ESG, the catch-all acronym for corporate efforts to address environmental, social, and governance issues, is undergoing a rethink, particularly in the United States.
Over the past decade, ESG has expanded as a framework to measure a company’s societal impact. Corporate risks linked to society’s biggest issues, such as climate change, inequality, and public health, persuaded investors that addressing these issues was good business. For instance, bolstering a supply chain against the shifting impact of the increasing global temperature protects the bottom line, and healthier employees improve productivity.
This shift led to a proliferation of metrics to measure company impact beyond revenues and profits.1 In the process, ESG moved from the margins into the mainstream, and investors, employees, regulators, and the public increasingly expected companies to take responsibility for reducing and resolving big societal challenges.2
The numbers tell the story
Among 89 large companies, the median number of ESG-related KPIs that a C-suite monitors is 100, a 30 percent increase compared to 2018. Media mentions of ESG soared—from 5,000 in 2014 to over 300,000 in 2024 (Exhibit 1). ESG reporting and compliance have increased transparency on issues like emissions and inclusive economic growth, preventing societal harms and showing that companies can and do make a positive difference.3
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Four line charts, each with a line going upward to represent the increased focus on ESG over the past decade. In the first chart, the line rises from 2018 to 2023, indicating a 1.3-time increase, showing the median number of ESG-related KPIs tracked by companies. The second, third, and fourth charts all show a line going upward from 2014 to 2025. The second chart indicates a 1.8-time increase in the number of mandatory ESG regulations globally. The third chart shows a dramatic 37-time increase in venture capital and private equity investment in ESG-measurement businesses. The fourth chart shows a steep 54-time increase in the number of ESG media mentions.
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Yet, the rapid proliferation of ESG checklists has crowded CEO agendas, leading to ESG fatigue.4 Media mentions have ticked down in 2024 and 2025, and in the United States, shareholder proposals related to ESG declined in 2025 compared to 2024. Companies are increasingly pulled in opposite directions by differing cultural and regulatory expectations across countries. In the European Union, the regulatory requirements of the Corporate Sustainability Reporting Directive went into effect in 2025, while the United States is moving toward less reporting.5 Events such as the conflicts in Ukraine and the Middle East and an emerging rearrangement of global trade have shifted public attention to energy security and affordability, amplifying these complications.
Fundamentally, a compliance-based approach does little to help companies set strategic priorities and align their unique capabilities with societal needs in a way that’s consistent with their business goals. Thus, we’re at an inflection point: Societal challenges are not going away, and the way companies engage with them must evolve.
In this report, we take neither a positive nor a negative view of ESG, instead offering a fact base to support companies and other organizations in evaluating business opportunities that advance societal goals if they have an interest in doing so. Specifically, it examines where corporate capabilities could deliver outsize impact and identifies the market contexts needed to enable a business case across a diverse set of societal issues. A clearer, capabilities-based approach can help business leaders interested in addressing societal issues, set a strategy and sharpen societal choices about the use of public resources.
Companies have an impact on society through products, incomes of company stakeholders, and ‘spillovers’ to the rest of society
To be sure, companies make their biggest contributions to society by delivering better products and services and supporting lives and livelihoods. In previous research, we analyzed how companies create and distribute value among employees, suppliers, shareholders, governments (via taxes), and customers.6 This work shows how the bulk of a typical large company’s value, goes to consumers in the form of consumer surplus, as well as to employees and suppliers as income, specifically $0.83 of every $1 of revenue. (Exhibit 2). Productivity growth and benefits to stakeholders like workers, shareholders, suppliers, and customers can go hand in hand. Optimizing such “win–wins” on issues relating to these stakeholders is not always easy and goes beyond financial flows, but doing so and upholding standards that maintain a social license to operate are important parts of creating long-term value for a company.7
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A diagram with several lines of different thicknesses divided into three categories: elements of gross value added, indirectly measured, and estimated. It shows the distribution of corporate economic gains to households through eight pathways for an average corporation with more than $1 billion in revenue. The diagram flows from left to right, with lines extending from a rectangle labeled “Corporation” into eight pathways: 1) supplier payments, 2) investment, 3) tax, 4) capital income, 5) labor income, 6) consumer surplus, 7) negative spillovers, and 8) positive spillovers, ultimately reaching another rectangle labeled “Households.” The two thickest lines represent supplier payments—which flow into supplier companies and then into upstream supplier companies to reach households—and consumer surplus, which flows into products and services and then to households.
