Despite the anti-DEI crusade, most businesses are sticking to ESG plans that include DEI. Not for compliance, but for competitive advantage. Leading businesses are navigating the current challenges to their benefit. What should business do now? Stay the course.

The landscape

Uncertainty is the word of the day in business. At just about every turn, businesses are hitting headwinds, including a sharp jump in rates of mistrust in business leaders according to the 2025 Edelman Trust Barometer.

Against that backdrop is the increase in anti DEI and ESG sentiment, which has ESG’s critics strengthening their argument that it diverts resources from core business and shareholder value. Or as some have put it – ‘in 2025 going woke means going broke’.

But what we’re hearing across our industry networks and 150 business members is that most executives remain committed to ESG plans regardless of evolving government decisions. In fact, many are doing more, not less.

Because there’s understanding that ESG and DEI is a strategic approach to long-term value creation. It strengthens financial performance and investor confidence. Most businesses recognise that commitments to doing good and advancing inclusion support business growth – especially in turbulent times.

Now more than ever the businesses that continue to proudly deliver on DEI and ESG will see long-term competitive advantage. Customers and employees are watching, and the brands that stick to their commitments will be rewarded with long-term profitability.

Most businesses are continuing with ESG and DEI plans

Most businesses plan to move forward with their DEI and ESG plans, because they see significant strategic benefits. Customers demand it. Employees are engaged by it. Investors are (still) backing it.

While some US businesses have wound back DEI programs, others are strongly rejecting the increased anti DEI sentiment. Just last month 98% of John Deere and Apple shareholders rejected anti-diversity proposals because they believe that DEI is material to profitable business growth. That follows 98% of Costco shareholders voting down a proposal to investigate the business risks of diversity.

Global surveys show the same trend.

• The 2025 Executive CSR Report found 76% of leaders expect their company’s investment in social impact initiatives to rise over the next 12 months. And they’re focusing on smarter strategy and ROI to ensure those investments translate to business value.

• The 2025 Workiva survey of 1,600 executives found nearly all agreed that a strong sustainability reporting program will give businesses a competitive advantage in the next two years. 85% intend to move forward with their existing plans, and 77% said their approach to sustainability reporting won’t change. And, 97% of investors said that they would be more likely to invest in companies with assured integrated sustainability and financial reporting.

• KPMG’s Looking Ahead ESG 2030 Predictions shows that stakeholders expect directors to continue to take action to increase the diversity of their boards and the organisations they govern.

Across Social Traders members, social procurement spend in Australia is increasing every year. And it’s not slowing down. Over 60% of our business members are growing their spend with diverse suppliers year on year.

We’ve also seen a shift at Social Traders in recent years in the motivation for engaging in social procurement. While originally it was compliance led (predominantly via the Social Procurement Framework in Victoria), the main motivation is now company values and ESG plans.

Despite the headwinds, most businesses understand the role of ESG and DEI in driving long-term value creation. While some may be doing it without as much fanfare in the short term, the work and commitment continues.

Also – it’s legally required for many

There are many parts of the world (now including Australia) where ESG integration isn’t just popular – it’s legally required.

• Mandatory Australian Sustainability Reporting Standards (ASRSs). The ASRAs came into effect in January for large businesses. Companies have to report on all relevant sustainability-related topics across the governance, strategy, risk management, and metrics and targets, in a similar way to annual financial reports.

• Review of the Modern Slavery Act. The government will consult this year on reforms recommended in the response to the review of the Act, including expanded mandatory reporting and civil penalties for non-compliance.

• EU’s Corporate Sustainability Due Diligence Directive (CSDDD). The CSDDD introduced assured integrated reporting on responsible corporate behaviour. Australian business subsidiaries with ‘in scope’ parent companies or contracting with ‘in scope entities’ may be subject to new checks on human rights and environmental standards.

Mandatory social performance reporting will be next

The International Sustainability Standards Board (ISSB) has an open research project covering ‘human capital’ as a next consideration for mandatory disclosures.

KPMG’s Looking Ahead ESG 2030 Predictions report shows that 94% of CFOs believe social will be an important priority for their organisation in 2030. The B4SI Benchmark shows a 37% rise in the number of companies reporting the impact of their community initiatives over the last decade.  

The Edelman Trust Barometer shows that people with a higher sense of grievance with business are more likely to believe business is not doing enough to address societal issues.

Which means we can expect to see more of this:

“Levande is committed to addressing critical areas that impact not only our business, staff and residents but also the wider community. … we’re putting the ‘S’ in ESG at the forefront”.

And more of this:

“while we’re recognised for being a leader in environmental sustainability, we know that social performance is just as critical” (Mirvac Social Performance Report).

There’s competitive advantage to be had across customers, staff and investors

On the one hand shifts in regulatory and stakeholder expectations are a complexity for businesses to navigate, but on the other they are an opportunity to innovate and get ahead. The companies that embrace ESG and DEI will lead. The ones that ignore it will be left behind.

• Customers are demanding it. Customers expect brands to have a purpose they not only wear on the outside, but live on the inside too. PwC’s ESG Trends Report shows over 60% of people base their purchasing behaviours on ethical and sustainable criteria, and this is growing by 10% each year. They’re also prepared to pay more for ethically sourced, sustainably made products.

• Top talent is paying close attention. ESG is a competitive advantage for both attracting and engaging employees. You won’t pass go if you can’t show purpose beyond helping the business make money. For example, Economist Impact showed that over 40% of executives prioritise ESG in career decisions.

• Investors want the ROI. A global survey by Morgan Stanley found more than half of investors say they plan to increase their allocations to sustainable investments in the next year. More than 70% of investors believe strong ESG practices can lead to higher returns.

Businesses like Unilever are examples of the ROI other businesses are leaving on the table. They embraced a longer-term, purpose-driven approach considering all stakeholders including communities, the planet and the next generation. The result? Investors benefitted because the business delivered ten years of top and bottom line growth.

ESG and DEI can’t be wiped out with the stroke of a signature on an Executive Order - it’s the future

While the anti-ESG and DEI sentiment has been given a boost in recent months, now is not the moment to pull back. Leading businesses are doing more, not less.

As Forbes Magazine highlighted, cutting back on ESG programs is a risk to employee engagement, innovation, customer trust, supply chain stability and profitability. The companies that retreat into silence will lose the trust of their workforce, customers, investors, and communities. Businesses that champion ESG aren’t sacrificing profit - they’re future-proofing their success.

Especially now, the businesses that remain strong in their commitments will earn staff and customer loyalty. They will set the gold standard for leadership in the 21st century. And that will translate into long-term business performance and shareholder value.

The businesses leading the way know that ESG and DEI isn’t a tick-box - it’s part of business performance. It’s led by leadership, not consultants. It involves every department, not just the sustainability team. It’s regular action, not compliance checklists.

What should business do now? Stay the course.

Tara Anderson

CEO

Social Traders