A few years ago, ESG was everywhere. It dominated annual reports, shaped capital allocation, and guided sustainability strategies from boardrooms to construction sites. But lately, the mood has shifted. Headlines decry a “backlash,” with many states rolling back ESG mandates, and institutional investors tightening their definitions—or abandoning the acronym altogether.
So what does this mean for those of us building a lower-carbon future, literally and figuratively?
From where I sit—working with engineers, architects, and developers across North America—it’s clear that the ESG backlash is not a rejection of sustainable design. It’s a recalibration. And for those who build and operate buildings, it’s a moment of both challenge and opportunity.
Buildings account for almost 40% of global carbon emissions, so any credible climate strategy must involve energy-efficient, low-carbon building design and, more importantly, building performance and operational resilience. For firms focused on this space, ESG has been both a mandate and a market-maker, fueling investment in technology, green materials, and better analytics.
But with investor sentiment cooling and some clients retreating from public ESG commitments, sustainability professionals now face a harder sell. It’s no longer enough to cite a moral imperative. Business cases must be watertight, especially when projects are complex and margins are tight.
The backlash, ironically, may help weed out superficial approaches to ESG—what some have dubbed “checkbox sustainability.” It’s no longer sufficient to install solar panels or pursue a certification for PR value alone. Instead, clients are asking harder questions: What’s the ROI of that retrofit? How can energy modeling help me or my clients reduce operating costs? Can you help me design a building that is future-proofed for an energy-scarce future? Can we actually meet the performance targets we’ve claimed?
This shift favors rigor. It favors firms that can measure and prove their impact—not just their intent. Demand is shifting toward quantifiable results, and we’ve seen this in our own work at IES, with growing interest in simulation tools that evaluate how a building will perform before it’s built under a variety of conditions—or how an existing one can be optimized to reduce emissions and energy costs without compromising performance.
While some ESG funds have cooled, risk-based thinking isn’t going anywhere. Regulatory pressure is mounting, especially at the state level in the U.S. From New York’s Local Law 97 to California’s evolving Title 24 code, energy performance and emissions standards are getting stricter. Real estate owners and engineering firms know they can’t afford to be caught unprepared.
At the same time, physical climate risks—from heat waves to flooding—are making resilience a bigger part of the sustainability conversation. Designing with decarbonization in mind is important. Designing for durability and adaptability is essential.
The ESG pendulum may have swung, but the fundamentals haven’t changed. Clients still want lower operating costs. Cities still want to hit climate targets. Tenants still want healthy, efficient spaces. And investors—whether they use the ESG label or not—still seek long-term value.
What has changed is the tone of the conversation. We need to meet clients where they are: less focus on acronyms, more focus on outcomes. That means offering tools and strategies that don’t just look good on paper, but make economic sense on the ground—and deliver real-world performance.
It’s time to retire buzzwords and double down on outcomes. The future of sustainable building won’t be driven by ESG virtue signaling. It will be driven by data, engineering, and evidence that greener buildings are better buildings—financially, functionally, and environmentally.
Christy Martell is Senior Vice President of Revenue, Americas at IES. With over 20 years in cleantech and energy, Christy has previously led growth and sales strategy at companies including Arcadia, Stem, and Bloom Energy, and holds an MBA in Energy from UC Berkeley’s Haas School of Business.
