ESG as the non-financial function. A clearer way to think about business performance

Over the past few months, I have found myself increasingly frustrated by the way ESG is being talked about online, particularly on LinkedIn. The tone has shifted and people are more negative, more dismissive, and some are openly cynical. And since the regulatory developments of 2025, combined with a more complex geopolitical environment, I have noticed a growing narrative that ESG is something optional, something fluffy, or something that can simply be pushed to the side.

I understand where some of that fatigue comes from. ESG has been poorly explained at times. It has been treated like a reporting exercise rather than a management discipline. It has been wrapped in jargon, acronyms and frameworks that can overwhelm even well intentioned businesses. And when regulation changes, it can create the impression that the whole topic was only ever driven by compliance.

But that is not what ESG is. What I have come to believe is that the frustration around ESG is often less about the substance and more about the framing. People do not share the same definition of what ESG is meant to do. Without a clear definition, ESG becomes a catch all term. It becomes easy to misunderstand, easy to dismiss, and easy to reduce to a report.

So rather than debating whether ESG is popular or unpopular, I want to offer a different way to think about it. A way that makes it more practical, more grounded, and far easier to integrate into how businesses actually operate.

Here is the reframing that I believe brings clarity. ESG is best thought of as the non-financial function of a business. Not the sustainability team, not the annual report, and not the latest framework. A business function. A function that gives leadership visibility over the non-financial drivers of risk, value, and resilience, so that better decisions can be made.

Once you see ESG through this lens, the conversation becomes less abstract and much more useful.

Why finance is universally understood

Every business understands the value of a finance function, and it is rarely debated, because the link to business performance and decision making is obvious. Even the smallest company knows that financial information is essential.

Finance exists to help a business see and manage financial performance. It gives you visibility into profitability, cost drivers, cash position, and exposure. It supports strategic decisions about investment, budgeting, forecasting and risk. It also creates discipline. Controls, approvals, documentation, and governance exist so leaders can trust the numbers they use to make decisions.

And importantly, finance is not only about reporting. Reporting is an output. The deeper purpose of finance is management. It helps a business run with visibility rather than guesswork.

ESG does the same thing, but for non-financial performance

Now apply the same logic to ESG. If finance provides visibility over financial performance, ESG provides visibility over non-financial performance.

It helps a business understand environmental performance, such as energy use, emissions, resource consumption, waste and nature related impacts. It helps a business understand social performance, such as workforce wellbeing, safety, culture, community impacts and supply chain labour practices. It also helps a business understand governance performance, including ethical conduct, accountability, oversight, internal controls, and how critical decisions are made when trade offs arise.

When you treat ESG as a function, the purpose becomes clearer. It exists to help a business see the non-financial factors that influence long-term performance, so those factors can be managed deliberately rather than reactively.

Once you have that visibility, better decisions follow naturally. Businesses can reduce risk before it becomes costly. They can identify inefficiencies, strengthen supply chain resilience, protect reputation, build trust with customers and partners, retain talent, and respond to changing expectations with confidence. ESG stops being a vague concept and becomes a practical management discipline.

Why ESG feels so broad, and how to make it practical

A common reason ESG gets dismissed is that it feels like everything. That criticism is fair when ESG is approached without a filter.

But the same is true in finance. Finance can be broad too, spanning revenue, cost structures, cash flow, investment strategy, controls, forecasting and governance. What makes finance practical is focus. It concentrates on what is material to performance.

ESG needs the same discipline, and the filter that makes it practical is materiality. Materiality is how a business decides what matters most, given its industry, business model, value chain, geography, stakeholders, and risk profile. What matters for a software company will not be the same as what matters for a manufacturer. What matters for a professional services firm will not be the same as what matters for a food producer. The function is the same, but the priorities differ.

When companies try to implement ESG without defining what it actually means in the context of their business (i.e. what is material), ESG becomes overwhelming. When companies define what matters most, ESG becomes manageable and decision useful.

