ESG is Dead, They Say. Long Live TERRA

Patrick Bolton, Alison LaFrance and Beatrice Weder di Mauro

No 21718, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Environmental, Social, and Governance (ESG) investment has moved in less than a decade from dominant paradigm to contested terrain. This paper examines the rise and recent retreat of ESG in corporate governance and financial markets. We document a marked decline in ESG engagement across corporate commitments, investor coalitions, and corporate communications. While the backlash is most visible in the United States, similar patterns appear globally, indicating deeper structural weaknesses in the ESG model. ESG relied heavily on voluntary coordination and the promise that firms could “do well by doing good†—claims that proved fragile under political and market pressure. We argue that sustainability efforts should refocus on environmental risk through a narrower framework: Transition, Emissions, and Resource Risk Accountability (TERRA).

Keywords: ESG; Climate change; Biodiversity; Corporate governance (search for similar items in EconPapers)
JEL-codes: G28 G34 G38 H23 K22 L21 (search for similar items in EconPapers)
Date: 2026-07
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