• Kerry calls for ESG to focus on economics, not ethics
• Critics say ESG enables greenwashing, lacks clear standards
• Political shifts, weak metrics cast doubt on ESG credibility

Former U.S. Secretary of State and Special Presidential Envoy for Climate John Kerry said the Environmental, Social, and Governance (ESG) standards must abandon their moral grounding and become anchored in economic reality to gain widespread acceptance.

Speaking Monday at the Building Bridges Conference in Geneva, a summit focused on accelerating the sustainable transition, Kerry argued that the proliferation of ESG standards, set by international organizations, voluntary initiatives, and private ratings agencies, should be reassessed.

Listening to John Kerry at the Building Bridges Summit. @BBridgesCH pic.twitter.com/49AnCzcDDF

— Reuben M Wambui?? (@reubenmuhindi) September 30, 2025

"ESG probably ought to mean efficiency, security and growth," Kerry stated, adding that sustainable finance will only be convincing if it demonstrates its ability to improve "economic fundamentals, create jobs, and raise living standards."

Kerry's comments come amid mounting criticism of the ESG movement, which McKinsey & Company has highlighted as suffering from several structural flaws.

Credibility and Complexity Concerns

The most prominent criticism is that ESG unintentionally enables greenwashing. Rather than driving corporate transformation, it often functions as a communication tool used to attract investors and customers without truly changing business models.

The second issue is complexity. Companies are forced to navigate competing objectives, reducing emissions, improving social conditions, and strengthening governance, without a clear mandate from shareholders, resulting in an unrobust evaluation framework.

Third, a lack of standardization erodes the credibility of ESG scores. Unlike relatively homogenous credit ratings, ESG scores vary widely among agencies. McKinsey data shows that the correlation between major agencies ranges from just 38% to 71%, fueling investor skepticism and complicating peer comparisons.

Finally, the link between ESG metrics and financial performance remains uncertain. While some academic studies, including those from the University of Chicago and the European Corporate Governance Institute, find positive correlations in specific instances, they have failed to establish a clear, generalizable causal relationship.

These inconsistencies have been underscored by high-profile cases. Three years ago, Tesla, a pioneer in electric vehicles, was excluded from a major ESG index while oil giant ExxonMobil remained listed, a decision that drew outrage from Elon Musk and reignited accusations of incoherence. Separately, Deutsche Bank was investigated for promoting "green funds" whose sustainability credentials were later challenged. Such incidents reinforce the perception that the system is opaque and vulnerable to marketing abuses.

These structural limitations are compounded by geopolitical shifts. The return of Donald Trump to the White House, for instance, has reprioritized energy security and sovereignty, sidelining climate transition ambitions in the U.S., a major fossil fuel producer.

Olivier de Souza