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But companies also affect people who are not direct stakeholders. These societal spillovers include positive externalities, such as productivity growth, technology diffusion, or improved access to services, and negative ones, like pollution, biodiversity loss, or underprovision of public goods.
The negative ones often arise when markets fail in one of two ways:
- Underprovision. Goods or services that create significant social value, such as basic healthcare, sanitation, education, nutrition, or electricity, are not delivered at sufficient scale or quality.8
- Negative externalities. The environmental or health costs of companies’ products or operations aren’t reflected in prices or absorbed by the producer, as in the case of pollution and damage to biodiversity.
Addressing underprovision and externalities is the focus of this research.9 In the same way our prior work quantified the flow of value to different direct company stakeholders, this report uses a representative set of 18 environmental and societal issues to illustrate where companies can make a difference and quantify potential impact if they choose to act—or should society choose to tweak markets and incentives to create a business case for doing so (Exhibit 3).
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A diagram with three concentric circles of different sizes, illustrating the categories of societal issues that companies could consider, extending beyond immediate corporate stakeholders. The innermost circle, featuring an icon in the shape of three buildings, represents issues related to immediate corporate stakeholders, such as workforce training and supply chain resilience. Surrounding this is a larger circle in a different color, highlighting 18 societal issues related to negative business externalities and the underprovision of goods and services; some of these issues include biodiversity loss, lack of access to and low quality of education, greenhouse gas emissions, inadequate housing, and indoor and outdoor air pollution. The outermost area, the largest circle, includes issues not primarily about economic value, such as voting rights and universal access to justice.
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Progress on many of these societal issues occurs as economic development increases the purchasing power of households and governments, highlighting the indirect impact companies have on societal issues via their contributions to productivity growth and incomes through business as usual.10
However, the prevalence of an issue can also vary significantly across countries in the same per capita income group. For example, infant mortality rates are, on average, higher in countries with lower income levels. Yet there are lower-middle-income countries with infant mortality rates up to 70 deaths per 1,000 live births, which is significantly higher than the average for low-income countries.11 In short, economic development matters a lot, but it is not the only factor driving progress on societal issues. The variation can have many structural causes but it also indicates latitude for companies and society to accelerate progress beyond what they contribute to economic growth in the normal course of business.
Historical examples reveal important company roles that are often overlooked, such as developing new technologies and business models that change the game. For example, unleaded gasoline, seat belts, and ozone-safe products all involved an iterative process of innovation and policy adjustments that aligned company capabilities with societal goals over a sustained period, though not always in a straight line.12
Companies can find overlooked business opportunities in addressing such issues, or can invest in ways that could make solutions to them cost competitive. Accelerated progress comes when innovation and policy adjustments work in tandem. For example, the development of drone delivery of blood to support maternal health in Rwanda was a sequence of company and government actions, including innovation, permitting, piloting, scaling of flight corridors, improved distribution, and expansion of products (Exhibit 4).
2014: Zipline’s founders believe their long-range, fixed-wing drones could address Rwanda’s acute need for rapid blood transfusions to treat postpartum hemorrhage, severe childhood anemia, and other health issues needing a fast response. They approach the Rwandan government for permission to test the plan.
2015: Rwanda’s Ministry of Health grants permission for a pilot program to deliver blood by drone.
