The ESG Rollback Everyone's Watching Is the Wrong One

Two things happened to corporate climate commitments over the past two years, and the business press covered the wrong one.

In February 2025, HSBC quietly pushed its own operational and supply-chain net-zero target back twenty years, from 2030 to 2050, citing slower-than-expected progress on Scope 3 emissions. Three months earlier, a reshuffle had removed the Chief Sustainability Officer role from its executive committee altogether. Within months the bank had also left the UN-convened Net-Zero Banking Alliance. A year later, TotalEnergies told the market it could no longer formally adopt a net-zero transition plan aligned with 1.5°C, on the grounds that scientists now consider that pathway "out of reach." Both stories ran as evidence of the same thing: ESG in retreat, emboldened by a political climate that has made climate commitments look like a liability rather than an asset.

That's the visible rollback. It is not the interesting one.

What's actually being rolled back

Start with what changed in the law, because it's smaller than the headlines suggest. In February 2026, the EU's Council gave final approval to the Omnibus I directive, which raises the threshold for mandatory sustainability reporting from roughly 250 employees and €50 million turnover to 1,000 employees and €450 million turnover; by one estimate, this removes four in five previously in-scope companies from the regime entirely. It also caps how much data those remaining reporters can demand from smaller suppliers in their value chain, and strips out the sector-specific reporting standards that were still being drafted.

That is a real simplification. It is also, on its own terms, modest: it changes who has to report and how much detail they owe, not what climate science requires of anyone's operations. Nothing in Omnibus told HSBC that Scope 3 progress would be slow, and nothing in it told TotalEnergies that 1.5°C was scientifically out of reach. Both companies made commercial and scientific judgements that happen to have landed in the same multi-year window as a regulatory change they can now cite as cover. The correlation is convenient. It isn't causal.

Meanwhile, the number that should be getting more attention than either of those stories is quieter and less dramatic: the share of S&P 100 companies using the word "ESG" in a report title fell from 40% in reports published in 2023, to 25% in 2024, to just 6% in the most recent count for 2025, according to the Conference Board. The same research found the substantial majority of S&P 500 firms were still disclosing climate-related targets even as that language receded. And an EcoVadis survey of 400 executives at large US companies found that 87% had maintained or increased their sustainability investment despite the regulatory noise, a meaningfully weaker claim than "increasing," and one worth sitting with, because a further 31% told EcoVadis they were specifically increasing investment while simultaneously pulling back their public communication about it. Researchers have a name for that particular combination: greenhushing.

Put plainly: the label is dying faster than the underlying work, for most companies. But "for most" is doing real work in that sentence, and greenhushing is by design very hard to tell apart from quiet abandonment from the outside, which is exactly the problem.

Why that distinction should unsettle you, not reassure you

It would be comfortable to conclude from this that the fundamentals are fine: that beneath a retreating vocabulary, disciplined organisations are quietly getting on with the job, and only HSBC and TotalEnergies actually blinked in public. That is one reading of the evidence above, and it is not an unreasonable one.

It is also not obviously the right one, and a board that settles on it without interrogation is taking something on faith it hasn't tested.

Here is the harder question: if "ESG" is disappearing from titles because the term became politically toxic rather than because the underlying governance matured, then some of what looks like disciplined continuity is strategic camouflage instead, and camouflage is not the same thing as commitment. A company that quietly keeps its climate targets while deleting the word from its report title has made a communications decision. Whether it has also preserved the accountability structures (the board-level ownership, the capital allocation discipline, the audit trail) that made the original targets credible is a separate question, and the retreat of the label removes exactly the visibility that would let an outsider tell the difference.

Where this lands closer to home

British boards watching this from the sidelines, comfortable that Omnibus is an EU story, are working from an incomplete map. The UK is not building a simplified version of CSRD; it is building a parallel regime of its own, and the two do not automatically satisfy each other.

The Department for Business and Trade published UK Sustainability Reporting Standards, the UK's own adoption of the ISSB's global baseline, at the end of February. As things stand, they are available for voluntary use only. The Financial Conduct Authority has proposed making the climate-related strand mandatory for listed companies from accounting periods starting 1 January 2027; its consultation closed in March, with final rules expected this autumn. That is a proposal, not yet a rule, and boards planning around it as though it were settled law are ahead of where the regulation actually sits. It is also, by design, a narrower test than its EU counterpart: "single materiality," asking what a sustainability issue means for the company's own cash flow and cost of capital, rather than the EU's "double materiality," which also asks what the company means for the world.

That single distinction creates real complexity for any UK group with European operations. A UK parent can be entirely compliant under its own, narrower domestic standard while a qualifying EU subsidiary or branch remains separately caught by the EU regime: reporting on double materiality, on a different timetable, group turnover permitting. And a UK company that sits well below every relevant threshold on both sides of the Channel can still find itself fielding detailed sustainability data requests from a large EU customer further up the value chain, now capped at a new voluntary standard rather than the full EU framework, but a live compliance burden regardless of whether the requesting company is legally obliged to send it.

None of that is simplification. It is two regimes, with two different definitions of what matters, running in parallel through the same group structure, which means the honest answer to "are we simplifying or not?" is often "it depends which entity, and which materiality test, you're asking about."

The question this leaves you with

None of this settles whether the retreat from public ESG commitments is prudent recalibration or quiet abandonment dressed up as realism; the honest answer is probably that it's both, depending on the company, and that the label tells you almost nothing about which. What it does settle is that "our reporting burden went down" and "our commitments are intact" are two different claims, and the gap between them is exactly where a board's attention is most needed and least likely to be looking. The companies worth watching over the next eighteen months aren't the ones that dropped the word ESG. They're the ones whose targets you can no longer find without asking.