Companies Must Reinvent ESG Strategies for Immediate Financial Gains, Says Infosys Report
ESG Moves from Compliance to Core Business Strategy
ESG goals are no longer nice to have: They are business necessities. The value of ESG investment assets is projected to reach $53 trillion by 2025, one-third of global assets under management. To tap into this growing pool of money, businesses increasingly need to show investors that they have low ESG risks. Concerns about greenwashing will also pressure firms to prove their commitment to becoming more responsible corporate citizens through internal investments and metrics that back up their results.
However, companies often are uncertain about how much to invest in ESG and where to focus their efforts. These forces combine to encourage, or even insist, that companies act quickly to become more responsible enterprises. If businesses don’t set ESG priorities and act on them, they risk alienating their customers, investors, employees, or all of the above.
ESG Becomes a Financial Must
Companies also can’t afford to start initiatives that might drag down financial performance, particularly as an economic downturn seems more likely. Bad choices now can waste a company’s time and money, and still leave them far from their ESG goals. Pressure from the edges is pushing companies into a mature middle, where traditional business interests and ESG need to coincide and even amplify each other. The Infosys Knowledge Institute’s ESG Radar examines the changes companies are making — and must make — to achieve their ESG goals, whether that is to become a more responsible corporate citizen or lower ESG risks.
In a groundbreaking shift, environmental, social, and governance (ESG) initiatives are no longer just a corporate checkbox—they’re a proven pathway to profit. A new report from Infosys, released on March 24, 2025, titled ESG Radar 2023, reveals that companies worldwide are rethinking how ESG fits into their operations. Based on a survey of 2,500 executives and ESG experts, the study underscores that 90% of businesses see positive financial returns from ESG efforts, with many reaping rewards within three years. As sustainability becomes a business necessity, this report urges organizations to act now rather than waiting for future payoffs. With economic pressures mounting globally, the findings couldn’t be timelier for leaders aiming to balance purpose and profit in 2025.
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Why ESG Matters More Than Ever in 2025
The world is at a tipping point. Climate change, social inequality, and governance scandals dominate headlines, pushing companies to prove they’re part of the solution. The Infosys report, accessible at Infosys ESG Radar, shows that ESG is no longer optional—it’s a competitive edge. Executives surveyed agree that integrating ESG into core strategies isn’t just about reputation; it’s about survival. With 66% of respondents seeing returns within three years, the data challenges the old view of ESG as a long-term gamble. In 2025, as supply chains strain and consumer expectations evolve, businesses ignoring ESG risk falling behind.
The report paints a clear picture: companies that treat ESG as a value creator rather than a cost center thrive. A 10% increase in ESG spending correlates with a 1% boost in profit growth, offering a tangible incentive. For a firm spending 5% of its budget on ESG, bumping that to 15% could mean an extra percentage point in profits—an enticing prospect in today’s volatile economy.
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Beyond Branding: The Financial Power of ESG
Historically, ESG efforts focused heavily on environmental goals—think carbon neutrality or renewable energy. While these remain critical, the report highlights untapped potential in social and governance areas. Companies emphasizing employee welfare over customer-centric ESG initiatives report profit growth up to 1% higher. Meanwhile, firms with strong governance—like having a Chief Sustainability Officer (CSO) or ESG board committee—see profit and revenue jumps of 2%. Yet, only 27% of surveyed companies have all these leadership elements in place, revealing a gap between opportunity and action.
Take the social angle: prioritizing employees through diversity programs or skill development isn’t just feel-good—it’s profitable. The report cites examples where firms embedding ESG accountability in the C-suite outperform peers. However, only 19% tie executive pay to ESG goals, suggesting many leaders still hesitate to fully commit. In 2025, as talent wars heat up globally, companies neglecting the “S” in ESG could lose both people and profits.
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Supply Chain Transparency: The Next Frontier
One of the report’s boldest calls is for greater supply chain integration. Nearly all surveyed companies want to align ESG goals with suppliers, especially as Scope 3 emissions (those from supply chains) come under scrutiny. Yet, less than a third share ESG expectations with partners, and just 16% renegotiate contracts based on ESG data. This disconnect is a missed opportunity. Transparent supply chains don’t just reduce emissions—they build trust and efficiency, driving financial gains.
Imagine a manufacturer sharing ESG metrics with suppliers, incentivizing sustainable practices. The report suggests this could unlock billions in value across industries. In 2025, with global trade tensions rising, companies that lead on supply chain ESG could gain a strategic edge, turning a compliance burden into a business advantage.
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Leadership and Accountability Drive Results
The data is unequivocal: ESG pays off most when leadership buys in. Companies with a CSO, Chief Diversity Officer (CDO), and an ESG-savvy board see outsized returns. The report found that firms where the CSO approves capital spending on ESG initiatives outperform others by 2% in profit growth. Yet, only 30% place ESG responsibility at the C-suite level—a statistic that surprises given the financial upside.
In practice, this means rethinking how decisions are made. A tech firm prioritizing sustainable innovation or a retailer overhauling its sourcing might see immediate benefits if leaders champion the cause. In 2025, as AI and automation reshape industries, embedding ESG into leadership roles could be the differentiator between stagnation and growth.
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Challenges Ahead: Budgets and Mindsets
Despite the promise, hurdles remain. Economic uncertainty in 2025—think inflation, energy costs, and geopolitical risks—makes budget increases for ESG tough to justify. The report acknowledges this tension, noting that companies need more resources and operational shifts to sustain gains. Many still view ESG as a cost, not an investment, a mindset the study aims to flip.
Then there’s the execution gap. While 90% report returns, the depth of integration varies. Environmental metrics are tracked more than social or governance ones, skewing efforts. The report urges a holistic approach—balancing all three ESG pillars—to maximize impact. In a year where every dollar counts, convincing boards to double down on ESG will test even the most forward-thinking CEOs.
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