2016: The first area of operations goes live. Zipline delivers blood to Kabgayi Hospital in 15 minutes, compared with 3 to 4 hours by road. Seven hospitals join the program within months.
2016: Ministry of Health starts paying for Zipline deliveries.
2017: Scaling slows down as high costs and regulatory prohibitions on drone flights at night limit Zipline’s ability to reach more hospitals. In parallel, B Medical Systems deploys solar-powered vaccine fridges in rural Rwanda, enabling last-mile health centers to safely store vaccines and expanding immunization reach.
2018: The Rwandan government approves uncrewed aerial vehicle (UAV) flight corridors for autonomous flying and signs a national service contract with Zipline. Gavi and UPS provide money to develop a village-level vaccine network.
2019: A distribution hub is built in Kayonza. Zipline’s drones can now cover two-thirds of the country and deliver more than three-quarters of all the blood needed outside Kigali, typically within 15 minutes.
2021: The Rwandan government approves UAV night flight corridors.
2022: The Rwandan government agrees to guarantee shipment volumes to 2029, ensuring a market for Zipline’s drone services.
2023: A vaccine pilot at the village level demonstrates lower costs can be achieved. With Gavi and UPS backing, Zipline affirms that its drones have dropped 76,000 vaccine doses in 119 rural posts, fully immunizing roughly 6,000 children for just $0.24 per dose—about 85 percent cheaper than using the motorbike cold chain that prevailed before drones were used.
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In the first of 11 panels, a line chart gradually declines, starting at 44,000 and stopping at 30,000, with the horizontal axis running from 2010 to 2023, depicting the rollout of logistics company Zipline’s medical blood delivery operation in Rwanda. The vertical axis shows Rwanda's rate of infant deaths per 1,000 live births. Highlighted on the chart is the first business-led innovation innovation that occurred in 2014, listed in the text.
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The second of 11 panels shows the same chart, highlighting the first policy intervention in 2015, with the shaded area beneath the line starting at 44,000 and then stopping at approximately 35,500.
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The third panel shows the same chart, highlighting the second business-led innovation that occurred in 2016, listed in the text, with the shaded area beneath the line stopping at approximately 34,000.
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The fourth panel shows the same chart, highlighting the second policy intervention that occurred in 2016, listed in the text, with the shaded area beneath the line stopping at approximately 34,000.
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The fifth panel shows the same chart, highlighting the third business-led innovation that occurred in 2017, listed in the text, with the shaded area beneath the line stopping at approximately 33,000.
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The sixth panel shows the same chart, highlighting the third policy intervention that occurred in 2018, listed in the text, with the shaded area beneath the line stopping at approximately 32,400.
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The seventh panel shows the same chart, highlighting the fourth business-led innovation that occurred in 2019, listed in the text, with the shaded area beneath the line stopping at approximately 32,000.
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The eighth panel shows the same chart, highlighting the fourth policy intervention that occurred in 2021, listed in the text, with the shaded area beneath the line stopping at approximately 31,000.
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The ninth panel shows the same chart, highlighting the fifth business-led innovation that occurred in 2022, listed in the text, with the shaded area beneath the line stopping at approximately 31,500.
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The final panel shows the same chart, highlighting the fifth business-led innovation that occurred in 2023, listed in the text, with the shaded area beneath the line stopping at approximately 30,000.
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Similarly, expanding internet access rapidly in India was spurred by a dynamic iteration of improved technology from private sector companies like Reliance Jio and government policy, resulting in a low-cost option that delivered access to hundreds of millions of residents. The story also involved refining regulation over ten years, including building out a core 4G infrastructure, then a next-generation technology, and reducing transaction costs (Exhibit 5). Competitors responded with lower prices and scaling solutions.
2013: Reliance Jio begins 4G rollout infrastructure deployment under a strategy to deliver 4G services at reduced prices.
2015: India launches Digital India initiative to improve online infrastructure and increase internet accessibility in India, with multiple programs including BharatNet, a program to build infrastructure to connect 250,000 villages with at least 50 megabits per second and open the infrastructure to businesses.
