Making PESTEL practical

Principal consultant Aidan Rave says reordering a widely used strategic analysis tool will help to improve boards’ understanding of their environment

I work with boards of all shapes, sizes, levels of maturity and across a broad range of public-purpose functions, from health to local government, education to sports.

Every board exists to oversee the organisation they lead, but to do that effectively, it’s also important that they appraise themselves of the environment in which they operate.

Public-purpose organisations operate in dynamic environments; change comes quickly and can bring huge consequences to those with insufficient external focus. No board – and no organisation – can exist in a vacuum.

One of the tools we use to help boards focus externally is the PESTEL analysis (Political, Economic, Social, Technological, Environmental, Legal). PESTEL is a framework that helps boards focus their attention outwards. The problem is, despite (or maybe even because of) it being taught in business schools, printed in strategy decks, and trotted out by consultants like me, it’s too often an exercise undertaken in theory and then promptly ignored.

So, here’s a thought: what if we reordered it to reflect how change actually happens?

What if we started with what often hits first (the economy) and ended with what tends to react last – politics?

That’s ESTELP: Economic, Social, Technological, Environmental, Legal, Political.

ESTELP is more than just a reordered acronym; it’s a story of our time that when applied to the last decade-and-a-half helps us understand how we managed to get ourselves into our current state.

It’s also a more practical way to think about the forces shaping our world and our organisations.

Economic: the starting gun

Economic conditions are the first thing boards feel. When interest rates rise, when inflation bites, when growth stalls, everything else follows. The UK economy experienced a sharp contraction during the global financial crisis, shrinking by about 6% between early 2008 and mid-2009; the deepest recession since the Second World War.

Recovery was sluggish, with average annual GDP growth falling from 3% (1993–2007) to just 1.5% (2009–2023), signalling a structural shift to lower growth. Labour productivity growth collapsed after the crisis and never returned to pre-crisis trends, creating a ‘productivity puzzle’ that continues to constrain wages and living standards.

Meanwhile, government borrowing surged as bank bailouts and fiscal stimuli pushed public sector net debt from 38% of GDP in 2007 to nearly 98% by 2024, compounded by later shocks such as COVID-19 and the energy crisis. The banking sector required unprecedented intervention, including capital injections into major institutions such as RBS and Lloyds, followed by stricter financial regulations and stress testing to bolster stability.

From 2010, prolonged austerity aimed at deficit reduction through spending cuts and tax rises limited public investment and arguably slowed recovery, sparking ongoing debate over its social impact. Monetary policy also shifted dramatically, with interest rates slashed to near zero and quantitative easing deployed to support liquidity, measures that inflated asset prices but delivered mixed results for real economic growth.

The crisis exposed structural vulnerabilities, as the UK’s heavy reliance on financial services and openness to global markets amplified the shock. The long-term consequences have been profound: persistently low growth and weak productivity have left the economy fragile, while living standards improved only modestly and inequality widened as asset owners benefited disproportionately from lower interest rates.

The economic match of 2008 had lit the political touchpaper.

This is where boards need to start. Not with abstract forecasts, but with the lived reality of economic pressure. Because if you don’t understand the economic context, you’re flying blind.

Social: the reaction layer

Economic pain doesn’t stay in spreadsheets. It shows up in people’s lives in the form of rising costs, insecure work, public services under strain. These are the things that shape how people feel, behave, and ultimately vote.

While governments bailed out banks and large corporations, ordinary citizens endured austerity, fuelling perceptions of an unfair system that favoured elites.

This collapse of confidence created a space for populists who promised to fight the establishment. Economic insecurity also triggered cultural anxiety, intensifying fears about globalisation, immigration, and national identity; narratives that populists exploited by framing outsiders as threats to jobs and sovereignty.

The crisis exposed vulnerabilities in global financial systems, sparking scepticism about globalisation and free trade, which populist movements converted into calls for protectionism and economic nationalism.

Meanwhile, mainstream parties struggled to offer compelling solutions, leaving a vacuum that populists filled with simple, emotionally charged messages: elites caused your suffering; we will restore power to the people.

The rise of populism in the UK and across Europe is not just about ideology; it’s about insecurity. When people feel left behind, they look for someone to blame and someone to follow.

Boards need to understand this not just as a political risk, but as a social one. What does it mean for your workforce? Your service users? Your legitimacy?

Technological: the accelerator

Technology can act as a disruptor, an innovator, an augmenter and a transformer.

Automation and AI are boosting productivity but displacing jobs, driving demand for reskilling and new work models, while digital platforms fuel the gig economy and reshape employment norms.

There’s no doubt that social media has revolutionised communication and community-building, yet it also amplifies polarisation, misinformation, and mental health concerns. Our lives are increasingly shaped by algorithms that create echo chambers, hardening attitudes and limiting alternative perspectives.

