In the last two years, ESG has accelerated from being a reporting requirement to a leadership imperative. But this shift is messy, uneven, and often contradictory. While some companies are embedding sustainability into leadership strategy with conviction, others are making moves that look more like optics than transformation. This tension is precisely where ESG and leadership strategy now converge, and where the next battle for credibility will be fought.
From Compliance to Capital Allocation
Too often, ESG is still treated as compliance: a reporting cycle dictated by regulation. But the companies that move beyond compliance are proving that sustainability can drive strategy, innovation, and value creation.
Take Mars, Incorporated, which in mid-2025 launched a $250 million Sustainable Investment Fund to scale transformative solutions. That is a clear signal: ESG is no longer something for the annual report. Instead, it’s shaping how capital is deployed and how leadership frames the company’s future.
Contrast that with companies that continue to push out ambitious targets without aligning budgets or governance. These are the organisations where employees, investors, and candidates quickly lose faith. Ambition without resourcing is not strategy – it’s spin.
Leadership That Reinvents – Not Just Reports
In some sectors, ESG is prompting leaders to reinvent the very model of leadership. At Chloé, CEO Riccardo Bellini has embraced regenerative leadership, reframing the company as a living system accountable to people and planet as well as profit. That requires redesigning incentives, redefining governance, and accepting that ESG is not a “department”, it’s a leadership mindset.
Schneider Electric shows what happens when this mindset is embedded in governance. Named the world’s most sustainable corporation in 2025, it has achieved operational carbon neutrality and cut supplier emissions by 40%. Crucially, it has reinforced its leadership structure by appointing Esther Finidori as Chief Sustainability Officer this year, embedding ESG not as a bolt-on but as a strategic driver across the executive agenda.
ESG as Differentiator or Distraction?
For some companies, ESG is becoming a genuine competitive differentiator. General Motors hiring Cassandra Garber as CSO from Dell, IKEA confirming Lena Julle as permanent CSO, and MUFG creating its first CSO role for the EMEA region all demonstrate that sustainability is now seen as a board-level capability, not a side function. These moves strengthen credibility because they allocate real authority.
But others risk undermining their own efforts. HSBC, for example, appointed Julian Wentzel as Group CSO in 2025, but placed the role under the CFO. It may be a clear signal that sustainability is still seen primarily as a reporting and risk exercise, not a strategy driver. That gap between rhetoric and structure is exactly where top candidates walk away.
Coca-Cola provides another cautionary tale. In 2025, it committed to disclose investments in reusable bottles after investor pressure. Transparency is welcome, but when change comes reactively,only after activists force the issue, it raises questions about whether ESG is embedded in leadership conviction or simply managed as reputational risk.
Governance and Broader Accountability
The most interesting shifts may be happening in governance itself. The Governance for Tomorrow initiative in fashion is experimenting with decision-making that includes workers, nature, and future generations. This is not about quarterly targets — it’s about redefining who leadership is accountable to. For an industry built on linear growth, that’s radical. For others, it’s a preview of where ESG leadership could go.
What This Means for Leadership and Search
The lesson is clear: ESG and leadership strategy can no longer be separated. Technical expertise in sustainability is necessary, but not sufficient. Today’s leaders must combine commercial fluency with political acumen, capable of shifting boardroom conversations and embedding sustainability into core business strategy.
At Calderon Search & Advisory, we see this every day in our search work. The companies that succeed in hiring transformational leaders are those that:
- Give sustainability executives direct influence, ideally reporting to the CEO.
- Align budget and mandate with ambition.
- Create space for constructive challenge at board level.
Those that don’t? They end up with symbolic hires: leaders asked to carry global responsibility with little authority. And those roles either go unfilled, or they burn through good people in 12–18 months.
In Summary:
The convergence of ESG and leadership strategy is already happening, but it’s not happening evenly. From Mars deploying capital into a $250m sustainability fund, to regenerative leadership at Chloé, to Schneider embedding ESG into governance, there are models of genuine transformation. But when other companies treat ESG as compliance or reputation management, the cracks show quickly.
For companies serious about transformation, the question is not whether to integrate ESG into leadership. The question is: are you structuring your leadership in a way that makes sustainability credible, actionable, and real?
Because in this new era, ESG is no longer a story to tell, it’s a strategy to live.