2016: Jio goes live nationwide, offering six months of free 4G data and voice services. One hundred million users join over 170 days, driving down users’ price of service by roughly 90 percent.
2017: The Indian government reduces intercompany charges for interconnections, which reduces the price of mobile plans even more.
2017: Jio introduces the JioPhone at a price of $20. Customers buy more than 80 million units, which deliver internet access to tens of millions of first-time users.
2021: The Indian government abolishes interconnection charges, further reducing costs for companies and consumers.
2023: JioPhone Next, built with Google and costing less than $50, targets an additional 500 million users. Jio also launches a $12 version.
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An eight-panel exhibit is set up similarly to the last exhibit, but with a line chart starts at the bottom on the left and gradually goes upward towards the right, beginning at approximately 10 percent and ending at about 55 percent. The horizontal axis runs from 2010 to 2023, showing the impact of business-led innovations and policy interventions on increasing internet access and connectivity in India. The vertical axis represents the share of India’s population with internet access as a percentage. This first panel highlights the first business-led intervention in 2013, mentioned in the text.
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The second of seven panels shows the same line chart, highlighting the first policy intervention that occurred in 2015. The shaded area beneath the line starts at approximately 10 percent and stops at approximately 14 percent.
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The third panel shows the same line chart, highlighting the second business-led innovation that occurred in 2016. The shaded area beneath the line starts at approximately 10 percent and stops at approximately 16 percent.
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The fourth panel shows the same line chart, highlighting the second policy intervention that occurred in 2017. The shaded area beneath the line starts at approximately 10 percent and stops at approximately 18 percent.
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The fifth panel shows the same line chart, highlighting the third business-led innovation that occurred in 2017. The shaded area beneath the line starts at approximately 10 percent and stops at approximately 18 percent.
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The sixth panel shows the same line chart, highlighting the third policy intervention that occurred in 2021. The shaded area beneath the line starts at approximately 10 percent and stops at approximately 50 percent.
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The final panel shows the same line chart, highlighting the fourth business-led innovation that occurred in 2022. The shaded area beneath the line starts at approximately 10 percent and stops at approximately 15 percent in 2022.
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A narrow focus with the right collaboration and time frames can enable companies to meet business and societal goals
Companies may have difficulty finding business opportunities that align with solutions to societal issues, however, due to several common factors. For example, overextension occurs when companies take on too many issues, diluting their impact at best and confusing their strategy at worst. Finding effective solutions to obstacles may require collaboration with other organizations and institutions, which can be hard to achieve and is not always well executed or sustained. And corporate expectations for returns can be quite short, limiting investment in opportunities with business and societal rewards that often materialize only over a long period, given the additional orchestration needed.
Additionally, not all companies can address all societal issues. Criteria related to capabilities and incentives determine whether and how a business can play a role:
- Capabilities fit. Can a company’s existing products, services, or supply chains be directed to resolving a specific issue? Does the company have the necessary R&D, distribution, or operations infrastructure (or potential) to create or deliver solutions at scale?
- Economic viability. Is there a market-based pathway to delivery, or available philanthropic or public funding? Many underprovision issues exist in contexts where end users cannot pay directly, which can make business involvement dependent on third-party support.
- Regulatory and political environment. Beyond funding, what policies, standards, or incentives, if any, enable (or block) business participation? Some issues require policy clarity, streamlined permitting, or cross-sector coordination.
Companies that meet the first criterion but face challenges in meeting the second two often encounter obstacles and need narrower focus, better collaboration, and longer time frames to move forward. Conversely, when all three factors align, business-led solutions can flourish rapidly, as the Zipline and Jio examples illustrate.