Politically, technology empowers activism and transparency while enabling surveillance and cyber manipulation. Ethical dilemmas around data ownership, bias, and accountability are growing, and although innovation supports sustainability through clean energy and smart systems, it also consumes massive amounts of energy and strains the very resource balance it could potentially achieve.

Take ChatGPT. In less than a year, it went from curiosity to boardroom agenda item. Not because it’s perfect, but because it’s powerful and it’s changing expectations.

Boards need to ask: what does this mean for our people, our processes, our ethics?

And let’s not forget the darker side: misinformation, surveillance, digital burnout.

Tech isn’t neutral. It reflects the society it’s built in — and it can amplify its worst instincts.

Environmental: the pressure cooker

Climate change isn’t a future problem. Floods in Yorkshire, wildfires in Greece, water shortages in India are no longer anomalies but business as usual.

They’re also signals.

The climate crisis is reshaping society in profound ways. Rising temperatures and extreme weather events are driving environmental displacement, forcing millions to migrate and straining infrastructure and social systems.

The financial cost is enormous, from disaster recovery and insurance losses to the economic burden on vulnerable communities, yet the transition to green energy and sustainable technologies also creates new economic opportunities and jobs.

At the same time, climate activism has surged globally, mobilising citizens and influencing policy, while demanding accountability from governments and corporations. This activism has created a reaction too, with ‘Just Stop Oil’ being an example of the division between those who think it already too late for humanity and those who suspect the whole movement is an overreaction and yet another example of ‘woke’ hysteria.

These dynamics are redefining economies, politics, and social priorities as societies grapple with both the risks and possibilities of a warming world. Boards can’t treat environmental issues as CSR box-ticking. They’re strategic risks. Supply chains, insurance, regulation, public trust — all are affected. The emotional impact matters too.

Climate anxiety is real, especially among younger generations. If your organisation isn’t seen to care, there is a danger that it won’t be seen at all.

Legal: the lagging indicator

The law is slow. It catches up eventually, but often after the damage is done. Think about GDPR, it arrived years after data exploitation became a problem. Or the ongoing challenge of regulating social media in free societies, a game of cat and mouse, where the dangers of data harvesting and manipulation by malevolent actors, sits alongside a worldwide communication that has done much to break down barriers and enhance learning and co-operation.

Law doesn’t just follow society; it signals where we’re heading. It reflects the values we hold now, for example equality, privacy, sustainability, but it also anticipates what’s coming. When attitudes shift, the law catches up, as with same-sex marriage.

Sometimes it moves first, setting the pace, as it did for civil rights legislation or climate rules that push change before it’s mainstream. Courts and lawmakers are already shaping responses to AI, data ethics, and environmental risk. In that sense, law is both a mirror and a map; it shows what matters today and sketches the outline of tomorrow.

Boards need to think ahead of the law. What’s coming? What’s missing? What’s morally right, even if it’s not yet legally required? Because reputational risk doesn’t wait for legislation.

Political: the mirror, not the driver

Finally, we arrive at the end of the yellow brick road and find the politics of all of this.

In the traditional PESTEL, politics is treated as the starting point. It’s actually the end result; a reflection of economic, social, and technological pressures. When people are scared, angry, or hopeful, politics responds.

The destabilisation of UK politics can trace roots back to the crash of 2008. Imperceptible at first, the subsequent decade and a half has been marked by volatility and fragmentation. The financial crash exposed deep economic and regional inequalities, fuelling discontent that austerity only amplified.

That resentment found expression in Brexit; a rupture that redefined party loyalties and turned a technocratic question into a cultural fault line, dividing friendships, families and society itself. The referendum unleashed populist energy, driving the rise of UKIP, the Brexit Party and finally Reform UK, while pulling the Conservatives toward hardline nationalism and Labour toward internal conflict and a radical left turn under Corbyn.

Extremism grew on both sides: anti-immigration rhetoric hardened on the right, while anti-establishment sentiment surged on the left. Add to this a succession of political upheavals—five prime ministers in 15 years, coalition politics, leadership coups, and corruption scandals and the picture is one of a system still struggling to absorb shocks.

What began as an economic crisis became a crisis of governance and trust, leaving politics more polarised, less predictable, and still searching for stability.

Politics is not an inert activity; it is both catalyst and consequence. It changes and shifts as it is influenced by events and boards need to understand it not just as policy, but as mood.

What’s driving the public conversation? What’s likely to shift next?

Why ESTELP works

ESTELP isn’t just a rearrangement; it’s a better way to think. It starts with what boards feel first and ends with what they often misunderstand most: political reaction.

It helps leaders trace the arc of change, from cause to consequence, from pressure to policy, encouraging a more grounded, more human, more strategic conversations.

This stuff really matters because in the end, good governance isn’t about ticking boxes, it’s about seeing clearly, thinking deeply, and acting wisely.

So, the next time your board goes through the motions of environmental analysis, perhaps consider using ESTELP to tell the real story of our times – and try to work out what comes next.