ESG: from constraint to catalyst

The problem

Ask a leadership team what sustainability means for their business. You usually get three answers. It costs money. It makes us slower than rivals who ignore it. And sooner or later you must choose between profit and the planet.

So in most companies, ESG is a compliance task. A small team writes the reports and checks the boxes. It is necessary, but it is not strategy.

I think this is the wrong way to look at it. Formula 1 is the best proof I know.

What Formula 1 shows

In 2014, F1 replaced its big V8 engines with a smaller 1.6-litre turbo V6 and a hybrid system that recovers energy. It also limited how fast fuel could flow into the engine. For a sport built on power, this looked like a step back.

Teams protested. Fans hated the new sound. Critics said the races would be slower and more boring.

The opposite happened. With less fuel to work with, engineers built the most efficient racing engines ever made. The limit did not slow the sport down. It made it better, and the technology now ends up in road cars.

Faster and more powerful, on less fuel

And it goes further. From 2026, F1 engines must run on 100% sustainable fuel, and electric power gives close to half of the total output.

F1 did not get slower when it was told to burn less fuel. It got smarter.

The point of this piece

Not just Formula 1

You see the same thing whenever a company treats a sustainability limit as a problem to solve, not a tax to pay.

Tech. Google used DeepMind's AI to run the cooling in its data centres. It cut the energy used for cooling by up to 40%. Less energy, lower cost, same service.

Fashion. Patagonia put the environment at the heart of its brand, not in a side report. It gives 1% of its sales to environmental groups every year, and its revenue has passed $1 billion.

Aviation. In 2021, United flew the first passenger flight with one engine running on 100% sustainable fuel. Over its life, this fuel can produce up to 85% less greenhouse gas than normal jet fuel. United then set up a fund of more than $200 million, with 22 partner companies, to back the start-ups that make it. It is still expensive, but it is the clearest way to keep flying as emission rules get stricter.

Why most companies stay stuck

If the benefits are real, why do so few companies get them? I see four reasons.

Short-term thinking. When results are judged every quarter, any sustainability investment looks like a cost.

ESG in a silo. It sits in its own team, far from the people who design the products and run the business.

Small steps only. Companies improve what they already do a little, instead of rethinking it.

A false choice. They believe profit and sustainability work against each other, when you can improve both.

Three steps to take

The F1 lesson comes down to three steps any company can take.

1. Reframe. See each sustainability limit as a design challenge, a reason to innovate.

2. Invest. Put R&D money into the technology that beats the limit, as F1 teams did with energy recovery.

3. Integrate. Make sustainability part of daily operations, and measure ESG targets next to cost and speed.

Key takeaways

1. A sustainability rule is a design challenge, not a tax.
2. F1 proved it: with less fuel, it built the most efficient engines ever made.
3. Reframe, invest, integrate: measure ESG next to cost and speed.

Sources

1. Formula 1 Dictionary, "Thermal efficiency in F1: over 50% and climbing"
2. Honda, "2026 Formula 1 regulations overview"
3. Google DeepMind, "DeepMind AI reduces Google data centre cooling bill by 40%", 2016
4. Patagonia, Annual Benefit Corporation Report, fiscal years 2023 and 2024
5. Formula 1, 2000 Italian Grand Prix qualifying results and 2024 Italian Grand Prix (Wikipedia)
6. Formula 1, "How F1 technology has supercharged the world", 2019
7. Formula One regulations, fuel limits by era (Wikipedia)
8. GE Aerospace, "United to fly world's first passenger flight on 100% sustainable fuel", 2021
9. United Airlines, "Sustainable aviation fuel", corporate impact report