Jessie Martin, Global Head of Advisory at Novata, joins this episode of Sustainable Intelligence to explore the growing pushback against ESG reporting, particularly due to regulatory overload and inefficiencies. Jessie highlights how businesses are struggling with excessive ESG data demands, leading to frustration and calls for simplification, especially in Europe with the CSRD and in the US with a shifting regulatory landscape. Despite these challenges, she emphasizes that a sustainability focus should not be abandoned but rather reframed as a tool for managing business risks and opportunities, rather than just a compliance exercise.
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Conversation with Jessie Martin (Transcript)
Ella Williamson: Welcome to Sustainable Intelligence, where we discuss all things sustainability for the private markets, brought to you by Novata. I’m Ella Williamson, and I’m thrilled to be your host.
Joining us today is Jessie Martin, Global Head of Advisory at Novata. Jessie is an environmental economist and sustainable finance leader with nearly 20 years experience working with corporates, investors, asset managers, financial institutions, NGOs, and governments around the globe. She has written sustainable finance and climate policies, contributed to the creation of a new asset class for nature, and developed novel financial instruments for energy transition and decarbonization. Her work has been featured in the Seattle Times, New York Times, and Bloomberg.
Therefore, I couldn’t be more excited to jump into today’s topic on reframing ESG and the macro trends for 2025. So Jessie, can you start by setting the stage. What are the current biggest macro trends in ESG?
Jessie Martin: Yeah, of course. I would say that the macro trend of ESG in 2025 is going to be pushback. It’s definitely going to be a period of pushing back on ESG in a few different forms. Companies are feeling really overburdened by the number of requests they’re getting for ESG data from customers, investors, and regulators. They’re needing to direct an increasing level of resources toward this while really struggling to see where the value is.
In Europe, there is a growing chorus of requests to delay or scale back the CSRD and reduce the burden this regulation is going to impose upon businesses. And for those familiar with the regulation, this really should not be a surprise.
There is a lot of chatter about the Omnibus Bill and whether or not, and really how, that will achieve the European Commission’s stated intent of reducing the reporting burden across a number of key sustainability reporting requirements. But, for now it’s all still a mystery, and so far seems to have muddied the waters as much as anything.
And then, of course, in the US we have a new administration that is going to prioritize deregulation over sustainability and has been pretty vocal about its stance toward ESG in general. So lots of pushback coming from all directions.
But I think it’s really important that we don’t conflate all of this pushback with pure opposition to or abandonment of ESG. So, the ideal scenario in my opinion is that all of this scrutiny and examination actually gets us back to the basics of managing sustainability risks and opportunities as part of doing business in a complex global economy. But, we’re really drifting further and further away from that, and I think that’s where some, and maybe even most, of this pushback is really coming from. So, there is a real sense that all of these frameworks and alliances and coalitions and initiatives are really not serving businesses, and I’d personally argue that for the most part they’ve not been particularly effective at driving positive outcomes more broadly, either.
So, we always tell our clients at Novata that if you want to get good, actionable data from your companies that actually can be translated into something useful and meaningful, then they actually need to see the value it’s driving for them. And that data needs to be relevant to their business objectives. So, at a macro level I think we’ve just strayed too far from that principle and it is time for a bit of a reset. And that’s going to be what’s driving a lot of conversation and changes throughout 2025.
Ella: Thanks for that Jessie. So, rather than abandoning ESG altogether, it sounds like the real opportunity lies within refocusing the fundamentals.
Jessie: Absolutely!
Ella: Now, there is also a growing backlash against sustainability regulations specifically. How are businesses navigating these pressures, particularly in Europe with their disclosures?
Jessie: Yeah, I think the clearest example of this right now is in how companies are preparing their disclosures for the CSRD amidst those growing calls for delays and simplification of those requirements.
At this point, among our clients, we’re seeing a variety of responses that depend primarily on business size, industry, and in some cases, sustainability maturity or sustainability ambition levels. We have some that are all in and moving forward full steam ahead, some that are proceeding with caution and focusing on the bare minimum, and honestly, we’ve got some that are saying you know what, there just isn’t enough clarity here and this is a really big ask, so we’re going to sit back and wait.
While I can empathize with that last one, I still don’t recommend it. You are going to need to report in some shape or form, and there are ways that you can prepare at a strategic level while conserving resources and also deriving some business value out of the work as well. Sustainability reporting regulations and stakeholder requests for ESG data are not just going to go away, so even as requirements evolve and hopefully improve, doing nothing is still a risky move in my opinion.
Ella: And the real challenge, I guess, then is figuring out how to stay engaged with ESG in a way that’s sustainable for your business. Now, building on the theme of regulation, with an omnibus bill and regulatory overload, what practical advice would you give to businesses to stay focused and strategic?
Jessie: Yeah. To be honest our guidance here at Novata really has not changed. We have always anticipated changes to the regulation. We have been very transparent with our clients about that. After it was rolled out, SFDR was scaled back and it was reasonable to assume that CSRD would be as well, especially given the scale of this particular regulation.
