In my recent conversation with Gwen Safa, Global Head of Sustainable Corporate Solutions at Barclays Investment Bank, in the webinar “Sustainability: Competitive Advantage or Regulatory Burden?”, we discussed a question that has stuck with me:
Is ESG a cost or a value driver?
It’s not a new question, but it’s revealing, because it shows how much the conversation has shifted. A few years ago, ESG was often seen as either a bonus or a burden. Today, it’s neither. And that’s precisely what makes it interesting.
ESG Is the New Cost of Entry
Across both public and private markets, ESG is no longer viewed as a competitive advantage. It’s a baseline expectation. Fundamentals like governance structures, reporting protocols, regulatory alignment, and sustainability disclosures are now considered standard operating procedure.
For companies approaching an IPO or seeking institutional capital, this means one thing: if you’ve checked the boxes, don’t expect applause. ESG compliance no longer earns bonus points; it simply keeps you in the game. Investors will notice if it’s missing, but they won’t reward you just because it’s there.
That’s not a dismissal of ESG. It’s a signal of maturity. Markets have evolved, and so have expectations. The absence of ESG practices is now a red flag. Their presence is table stakes.
Who’s From Compliance to Contribution: Where ESG Gets Strategic
Where ESG does create value is when it’s embedded, not just documented.
This is where the conversation shifts from compliance to strategy. ESG becomes meaningful when a company’s products, services, or operating model actively contributes to long-term sustainability outcomes, whether accelerating the energy transition, enabling supply chain transparency, or improving resilience to climate and regulatory risks.
In these cases, ESG is more than a report. It’s a lens through which companies make decisions, allocate capital, and create value. That distinction matters. Investors increasingly look for ESG utility, not formality.
Capital Follows ESG That Works
We’re already seeing this shift reflected in capital flows. Companies with credible, integrated ESG strategies are drawing more interest from Article 8 and Article 9 funds. This isn’t just box-checking capital, it’s actively seeking alignment with sustainable, future-oriented business models.
What’s changed is that investors assume you’ve handled the basics. Now they’re asking:
What is ESG enabling in your business?
How does it reduce material risks?
How does it support long-term value creation?
In other words, ESG doesn’t earn you extra attention by existing. It earns it by performing.
ESG Is Quiet - Until It's Missing
This evolution also reframes how ESG is discussed in investor conversations. Where there was once a long list of diligence questions, there’s now quiet confidence or concern.
If the fundamentals are in place, ESG may not even come up in detail. That silence isn’t a red flag; it means ESG has moved from the spotlight to infrastructure. From headline to hygiene.
But if something’s off, if disclosures are patchy, if governance looks weak, or if risks aren’t clearly addressed, that silence disappears fast.
Proving ESG Works Is the Next Chapter
So, is ESG a cost or a value driver?
It’s both, and it’s neither. It depends entirely on how it’s used. ESG can’t guarantee returns, and it won’t replace operational discipline. But when embedded into how companies operate, into procurement, product development, capital allocation, and risk management, it becomes a signal of resilience and a magnet for forward-looking capital.
The next challenge isn’t proving ESG exists. It’s proving it works.
That’s not a burden. And it’s no longer a bonus.
It’s the new baseline for doing business.
SESAMm’s AI Technology Reveals ESG Insights
Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.
As social values shape consumer expectations, companies are under growing pressure to align with progressive causes. But not all support is genuine. SESAMm’s latest report, Beyond Greenwashing: Unveiling the Spectrum of Colorwashing, explores how brands adopt the language of inclusion, without the action to match.
Colorwashing refers to the use of social justice themes in marketing—such as gender, race, or LGBTQ+ rights—to appear ethical or inclusive while avoiding meaningful change. The report analyzes major forms, including pinkwashing, rainbowwashing, racialwashing, bluewashing, and orangewashing.
Key Takeaways:
Colorwashing is on the rise: Mentions of pinkwashing, rainbowwashing, and blackwashing have grown sharply since 2020.
It’s about image, not impact: Many companies leverage social issues for PR, but fail to back them with policy or internal reform.
Consumers are calling it out: There’s an increasing backlash against symbolic gestures that lack substance, especially during high-visibility moments like Pride Month.
AI can help: Real-time controversy detection enables investors and communications teams to monitor and address potential colorwashing early.
Over the past decade, many organizations have improved their carbon footprints, from recyclable and biodegradable packaging and single-use plastic to planting trees and reducing their greenhouse gas emissions. However, some businesses and companies looking to boost their eco-friendly image without committing to serious changes and addressing environmental issues have been associated with false green marketing. We call this "Greenwashing."
Defining Concepts
What is Greenwashing?
Greenwashing is a practice used by businesses to represent themselves as more sustainable than they truly are. Greenpeace and the Environmental Protection Agency define greenwashing as making false and misleading claims about a product's environmental benefits or practices, services, technology, or company practices. Greenwashing typically involves companies spending more money on advertising and marketing than on implementing sustainable business practices that minimize environmental impact. These false green claims can deceive consumers into believing that a product or company is more environmentally friendly than it is, leading to increased sales and profits. As a result, false advertising, misleading initiatives, and groundless claims have increased green investors' exposure to risks emerging from potential lawsuits from activist groups, image deterioration, and heavy losses in assets invested.
