Trellis, IMPACT ROI, and Sandbar Solutions released How to Set Sustainability Strategy in 2025: Thriving in an Era of Impact and Backlash (February 2025). The report is based on interviews with over 50 chief sustainability officers (CSOs) from U.S. and European companies with annual revenues exceeding $1 billion. The report explores the challenges of corporate sustainability strategy and ways to align expectations and incentives effectively.
Human Level’s Take:
- CSOs (chief sustainability officers) and their teams are facing a challenging moment: they are becoming overwhelmed with reporting and compliance; lack the means to work with the C-suite as a partner; or have invested in a more incremental approach to advance sustainability. At the same time, they face increased backlash and questions from executives on the effectiveness and value of sustainability initiatives.
- CSOs can practice what the authors call ‘Sustainability Tension Management’ (STM) as a way to continue to advance sustainability efforts that deliver scaled impact for planet and people while also delivering impacts for profit – in the short, medium and long term.
- This entails understanding internal views on sustainability through defining the company’s sustainability archetype(s). These capture the motivations that can shape the purpose and role of sustainability for the company. Brands can be (1) Box Checkers, (2) Reputation Driven, (3) Immediate Return Driven, (4) Impact & Purpose Focused, (5) Innovation Driven, or (6) Risk Reduction Driven.
- Once the archetype is understood, CSOs can move to making a business case that appeals to that profile, which usually involves highlighting how sustainability drives product value, reduces costs or drives business growth.
Key takeaways:
- Corporate sustainability faces growing expectations and opposition. Businesses are struggling to balance competing goals and priorities in the face of competing expectations. On one hand, the anti-ESG and anti-woke backlash in the U.S. has pressured companies to abandon terms like “ESG” and “DEI” and scale back commitments. While European companies face less resistance, they are beginning to see the U.S. backlash influence their markets, as well as C-suites growing more sceptical to sustainability programmes. In parallel, sustainability regulation is expanding rapidly with sustainability regulations increasing by 155% in the past decade. For example, the growth of anti-greenwashing regulations have has helped usher in a “greenhushing” movement, with companies keeping quiet about their sustainability activities. Simultaneously, global challenges persist: the likelihood of limiting warming to 1.5°C is only 14%, the poorest 50% hold just 8% of global wealth, and democracy is declining, with 57% of CSOs interviewed for this report believing that capitalism does more harm than good.
- C-suites fear a shift from sustainability evolution to revolution. Initially, executives saw sustainability as a gradual evolution that was mostly voluntary and could provide competitive advantages and business value overtime. However, in today’s current climate of increased and competing regulatory and stakeholder demands, interviewed CSOs believe C-suites fear that the evolution of sustainability is forcing a business transformation for which companies are not ready. Sustainability is no longer seen as a PR advantage or risk management—but as a potential liability and cost centre by executives in the companies assessed. The report defines this stronger expectation for companies to have validated impact metrics and full business integration of sustainability goals as the “Sustainability Impact Era.”
- How businesses are responding to these tensions. Despite the backlash, the report finds that only 8% of companies are scaling back on sustainability efforts, and none of those interviewed are abandoning them. However, many are keeping sustainability efforts in a low-profile, avoiding the term “ESG,” maintaining existing sustainability commitments but making new ones cautiously, scaling back DEI initiatives, focusing on complying with sustainability reporting standards and regulations. CSOs and their teams note they are becoming overwhelmed with reporting and compliance, lack the means to work with the C-suite as a partner, or have invested in a more incremental approach to advance sustainability.
- What to do? The report finds that companies typically use one of three approaches to developing sustainability strategies: choosing to meet stakeholder and rating agency expectations, setting measurable sustainability goals or targets first and developing a supporting strategy to achieve them, or focusing on programs and initiatives that mitigate material risks and build goodwill. Yet, these approaches often lead to excessive commitments or doing too little. The report proposes another approach: Sustainability Tension Management (STM). The approach begins by better understanding internal views on sustainability through defining the company’s “sustainability archetype(s).” These capture the motivations that can shape the purpose and role of sustainability for the company, as brands can be (1) Box Checkers, (2) Reputation Driven, (3) Immediate Return Driven, (4) Impact & Purpose Focused, (5) Innovation Driven, or (6) Risk Reduction Driven. Once the archetype is understood, CSOs can move to making a business case that appeals to that profile, which usually involves highlighting how sustainability drives product value, reduces costs or drives business growth. The report finds that CSOs that succeed are 83% more likely to achieve results from sustainable innovation and sustainability products/services development, 44% more likely to reduce energy consumption and 40% more likely to achieve responsible supply chain management.