There are a few key levers to pull in an omnibus bill, namely the number of mandatory vs. voluntary metrics and maybe even some of the thresholds for who is in scope and when. But, ultimately, the CSRD is not likely to be fully transformed, and also we know that when these changes actually are enacted, they tend to take a very long time to be finalized, so the steps to prepare are still very relevant.
Companies should still be shoring up their data processes and governance, they should be engaging and informing key players across their business, and they should also be getting a clearer picture for themselves of their data availability and quality—and then making operational plans to fill the gaps and address any needs that they’ve got.
And I think it’s just as important that as they’re doing all of this, they should also be identifying ways to use this data to drive strategic outcomes, whether those are around sustainability performance or financial performance, or ideally both. If you’re going to be putting all of this effort into completing an exercise like this, then you should absolutely be deriving some internal value from it. Ultimately, this is your data, it’s not the regulator’s data, it is your data and there are a lot of opportunities that it can unlock for the business.
And that really seems to be where a lot of our clients are at. Even after this latest unsubstantiated omnibus leak last week, indicating that perhaps a significant number of companies might no longer be in scope. And again, This is still just an unsubstantiated leak, and as far as I know, was really only reported in a single source, but we’re still hearing from companies as well as large asset managers with a lot of phase two reporters in their portfolios that they are proceeding as planned, and they see no need to change course.
So we’re still signing people up to use our solutions to make CSRD a lot easier, regardless of what the final version does look like. And we’re having great conversations with them about how to use that data to drive business outcomes.
Ella: Thanks for that, Jessie. And I love the fact that Novata’s guidance has remained consistent, despite these recent regulatory shifts that we’ve been seeing. And whether or not CSRD is going to be scaled back, which we’ll find out more in the next couple of months, companies are still going to need strong data processes, governance, and a really clear sustainability strategy.
Now, we know that ESG isn’t just about doing the right thing. Why is it critical to reframe ESG as a holistic business strategy rather than a compliance checkbox or side hustle that many businesses see it as?
Jessie: Yeah, it’s very important. I’d actually argue that it was never fundamentally about doing the right thing outside of what’s right for the business. It was always about recognizing the fact that doing business in a global economy requires understanding an increasingly complex set of risks and opportunities, some of which align to sustainability topics.
So, whether that is in the shape of climate risks, in the shape of supply chain disruptions as a result of severe storms, legal risks as a result of failing to monitor human rights and labor practices across your value chain, or the many risks that have always been present in the face of poor governance. Ultimately these are business risks that happen to be linked to sustainability, and managing them is essential to increasing business resilience, particularly in uncertain times. and then also as you enter new markets and actually grow your business, these are risks that have always been important to manage. But at the same time, sustainability topics can also introduce new business opportunities in the form of accessing new markets, developing products, and even developing pricing strategies.
ESG has always been about using data to identify, understand, and manage these risks and opportunities toward business objectives rather than an ideological objective. But now we’re seeing an increase in regulatory pressures, as you said, namely from Europe, as well as an ever-growing list of B2B and investor questionnaires that asset managers and companies have to respond to, all under this widening umbrella of ESG—and that has definitely shifted the narrative toward compliance and box ticking and away from risk mitigation and value creation.
So I think the question now is really how do investors and companies maintain that original intent of managing risks and opportunities, and ultimately increasing business resilience, when these scarce resources that they have for performing this work are being tirelessly consumed by disclosure requests? ESG practitioners have long touted the mantra “what gets measured gets managed,” but if measuring is all anyone has time for, then actually nothing gets managed. And I think businesses are feeling like that’s pretty much where we’ve ended up here at the start of 2025. I honestly don’t think anyone is happy with that tradeoff, and it’s a big part of what’s driving some of the pushback on these regulations and requests. So, if all we’re doing is collecting and reporting data, then what are we actually accomplishing, and how are we creating any value from this whole endeavor?
Ella: Yeah, and it’s that drain on resources that means we are not ultimately delivering strategic impact at the moment. So based on all you’ve just said, if you could remove one obstacle that’s holding businesses back from aligning ESG reporting with their business strategy, what would it be?
Jessie: I actually think that what makes this a challenge is the fact that the data that businesses are being asked to report, whether that be to an investor, customer, or regulator, is often just not material to the business. And that makes it really difficult to align it with business strategy or translate it into a business objective. Or, they’re just being asked to report so much data that the data becomes the end rather than the means. So, in a perfect world the burden, it wouldn’t be on businesses to try to magic all these disparate requests into a unified strategy; it would be on those requesting the data to only ask for data that is reasonable, material, and business-aligned.
Again, I just think we have strayed too far from that premise, and that’s why we’re seeing so much pushback. That’s also why my team works with our investor clients at Novata to do exactly that: ask for the metrics that are business aligned and industry specific, so they not only get buy-in instead of pushback from their portcos, but they are actually helping to drive that strategy and creating that value for them.
Ella: Thank you so much for that Jessie, that’s such a powerful note to end on. ESG, sustainability, or however your business frames it; it needs to drive strategy, not just an end in itself. As you said, businesses need to somehow make sense of all these fragmented demands, but for those requesting the data to ensure it’s reasonable.
Thank you so much Jessie for all your time today. I have absolutely loved talking to you as always. Until next time, let’s keep building sustainable intelligence together. Find out more at novata.com.
