Environmental, social and governance (ESG) investing has been practised in Europe for more than two decades, during which it has moved from niche to the mainstream market. The rapid growth in the number of sustainability-related financial products and service providers over the past decade has also attracted regulators’ attention. The EU’s regulatory capacity on sustainability represents a hidden treasure that echoes the realisation that to achieve the EU’s environmental and social goals, a sharp departure from the current predominant model of capitalism and corporate governance is required. It has been argued that an increasing amount of capital is misallocated due to the inadequacy of ESG criteria and the ESG services market’s lack of transparency. The rankings produced by ESG rating agencies create a false sense of security, and investors who buy into ESG funds with dubious credibility need protection. Considering the potential implications of ESG exposures for long-term financial stability, it is in the public interest to critically evaluate ESG criteria and reporting requirements to clear a path for more meaningful and more operational corporate objectives that contribute to the green, digital and just transition. Whilst in the context of the EU sustainable finance package many regulatory measures are already underway, it is imperative that the Commission fixes the blind spots and completes the additional steps needed.