations Environment Programme (UNEP) (2022). Biodiversity Hotspots and Risk Zones.

World Bank (2023). Rural Population (% of total population) – Sub-Saharan Africa.