Why Estée Lauder is Doubling Down on ESG as Others Pull Back

ESG frameworks are no longer the corporate darlings they once were. A few years ago, you could find ESG goals proudly front and centre in annual reports, investor presentations and sustainability disclosures.

Now, amid a global backlash, particularly in the United States, the language is changing, but some companies are still holding course.

One of them is Estée Lauder Companies (ELC), which continues to integrate ESG into supply chains, operations and governance, even as the broader business world grows more cautious.

Supply chain scrutiny in a new ESG climate

What used to be a banner for responsible business is now a lightning rod for criticism. ESG has become politicised, especially in the US, where accusations of ideological overreach have pushed investors to abandon ESG-aligned funds.

In the first quarter of 2025, more than US$8bn was pulled from ESG funds globally, US$6bn of that from US-based investors. Corporate resolutions around environmental and social issues have also waned, with regulations demanding more stringent financial justification before they get board-level consideration.

This shift is also felt in the language used by companies. Research from AlphaSense shows that mentions of Diversity, Equity and Inclusion (DEI) in US corporate reports have dropped by nearly 70%, and climate change references are down 30%. This pattern, often referred to as “green-hushing”, describes companies continuing their sustainability work while intentionally downplaying ESG terminology in public statements.

Julian Cran, Global Executive at HP, offers a different take: “This moment in the ESG conversation feels less like a retreat and more like a refinement...

"Sustainability, then, becomes less about storytelling and more about systems thinking, how decisions ripple across supply chains, stakeholder trust, and long-term resilience.” 

For companies with large and complex supply networks, this type of thinking is critical. The supply chain is often where sustainability commitments either succeed or fall short.

At ELC, that focus has never wavered. From sourcing Forest Stewardship Council (FSC)-certified cartons to using recycled materials in packaging, Estée Lauder’s supply strategy aligns closely with its broader ESG ambitions.

Embedded sustainability over performative statements

Estée Lauder isn’t just talking the talk. Across its global operations—spanning roughly 150 countries—the company has achieved carbon neutrality in Scope 1 and 2 emissions and runs entirely on renewable electricity.

Its packaging strategy follows the “5 Rs” (likely referring to reduce, reuse, recycle, rethink and renew), with the goal that by 2025, between 75–100% of its packaging will meet at least one sustainability criterion.

This operational push continues through every tier of its supply network. ELC's responsible sourcing practices emphasise environmental and ethical standards, from raw materials to distribution. That includes targets for water use, emissions and palm oil sourcing, many of which are being met ahead of schedule.

As companies shift ESG strategy from branding to backbone, Estée Lauder’s structure stands out.

David Metcalfe, Chief Executive of Verdantix, puts it plainly: “Executive ambition not regulation is the most important factor determining which path a company is on.”

That path, for ELC, is guided by data and disclosure. The company’s Social Impact & Sustainability Reports detail progress in gender equity, well-being and governance. It also publishes Climate Transition Plans that measure emissions, resource efficiency and adaptation goals, keeping investors informed without relying on buzzwords.

From ESG speak to business resilience

The clearest shift in this changing ESG landscape is linguistic. Companies are abandoning overt ESG language not out of disinterest, but to steer clear of controversy. Words like “carbon neutrality” are being replaced with terms such as “cost efficiency” or “risk reduction.” While the terminology changes, the work behind it continues—quietly, but with precision.

Estée Lauder’s Vice President of Sustainability, Al Iannuzzi, captures this pivot well: “Despite political backlash and regulatory hurdles, many companies are doubling down on ESG reporting while others are pausing or even stepping away.

"Within these two positions I see a positive shift going on: superficial ESG language is fading, while operationally embedded practices persist.” 

For Estée Lauder, this means less emphasis on public declarations and more on integration. ESG becomes less about declaring intent and more about demonstrating impact—particularly across global supply chains, where decisions affect everything from packaging materials to labour practices.

That approach is likely to appeal to investors now scrutinising sustainability reports with greater rigour. They want substance, not slogans. And in that sense, the ESG retreat may be filtering out the performative from the strategic.

For companies like Estée Lauder, that spells an opportunity to prove value not with words, but with action.