Such alignment underpins an approach we call “horses for courses” because it defines where and how companies—the horses—can best bring to bear their individual innovation and scaling capabilities if matched to the right issue, or course.13 This approach works like any other business opportunity but may require longer time horizons or plugging into coalitions of other businesses, nonprofits, philanthropy, and government when the questions of who pays and who delivers are more challenging than business as usual. What governments decide to prioritize is a separate decision and may depend on many local factors and trade-offs. We focus on the role of large companies (those with annual revenues exceeding $1 billion) because they have outsize impact when it comes to innovation, scaling, convening, and setting norms for the business community more broadly—the very capabilities that propel them into society’s spotlight.
Based on existing research, we analyzed the value chains associated with each of the 18 societal issues in this study. To estimate the degree to which companies and industries could help accelerate progress on underprovision issues, we assessed their share of the value added of required interventions that would provide more of the needed goods and services. For negative environmental externalities such as emissions, we assessed their share of contribution to those externalities. By those measures, we find that large companies today account for about 30 percent of the value at stake in accelerating progress across the 18 issues, which is roughly equal to their share of global GDP.
Using this analysis as a proxy for which companies can best accelerate progress across these issues, we find that each company or industry has the capabilities to move the needle on innovation and scaling for only a handful of issues. Ten out of 69 industries we analyzed have capabilities that make them leading candidates to accelerate progress on four or more of the 18 issues, and 41 industries have capabilities that could address one to three issues (Exhibit 6). While our list of issues isn’t comprehensive, given the low share of issues relevant to each industry, combined with challenges arising from the market contexts in which these issues occur, it makes sense for companies to choose societal issues by focusing narrowly and in a sustained manner.
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A table chart is divided into three clusters: “Exiting poverty,” “Accelerating empowerment,” and “Transforming mature systems.” Each cluster includes a list of issues discussed throughout the study and is further segmented into four vertical rows representing the income levels of the countries where these issues are most prevalent. The income levels along the horizontal axis are: low, lower middle, upper middle, and high. Each cell contains a circle shaded in one of four colors, indicating the prevalence of each issue, with darker circles representing higher prevalence. Issues like lack of access to basic electricity and early childhood malnutrition show the highest prevalence in low-income countries, indicated by a circle shaded with higher intensity, while issues like inadequate housing and lack of access to telecommunications and the internet in higher-income countries are represented by a circle with less intensity.
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The flip side of focusing on a few issues is that impact can be large relative to an industry’s current market size. For example, healthcare providers generate just 4 percent of revenues across large companies overall, but they could account for 35 percent of the progress to improve maternal and neonatal health, 25 percent to reduce noncommunicable diseases, 25 percent to improve mental health, and 8 percent to reduce communicable diseases.14
These impacts can also be large relative to an industry’s size in dollar terms. Take noncommunicable diseases: Accelerating progress would require about $1 trillion in additional spending on top of the recent historical rate, roughly two-thirds of which is linked to pharmaceutical interventions.15 Absent any obstacles to company action, this represents a business opportunity equal to about 40 percent of the current revenues of large pharmaceutical companies.
Conversely, accelerating progress on transportation infrastructure would require about $70 billion in additional annual investment, with about 25 percent of the investments potentially going to construction and engineering firms. This is equal to 1 percent of current revenues for large companies in the construction and engineering sector. While this percentage is modest in the context of overall industry revenues, it could represent significant opportunities for individual companies operating in or expanding into these markets.
By contrast, some industries don’t have a prominent role to play in solving any issue we studied but make their primary impact in other ways. For example, the semiconductor industry is one of the most important contributors to global productivity growth and thus to economic development and acceleration of progress on the societal issues we studied.16 Industries can also play critical roles as suppliers, distributors, financiers, and influencers, particularly in resolving intermediation challenges and other market obstacles. For example, large companies are not currently the main source of products with lead, so opportunities for them to address lead appear limited. However, through orchestration and intermediation in low- and middle-income contexts, large companies might sell unleaded alternatives or testing technology, convene actors in fragmented supply chains to monitor product safety, and raise public health awareness through their marketing and employees.
