Transforming Sustainability: The Case for a Rethink, Not a Public Relations Update
In the realm of sustainability, a significant shift is underway. The future of this movement may well be grounded in designing for resilience, long-term coherence, and real-world impact, rather than focusing on disclosures and defensive positioning.
A global survey, "Sustainability at a Crossroads," conducted by ERM, GlobeScan, and Volans, reveals that 93% of sustainability experts believe the current ESG (Environmental, Social, and Governance) agenda is no longer fit for purpose. The survey shows a profession that knows it is running out of road, with a consensus among experts that current strategies lag dangerously behind political and economic realities.
The survey identifies four mindsets among sustainability professionals: traditionalists, institutionalists, pathfinders, and radicals. While a third of leadership appears paralyzed, unsure how to respond as ESG becomes a political flashpoint and global regulations tighten, another third continues with a familiar playbook: annual reporting, compliance-focused governance, and reputational risk management.
However, the growing complexity of the sustainability agenda has led to fragmentation at the highest levels of leadership into three broad camps, as stated by Louise Kjellerup Roper, chief executive of Volans. The appetite for change is real, and a mandate is emerging among professionals.
ESG has helped bring environmental and social issues into mainstream finance, but it has narrowed the focus, often excluding resilience, adaptive governance, or long-range societal transformation from its scope. As a result, ESG has become both too broad and too prescriptive, leading to outcomes that make no sense to the general public and rewarding process over purpose.
The convergence of environmental breakdown, social regression, and governance backlash is an interlinked crisis with direct consequences for stability, markets, and public trust. The backlash against ESG is seen as a calculated strategy to defend entrenched interests, not justice.
The current challenges in redefining and improving ESG strategies beyond mere compliance include political backlash, legal risks, misalignment between ESG and business goals, and fragmented internal corporate efforts. Potential solutions focus on integrating ESG into core business strategy, prioritizing material issues with measurable progress, and navigating evolving regulatory and stakeholder expectations with transparency and precision.
To address anti-ESG backlash, companies must understand shifting regulatory landscapes, anticipate legal risks, and undertake actionable steps to fortify ESG practices in the face of global regulatory divergence and enforcement challenges. Bridging the gap between technical ESG knowledge and business strategy is needed so decisions are informed by sustainability expertise but ultimately driven by business imperatives that align values with financial outcomes.
In summary, the path forward involves treating ESG not as a compliance exercise but as a strategic imperative that requires clear prioritization, leadership integration, robust measurement, and proactive navigation of political and legal challenges to capture value amid climate disruption, social regression, and governance backlash. This approach aligns with the evolving expectations of investors and regulators who continue to hold ESG performance as core to competitive success.
Sources: [1] Harvard Business Review [2] The New York Times [3] The Wall Street Journal [4] McKinsey & Company
