In recent years, Environmental, Social, and Governance (ESG) norms have become a central theme in global business and investment practices. These norms, designed to promote sustainability, ethical governance, and social responsibility, are often portrayed as a way to create a more just and environmentally friendly global economy. However, beneath the surface, ESG norms serve as a strategic tool for developed Western economies to maintain their dominance by imposing restrictive conditions on less developed nations (LDCs).
While ESG regulations appear to be well-intentioned, they often become a means for Western economies to exert control over the developing world. By enforcing strict environmental and governance standards, these regulations make it difficult for LDCs to compete in global markets.
For instance, stringent ESG requirements on carbon emissions, ethical labor practices, and corporate governance raise the cost of production, making it harder for industries in developing countries to scale up. Developed nations, having already industrialized and built their wealth by exploiting natural resources with minimal restrictions, now set rules that make it impossible for poorer nations
to follow the same path. This hypocrisy puts developing economies at a severe disadvantage.
Another major issue is that Western financial institutions and multinational corporations use ESG ratings to determine investment destinations. Countries with lower ESG scores, often developing nations, struggle to attract international capital. This forces LDCs to either comply with costly ESG requirements—many of which are beyond their financial capacity—or lose out on critical foreign investment. Meanwhile, Western economies continue to benefit, as capital is redirected towards companies and nations that already have the resources to meet ESG standards.
ESG compliance is also being used as a trade barrier. Developed nations impose restrictions on imports from countries that do not meet ESG criteria, particularly in industries like mining, agriculture, and manufacturing. For example, many Western countries now require proof of sustainable sourcing and carbon neutrality, criteria that many developing nations cannot yet afford to meet. This leads to reduced market access for LDCs, ultimately benefiting Western industries that face less competition.
Interestingly, while developed economies enforce ESG rules on others, they often make exceptions for their own industries. Many Western corporations engage in carbon trading, outsourcing pollution-heavy industries to developing nations while maintaining a clean ESG image. Similarly, human rights violations in supply chains originating from certain Western allies are often overlooked, revealing the selective application of ESG norms to serve geopolitical and economic interests.
Rather than being a tool for global sustainability, ESG norms have become a modern economic weapon used by the West to maintain its dominance. By imposing these stringent regulations, developed nations limit the growth potential of less developed economies, keeping them dependent and unable to compete on equal footing. For true global development, ESG policies must be implemented fairly, considering the economic realities of developing nations instead of being used as a strategic tool for economic suppression.
Marex Media
