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ESG is Dead, They Say. Long Live TERRA

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  • Bolton, Patrick
  • LaFrance, Alison
  • Weder di Mauro, Beatrice

Abstract

Environmental, Social, and Governance (ESG) investment has moved in less than a decade from dominant paradigm to contested terrain. This paper examines the rise and recent retreat of ESG in corporate governance and financial markets. We document a marked decline in ESG engagement across corporate commitments, investor coalitions, and corporate communications. While the backlash is most visible in the United States, similar patterns appear globally, indicating deeper structural weaknesses in the ESG model. ESG relied heavily on voluntary coordination and the promise that firms could “do well by doing good†—claims that proved fragile under political and market pressure. We argue that sustainability efforts should refocus on environmental risk through a narrower framework: Transition, Emissions, and Resource Risk Accountability (TERRA).

Suggested Citation

  • Bolton, Patrick & LaFrance, Alison & Weder di Mauro, Beatrice, 2026. "ESG is Dead, They Say. Long Live TERRA," CEPR Discussion Papers 21718, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:21718
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    File URL: https://cepr.org/publications/DP21718
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    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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