Greenwashing Mentions Over Time
In recent years, new concepts have emerged alongside greenwashing:
Greenwashing, Greenhushing, and Greenwishing Mentions Over Time
Greenhushing refers to a company’s refusal to publicize ESG information. The company may fear pushback from stakeholders who would find its sustainability efforts lacking or from investors who believe ESG undermines returns.
Greenwishing, or unintentional greenwashing, describes a practice where a company hopes to meet certain sustainability commitments but simply does not have the means to do so.
High-Profile Greenwashing Case Studies
When talking about greenwashing, the usual suspects are the oil and gas industry, the food and beverage sector, and other environmentally impactful industries. However, the financial industry has also been embroiled in its own greenwashing controversies.
It’s challenging to produce an accurate assessment of environmental, social, and governance (ESG) factors, which creates opportunities for companies to hide ineffective and fake green initiatives. According to Regtank, the main challenges to detecting greenwashing include:
Lack of reporting standards – There’s no universal set of standards for ESG compliance.
Lack of transparency – Companies often don’t disclose the specifics of their “green campaigns,” making it hard for investors and consumers to verify their claims.
Limited consumer awareness – Misleading marketing can exploit consumers’ eco-consciousness and brand loyalty, reducing scrutiny of false green claims.
These gaps lead to inaccurate ESG data and scores, allowing greenwashers to avoid accountability. Ultimately, detecting greenwashing requires careful scrutiny of company claims and a deep understanding of their supply chains and operations.
How Artificial Intelligence Detects Greenwashing
As greenwashing practices become more common, activist investors, journalists, and the general public are using social media, news outlets, and blogs to highlight false claims. Artificial intelligence (AI) has become an invaluable tool in the early detection of greenwashing by analyzing vast amounts of public data.
At SESAMm, we use generative AI and LLMs to identify greenwashing risks across billions of web-based articles. Our data lake covers over 25 billion articles in more than 100 languages from four million news sources, blogs, social media platforms, and forums, analyzing data on five million public and private companies. Through our AI platform, we generate reliable, timely, and comprehensive insights to detect greenwashing, monitor ESG controversies, and identify related risks.
The CSRD significantly strengthens the requirements for companies to substantiate their sustainability commitments. Mandating standardized and detailed ESG disclosures directly addresses the practice of greenwashing, where companies exaggerate their environmental credentials in marketing without meaningful follow-through. Under the CSRD, companies can no longer rely on vague or selectively presented data—any gaps or inconsistencies in their sustainability claims will be exposed in public filings, making greenwashing much riskier. This means an end to cherry-picked data and a shift toward more comprehensive, comparable, and verifiable ESG performance for investors and stakeholders.
The CSDDD (if it stands) further reinforces these efforts by obligating companies to go beyond marketing statements and prove they’re actively managing environmental and human rights impacts throughout their supply chains. This directive closes loopholes that greenwashing often exploits, such as highlighting only direct operations while ignoring supplier practices. By requiring due diligence on environmental impacts across the value chain, the CSDDD aims to turn sustainability from a branding exercise into a legal and operational priority. If real supply chain actions don’t support a company’s green claims, it could face legal action and reputational damage.
Looking Ahead
Looking ahead, greenwashing will continue to face intense scrutiny from regulators, investors, and the public. With evolving regulatory frameworks like CSRD and CSDDD, the pressure is on for companies to ensure genuine environmental responsibility—not just green advertising. At SESAMm, we believe that the combination of regulatory rigor and advanced AI technologies will play a critical role in uncovering false green claims and supporting investors in navigating ESG risks with greater transparency and accountability.
SESAMm’s AI Technology Reveals ESG Insights
Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.
At SESAMm, we have always been at the forefront of utilizing artificial intelligence (AI) for Environmental, Social, and Governance (ESG) risk analysis. Our journey began in 2014, leveraging natural language processing (NLP) to analyze vast amounts of data to identify company risks - from public equities to expanding into private assets. Our technology stack, deeply rooted in AI-first principles, has evolved significantly over the years, incorporating deep learning and large language models since their inception.
2023 marked a significant leap in generative AI, breaking data quality and precision barriers. Our ability to attain human-level precision in ESG control detection across dozens of languages is a testament to our commitment to continual technological advancement. We plan to further integrate generative AI into our processes, enhancing data quality and expanding our coverage, especially for smaller firms and infrastructure projects that often go unnoticed in the market.
Similarly to our 2023 vision blog post, we generated this image using Open AI, using the exact same prompt: An oil painting in classical style of an artificial intelligence holding the whole world in its hand. Realistic. - Check out how the image differs from last year's here.