ESG becomes credible when it is treated like finance

Another reason ESG frustrates people is that the data can feel messy. Often that is not because ESG data is unimportant. It is because it is newer, more distributed across teams, and less mature in terms of controls.

Many businesses have spent decades building strong financial processes and internal controls. ESG is still catching up (and in some instances extremely far behind). But the path forward is clear. If ESG is the non-financial function, then ESG information should be governed with the same seriousness as financial information.

That does not mean perfection. It means structure. Clear ownership of data, documented methodologies and assumptions, consistent definitions across the organisation, review and approval steps, traceability back to source evidence, and controls over changes. Over time, this is what transforms ESG from narrative to credible information that management can rely on.

And this is where the finance function becomes essential. Finance teams understand discipline, systems, evidence, and scrutiny. Sustainability teams understand the subject matter and the context. When those two capabilities work together, a business can build a far stronger model for managing performance.

When finance and ESG come together, sustainable business becomes visible

This is the point I think is often missed. When finance and ESG are treated as separate worlds, sustainability can feel intangible. ESG becomes a separate report, owned by a separate team, using separate data. It remains hard to connect to strategy, risk management, investment decisions and operational priorities.

But when finance and ESG come together, sustainable business becomes visible. Non-financial performance becomes measurable and governed. Sustainability risks and opportunities become clearer, more comparable, and more actionable. Decision making becomes more integrated because leaders can see both sides of performance, the financial and the non-financial, in one coherent view.

This is where business resilience becomes real. Companies can connect emissions reduction to operational efficiency. They can connect workforce wellbeing to productivity and retention. They can connect supply chain practices to continuity and risk exposure. They can connect governance to trust, capital access and long-term value.

In other words, the moment finance and ESG work together is the moment sustainability performance can actually be driven.

Frameworks and standards, a simple way to think about them

Another major source of confusion in ESG is the alphabet soup of frameworks and standards. I think it becomes much clearer when you compare it to how finance works.

In finance, most organisations follow an established accounting basis, such as IFRS or local GAAP, and they also use supporting frameworks for governance, control, and how information is presented and managed. The point is not that every company does everything in exactly the same way. The point is that there is a shared language and a consistent set of rules for how financial information should be recognised, measured, and reported.

ESG is moving in the same direction. Frameworks are most useful when they help you structure your approach, your governance, and how you communicate. They help you organise your thinking and design how the non-financial function operates. Standards, on the other hand, are what create consistency in how information is defined, measured, calculated, documented, and reported. They are the closest equivalent to the accounting rules and technical guidance that finance teams rely on.

When companies see the similarities, they gain clarity quickly. You stop trying to follow everything at once, and you start building a fit for purpose operating model. The goal is not to adopt every framework or chase every standard. The goal is to build a non-financial function that is grounded in clear governance and uses consistent measurement rules so the information can be trusted, compared, and improved over time.

What has changed moving into 2026

One of the most useful ways to interpret the regulatory developments of 2025 is not as a signal to switch off, but as an opportunity to build maturity. Many organisations have been operating in urgency for the past few years. That urgency pushed progress, but it also encouraged rushed approaches in some cases.

In 2026, many companies have a chance to breathe and build. They can strengthen governance rather than scramble for disclosures. They can build a credible data foundation that supports decisions, not just reporting outputs. They can integrate non financial performance into how the business is run. This is where the ESG function becomes genuinely valuable. Because the strongest organisations will not be the ones who can produce the best looking report. They will be the ones who can run the business with better visibility, better discipline, and better foresight.

The reality

A modern business cannot rely on financial performance alone to understand whether it is truly performing well. Financial performance tells you what happened. Non-financial performance often tells you what happened and what is coming.

ESG as a function, when implemented well, is simply the function that helps leadership see what is coming, understand what matters, and make decisions that protect and grow value over time.

So if ESG feels confusing, I do not think the answer is to abandon it. I think the answer is to reframe it. Treat ESG as the non-financial function. Build it with the same seriousness as finance. Tailor it through materiality. Integrate it into decision making. Strengthen data and governance steadily over time.

That is how resilient, sustainable businesses succeed.