Five Mistakes Leaders Make When Overlooking ESG in Strategy

In today’s world, leaders cannot afford to treat environmental, social and governance (ESG) considerations as optional extras. Globally, ESG has moved from “good PR” to a core business strategy that influences capital access, customer trust and long-term competitiveness. Yet too many leaders in South Africa still view ESG as a compliance burden or branding exercise, rather than the investment it truly is.

Mistake 1: Treating ESG as a PR Exercise

Some companies showcase glossy sustainability reports but fail to embed ESG into operations. This might win short-term applause, but without practical implementation, reputations collapse when inconsistencies are exposed. ESG should never be a veneer - it must shape decisions across supply chains, people management and financial choices.

Mistake 2: Ignoring ESG’s Long-Term Investment Benefits

Leaders who dismiss ESG as a “cost” miss its real advantage: resilience and profitability over time. Studies show ESG-aligned companies attract more investment, lower their cost of capital and retain talent. For SMEs and corporates alike, embedding ESG improves operational efficiency, opens market opportunities and secures investor confidence. ESG is not charity - it is long-term value creation.

Mistake 3: Overlooking Governance as the Glue

Many leaders focus on the “E” and “S” - energy use, diversity or community projects - but ignore governance. Yet governance ensures ESG initiatives are credible, measurable and impactful. Without governance, ESG risks becoming fragmented or tokenistic. A board and leadership team committed to transparency, accountability and alignment is the engine that keeps ESG alive.

Mistake 4: Failing to Connect ESG to Core Strategy

When ESG sits outside core strategy, it is the first item to be cut in tough times. Leaders must integrate ESG into financial planning, product design, supply chain management and risk frameworks. For example, climate resilience should inform property development; diversity should shape recruitment pipelines; ethical sourcing should guide procurement. ESG is strongest when it drives everyday business choices.

Mistake 5: Underestimating Stakeholder Expectations

Customers, employees, regulators and investors are all demanding proof of responsibility. Leaders who underestimate this shift risk being left behind. In South Africa, issues like energy security, social inequality and governance failures are front of mind. Businesses that ignore ESG risk losing contracts, licenses or talent to competitors who align with stakeholder priorities.

My Perspective

As an advisor, I believe the conversation on ESG must shift from performance optics to performance outcomes. Leaders should measure success not by how many ESG initiatives they publish, but by how those initiatives strengthen resilience, lower risks and open long-term opportunities. The real question is not “What does ESG cost?” but “What value does ESG unlock?”

ESG is not a passing trend. It is the future of sustainable business strategy and long-term profitability. Leaders who dismiss it as a tick-box or PR campaign are missing the real benefits - resilience, investor trust and growth that lasts.

At Kulima Capital, I guide organisations to embed ESG into strategy in a way that is both practical and transformative. As a world-class African millennial, Masters-level, entrepreneurially experienced female advisor, I bring insights from diverse industries to help leaders avoid common mistakes and unlock ESG’s full potential for the future of their business.