Enhancing User Interaction with AI: The Future of Client Engagement
A significant focus for SESAMm in 2024 is transforming how clients interact with our SaaS platform. Last year, we introduced a prototype of our generative AI chatbot, which marked the beginning of a new era in user interaction. Our goal is to utilize generative AI not just for data improvement but to enhance the overall user experience. This includes making data more accessible and addressing challenges like the lack of unique identifiers in the private space.
Accelerating Innovation and Development with AI
Our team of 60 engineers and researchers is the driving force behind our rapid development and innovation. The integration of large language models has enabled us to deliver features more quickly and efficiently. With a robust infrastructure and an agile AI team, we're pushing the boundaries of what's achievable with AI, outpacing traditional human analyst capabilities. This agility in innovation is crucial for our continued leadership in the market.
The Future of AI Technologies in SESAMm's Roadmap
We keep a close eye on the latest AI advancements, from new open-source libraries to cutting-edge commercial models. Our team is deeply engaged in fine-tuning models for specific applications, especially in tracking ESG events and uncovering insights about smaller, lesser-known companies. This approach reflects our culture – an AI-first company specializing in the financial and ESG space, always eager to incorporate more technology and innovate.
Cementing Leadership in AI-Powered ESG Analysis
Our vision extends beyond 2024, aiming to be the premier global player in ESG controversy and risk analysis. With regulations evolving globally, we anticipate a significant expansion in our market. Our focus remains on delivering unparalleled reputational insights, especially in the investment world, but also rapidly expanding into supply chain analysis and client monitoring. We're not just keeping pace with the market but setting the standard for AI-powered ESG analysis.
The Expanding Global ESG Landscape: Opportunities and Challenges
As regulations intensify worldwide, including in polarized markets like the US and Asia, we see a growing demand for ESG analysis. This global shift presents both opportunities and challenges. Our strategy includes further integrating our solutions into various ecosystems, such as ESG reporting tools, portfolio management systems, and CRMs. Through strategic partnerships, we aim to position SESAMm as an integral part of the global ESG analysis framework.
Walking the Talk: SESAMm's Commitment to Sustainability
In 2024, SESAMm is not just about leading in technology; we're deeply committed to practicing what we preach regarding sustainability. We have a robust ESG Manifesto and a series of actions aligned with environmental, social, and governance principles. Recognizing our relatively limited carbon footprint as a tech company, we focus on making impactful choices and fostering a culture of awareness and change within our team.
We've implemented programs for environmental awareness, like our Climate Risk training, conducted by certified employees. Our efforts in governance are highlighted by the appointment of our first independent board member, Stephane Beson, signifying our dedication to having diverse external perspectives guiding our company.
Regarding environmental footprint, we prioritize partnering with providers that use clean energy in their data centers. This conscious decision-making extends to selecting partners who can offset their carbon emissions, reflecting our commitment to sustainability.
Remote Work and Sustainability: A Dual Focus
Our approach to remote work has always been progressive. We see it as not just a productivity enhancer but also as a key sustainability strategy. Given our global presence, with teams in France, New York, Tunisia, and London, remote work is essential. It brings our team closer, transcends cultural barriers, and reduces our carbon footprint by significantly cutting down on travel. This strategy aligns with our dedication to work-life balance, recognizing the importance of flexibility for our employees.
Targeting the Right Market with Tailored Services
2024 is a year of strategic focus for SESAMm, especially in terms of our target market. We're seeing a growing trend among banks to aggregate ESG controversy data. Our unique capability to provide comprehensive coverage, encompassing mixed assets portfolios, positions us as a key player for these institutions.
We continue strengthening our presence in private equity and expanding our reach into the banking sector, private debt, and infrastructure funds. Our dedicated corporate business practice is another area of expansion, helping European companies monitor ESG controversies. We also focus on sustainability and ESG teams, procurement teams, and third-party risk teams, ensuring a broad yet targeted market approach.
Upholding Data Security and Privacy
Data security and privacy are paramount, especially given the increasing sophistication of cyber threats. Our co-founder and CTO brings invaluable expertise in cybersecurity. We conduct annual audits, have robust systems to monitor and preempt attacks, and continuously train our teams to be vigilant. While we don't deal with personal data, we focus on protecting critical systems for our clients, ensuring that we maintain the highest standards in data security.
Building a Team for the Future
Looking ahead, our confidence in 2024 stems from our team's exceptional capabilities. We've implemented agile processes and onboarded talented individuals across all levels. Our team's passion and dedication are key drivers in adapting to market changes and delivering high-quality services. It's not just about where SESAMm is now but how our team will continue to excel and innovate in the future.
A Vision of Innovation and Responsibility
As we move into 2024, SESAMm stands at the forefront of AI-powered ESG analysis, not just through technological innovation but also through a steadfast commitment to sustainability and security. Our focus on the right markets, combined with a forward-thinking approach to remote work and data protection, positions us to meet the evolving needs of our clients.
Join us at SESAMm as we navigate the future of ESG analysis, leveraging our expertise to foster a sustainable, secure, and innovative business environment. Explore SESAMm's cutting-edge solutions and be part of a future where technology meets responsibility.
SESAMm’s AI Technology Reveals ESG Insights
Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.
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