An economy-level view of cost, scale, and time horizon can frame societal choices
We find that accelerating progress on the 18 issues we analyzed to the level achieved in the countries that have made the most progress in reducing them would require annual expenditures of $6 trillion in total, or three times the total profits of Fortune Global 500 companies in 2024—an insurmountable hurdle without a decision by society to allocate public funding or other resources.17 Economic benefits would more than offset that cost across all these issues, so in principle, addressing them could pay off—but often only over decades.
The combination of high costs and long time horizons will require society to balance intervention against the current use of resources and costs of change. Furthermore, the scale and wide variation of obstacles across interventions, even within issues, means that cost-effectiveness from a societal perspective would benefit significantly from granular prioritization. As a starting point, we collected estimates of the benefit-to-cost ratios (BCRs) of each issue from existing research. This identified the wide range of potential returns across issues: For example, the BCR typically is roughly two times investment for upgrading transportation infrastructure and between ten and nearly 40 times for reducing early-childhood malnutrition.
While BCRs provide a broad view of overall cost-effectiveness, more granular views often reveal wide variation in economic returns within an issue. This is especially the case for issues such as noncommunicable diseases, greenhouse gas emissions, education, and transportation infrastructure, each of which will require investment exceeding $200 billion annually to accelerate progress.
Similarly, the time horizon over which human benefits and economic returns are realized can vary. For example, investment to mitigate greenhouse gas emissions is front-loaded, with benefits accruing over decades, so questions of financing and sequencing are part of the cost-effectiveness equation. In contrast, many solutions to the health issues we studied can have relatively rapid economic impact.
For each of the 18 issues, we identified the countries where an issue is most prevalent and categorized the level of economic development in those countries as either “exiting poverty,” “accelerating empowerment,” or “transforming mature systems.” On this basis, the 18 issues can be clustered according to their prevailing economic context (Exhibit 7). The issues with the highest annual costs are most prevalent in high-income countries, but BCRs and time horizons for economic benefits to materialize can vary widely in all market contexts.
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A horizontal stacked bar chart of 18 rows, each representing an issue, illustrating the potential contribution of various industries in resolving different societal issues. Each stacked bar is segmented into four categories: 1) largest potential, 2) second largest, 3) third largest, and 4) companies that fall outside of the top three industries that could address the issue. The horizontal axis indicates the percentage of share from 0 to 65. On the right side of each stacked bar, there is a description of the top industries that can contribute significantly to resolving the issue. The top bar, showing “Lack of access to basic electricity,” indicates that the largest potential contribution to resolving the issue comes from the construction and engineering, electric utilities, and electrical equipment industries, reaching 65 percent.
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While these metrics can help guide choices, particularly at a granular, project level, they can’t capture every aspect of the value of better health or education, for example. Adjusting for noneconomic factors such as increasing disability-adjusted life years may result in a different prioritization. Even the discount rate used to calculate BCRs can shift results: We use a 5 percent rate, which is relatively high for social investments and low for corporate investments, but no single standard exists. Nonetheless, a large amount of research goes into determining the cost-effectiveness of addressing societal issues and can help support transparent societal choices about public resources and policy.
This research offers a vision of what could lie “beyond ESG.” At the core of the ESG rethink lies a simple insight: Companies can create real value for society but only if they focus on where their core capabilities can make the biggest difference and if they decide that action meets their company’s goals.
A capabilities-based, horses-for-courses approach requires identifying where and how companies are best suited to address societal issues. History is chockablock with examples of the many ways in which companies find business opportunities, all of which have structural similarities when it comes to advancing innovation and scaling or making business models work in the interests of societal needs, to help society under many different circumstances. In some cases, companies can act immediately. In others, policy interventions and collaborations are required to adjust the conditions and enable private-sector participation. Whether to do so is a societal choice about funding, regulation, and coordination.
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