Does ESG Drive Consumer Confidence?

By Solitaire Townsend

There is a meme swirling through LinkedIn where an online stock trader bemoans the current economy and asks if we should bring back pronouns because woke was ‘load bearing’ the bull market.

Of course, it’s a joke. Because most serious businesspeople believe the downturn in ESG/sustainability/purpose efforts is simply because companies can’t afford to ‘be good’ in this market.

All that social good stuff is subject to market forces, it can’t actually cause them, surely?

Perhaps it’s time to unpick the complicated causality between sustainability and confidence.

Consumer confidence is well understood: in times of consumer optimism, when people believe the future will be better, economies grow. Consumer spending rises, productivity surges, and governments are emboldened to make long-term investments. In short, when societies believe they are improving, that lives will get better, economies follow suit. Call it self-fulfilling prophesies or the economist preferred ‘market reflexivity’, the phenomenon has been long studied.

Optimistic people spend money, get jobs and drive growth.

That’s why the current backlash against ESG, DEI, and sustainability might be more than an economic sideshow. Indeed, dumping all the ‘social good stuff’ just might be supremely reckless. Because dismantling the scaffolding of social progress risks collapsing the very confidence on which modern economies depend.

The Confidence Feedback Loop

Let’s start with a basic but under appreciated truth: most economies are confidence machines. Consumers buy when they believe they’ll have money tomorrow. Businesses invest when they believe their markets will grow. And governments undertake major investments when they believe society will reward them for it.

Sustainability, ESG, and DEI initiatives do not merely respond to that confidence. They help generate it. Take the consumer. Across major economies, the rise of the sustainability zeitgeist coincided with a measurable uptick in what the OECD calls “consumer future orientation” which is a proxy for optimism about personal and national economic prospects. A 2021 OECD report notes that people who identify with sustainability concerns are more likely to engage in future-oriented financial decisions, from household investment to lifestyle planning

This is not accidental. When people see businesses and policymakers actively pursuing social and environmental progress, they are more likely to believe in their own future and thus spend, invest, and plan for it.

Greenhush Is Anti-Happiness

If sustainability builds consumer confidence, then hiding it does the opposite.

So-called greenhushing, when companies underreport or obscure their sustainability activity for fear of backlash, is becoming a silent saboteur of consumer sentiment. What may seem like a prudent communications strategy is, in fact, a confidence trap.

Consumers can’t reward what they can’t see. The trust premium that sustainability generates comes from transparency, not virtue concealed in spreadsheets. In Edelman’s 2023 Brand Trust Report, 73% of global respondents said they want to know what companies are doing behind the scenes on social and environmental issues, and 64% say silence makes them suspicious.

When firms retreat from visible commitments, they risk creating a vacuum filled by doubt. People begin to wonder whether companies are still investing in long-term value, or simply waiting out the cultural noise.

Worse still, greenhushing undermines the shared norms that drive collective progress. Sustainability is a signal that society is moving forward. When leaders go quiet, others question whether progress is stalling altogether.

Then there is our fatalism problem. In a landmark 2021 global survey, The Lancet Planetary Health asked ten thousand people aged 16–25 across ten countries about climate anxiety: 56% of them agreed that ‘humanity is doomed’.

Do marketers genuinely believe this level of ennui, fatalism and misery is good for business?

Greenhushing not only undermines brand equity but also bust consumer confidence. The logic is simple: if the companies you trust won’t speak confidently about the future, why should you spend confidently in the present?

So, greenhushing may shield a firm from one week’s headlines, but it erodes the trust that underpins future demand. In a values-driven marketplace, silence is forfeiture.

Woke Markets Are Bull

To be clear, ESG and DEI are imperfect. But their presence, even flawed, is better than their absence. Because together they generate an optimism dividend: the added economic value that comes from people believing they live in a society worth contributing to.

Economists often talk about how £1 of government spending can generate £1.50 of economic activity, aka fiscal multipliers. Well, social and environmental optimism is the ultimate multiplier. One act of progress can spark ten acts of confidence, which in turn fuel hundreds of decisions that grow the economy.

In a time when productivity is stagnant, investment is hesitant, and anxiety is high, we should protect and expand the drivers of collective confidence. Sustainability, DEI, and the wider social-good agenda are prerequisites for the consumer confidence that drives growth.

It takes hope to turn a bear into a bull. And hope, as every economist should know, is the most powerful economic force we have.