ESG: Compliance or Compass? — LinkedIn Live #10

Most conversations we have with boards and CEOs treat ESG as an obligation. A compliance framework. A reporting requirement that costs meaningful money and adds no visible value to the business.

That reading is understandable. It is also, we would argue, the most costly misreading in the boardroom right now.

The S is the missing conversation

ESG has three letters. In most boardroom conversations, two of them get most of the attention — the E (climate, emissions, decarbonisation) and the G (governance structures, disclosure discipline). Both important. Both increasingly operationalised.

The S is where the real conversation waits. Because the S is where meaning lives. And meaning, in the economy now emerging, is not garnish. It is the operating condition that determines whether the organisation still exists in fifteen years.

Pieter Hemels and the AEX Futureproof Index

Something Pieter Hemels brought to our attention this week made this concrete in a way that should stop most boardroom ESG conversations in their current tracks.

The AEX Futureproof Index is a research collaboration between Rotterdam School of Management / Erasmus University, Nyenrode Business University, and strategic agency ftrprf. Led by Professor Willem Schramade (Nyenrode), Professor Dirk Schoenmaker (RSM/Erasmus), and econometrician Wander Marijnissen (ftrprf), with a research team of 400 master's students, the study has for the first time calculated the social and ecological impact of the Netherlands' largest listed companies in hard financial terms. Not as ESG scores relative to sector peers. As absolute value in euros.

The headline finding: the top 23 AEX-listed companies collectively cost society more than they yield. The total financial value of these companies is offset by a negative social and ecological balance of minus 30 percent.

These companies are creating debt in the current society. Stealing from the planet. From their employees. From meaning.

That word — debt — is the reframe. The AEX Futureproof Index makes it measurable.

Philips tops the ranking with a Futureproofing Ratio of 4.86 — its social value is nearly five times its financial value. Ahold, Randstad, KPN, and most financial institutions score positively. 15 of the 23 companies studied create more social value than financial value.

ArcelorMittal sits at the bottom with a Futureproofing Ratio of minus 12.01. Shell scores in the red. So does Heineken — the researchers quantified the social cost of alcohol into hard euros for the first time. Unilever also lands remarkably low.

For boards, this is not soft ESG language. This is what the S looks like when it is measured in the same currency as EBITDA. The full research is published as the AEX Futureproof Index Report on the Nyenrode website.

The productivity-meaning paradox

Zoom out and the pattern gets sharper.

On one hand, productivity is stalling. Despite the largest infusion of technology in a generation — AI, automation, super-intelligent tools — productivity gains are not materialising at the rate the technology suggests they should.

On the other hand, meaning is declining. And where meaning declines, burnout rises. Mental health deteriorates. Retention collapses. Absence climbs.

These are not two separate stories. They are the same story, told from two angles. The more we bolt on technology while extracting the human contribution from the organisation, the more we accelerate the very hollowing we then try to fix with more technology.

The research is not the problem

Sisodia, Sheth & Wolfe have documented this at scale.

In Firms of Endearment (2nd ed., Pearson FT Press, 2014), they tracked 28 companies operating with stakeholder-integrated, purpose-driven models against the S&P 500 over fifteen years (1998-2013). The findings:

- 14x outperformance over the S&P 500 — the publicly traded firms returned 1,681% versus the S&P's 118% over the same period
- 6x outperformance over the Good to Great companies identified by Jim Collins

Third-party validation followed the same year: Companies that Practice Conscious Capitalism Perform 10x Better (Mackey & Sisodia, Harvard Business Review, 2014).

So the fiduciary case is not the missing piece. The proof exists. It has existed for over a decade.

What is missing is not information. It is consciousness. The boards that would need to act on this research are still operating from the level of awareness that produced the current situation. Different actions require a different level — not more data.

Why the deep-purpose connection at the top matters

There is a version of the meaning conversation that stays purely tactical. Managers deeper down in the organisation should carry this. HR programmes. Engagement surveys. Culture initiatives.

That version does not work. What we have measured energetically — and seen play out repeatedly in the field — is that if the board and the CEO are not personally connected to the purpose of the organisation, the biggest amplifier in the system is missing.

Pieter Hemels' story is the counter-example. He sold his previous company — one that had become entirely money-driven, one where he tried to introduce purpose but could not shift the underlying culture. So he started again. This time with soul at the core, not as decoration.

It is still work. But it is effortless. Because we are simply an amplifier — and people feel the energy in the organisation.

Purpose became his moral compass. And once it was, the operational effects compounded. A waiting list of people wanting to work there. Higher autonomy. People contributing their unique gift rather than fitting a job description. A decision framework that quietly asks of every choice: does this add long-term value to society?

Simple to state. Difficult to apply. Transformational when embodied.

The financial legacy question

Most boards, when we ask them about legacy, start with the exit number. How much will this be worth when we sell?

That is a financial legacy. It is not the only kind. And in the economy now emerging, it is the least valuable kind. What outlasts the exit is the impact on employees, on communities, on the systemic conditions the organisation contributed to — for better or for worse.

The board that only measures financial legacy will get exactly that. The board that widens the aperture will find that the financial numbers, over the long horizon, actually follow the wider legacy — not the other way around.

You do not have to change everything at once

One thing worth naming: this is not an all-or-nothing shift.

You cannot pause the business to install meaning. What you can do is start having different conversations — the kind that MRI the organisation rather than optimise its surface. Once the board and the C-level are actually in the meaning conversation, different questions surface. Different solutions emerge. Different decisions get made.

It is gradual. But it is natural. People are social beings by design. When meaning is felt as true rather than announced as policy, it ripples fast.

The AI paradox — and what the big consultancies are discovering

One recent signal, worth noting: EY has been calling back the junior consultants they were replacing with AI eighteen months ago.

The reason is not that AI failed at its analytical tasks. The reason is that AI cannot install human connection. The social fabric of an organisation — the heartfelt connection that produces coherence, trust, and shared meaning — is not something that emerges from a super-intelligent tool. It emerges from human beings actually working alongside each other.

The large consultancies are going to have to face something structural: they will need not only a different business model but a different level of consciousness in their consultants. You cannot help others make a transition you have not yourself made. And that transition is exactly the one the meaning economy is asking for.

ESG as instrument, not as report

Return to the opening question. Compliance or compass?

Read as compliance, ESG generates disclosure documents. Fills in boxes. Reports up. This is where most boards are today. It is administrative work with declining marginal value.

Read as compass, ESG becomes something else entirely. An early-warning instrument for when the human contribution is being hollowed out. A structural feedback signal on whether the organisation is building something worth passing on — or accumulating the debt that will make its future impossible.

The pillar most likely to determine which of these you are running is not the E. It is the S.

Continue the conversation

Frequently Asked

LinkedIn Live returns next Thursday. See you at the next one — and if this recording finds you after 17 September, join us via the Summit recording on our website.

Imagine your business becomes a legacy for humanity.