Even as climate change and nature loss become more acute, society’s ability to mount a coordinated response seems to be in rapid retreat. Geopolitical divides, trade wars, major U.S. Policy shifts, and concerns over the costs and impacts of possible solutions are throwing sustainability momentum into reverse.
As members of the Council on Sustainability Transformation convened by Environmental Resources Management (ERM), we believe this situation calls for a reassessment of private and public sector sustainability approaches to ensure they support continued progress and help maintain competitiveness in this increasingly messy world. It’s important to recognize the complexity of this challenge, especially given that companies and countries that scale back sustainability efforts may realize short-term benefits that elude those that stay the course—even though decisions emphasizing short-term benefits may increase long-term business risk.
Rather than wishing difficulties away, businesses and governments need to ask themselves tough questions as they rethink sustainability approaches, including:
- Is the sprawling sustainability agenda developed over the last few decades helpful and workable, or a hindrance to effective responses? What kind of radical prioritization of issues may be required?
- What are the right trade-offs for companies and countries when confronted with concurrent and urgent geopolitical, economic, societal, and sustainability challenges?
- What are the main obstacles to creating robust alliances that improve sustainability outcomes with minimal trade-offs?
Focus on the existential battles
Given the global threats to climate and nature, as well as the commercial and societal risks associated with them, corporate action should prioritize these two areas. When your house is on fire, the focus is clear: Get everybody out and extinguish the blaze. The same principle should guide companies, investors, and policymakers.
While for some companies and industries topics like human rights in the supply chain and worker safety will be on a short list of material issues, climate change and biodiversity loss present immediate, potentially irreversible global risks, necessitating urgent action by all kinds of institutions everywhere.
Emphasizing climate and nature does not mean neglecting social aspects. On the contrary, reversing global warming and nature loss are essential to mitigating their enormous potential societal consequences, such as negative health or economic outcomes, which would disproportionately affect already vulnerable communities and workers.
Less undivided attention is also the best way to unlock sustainability’s value-creation potential, from cost savings and the development of revenue-generating products to creating new markets. Significant and enduring corporate contributions to combating climate change and nature loss will only come from commercially viable solutions and innovations.
The current sustainability agenda compels companies to invest in topics that are not as urgent or universal as the ongoing climate and nature crisis in terms of their worldwide impacts and relevance to every business.
Push hardest where sustainability overlaps other priorities
Sustainability competes with other priorities in both private and public sector decision-making. Additionally, the level of sustainability effort governments expect from companies varies dramatically, with Europe having set the highest bar. Today, companies and governments worry that strict European standards have contributed to an erosion of the region’s competitiveness. This has led to a push to simplify existing sustainability policies, such as the Corporate Sustainability Reporting Directive (CSRD).
Simply making trade-offs between geopolitical, economic, societal, and sustainability issues is not enough—it’s crucial to minimize them as well. One way to do this is to find areas of overlap, where actions in one area positively address at least some of the others. For example, renewable energy and energy efficiency, combined with widespread electrification, can improve energy independence and shield countries and industries from the kind of geopolitical blackmail made possible by overreliance on fossil fuel imports, as Europe learned when the Russian invasion of Ukraine cast dependence on Russian natural gas in harsh new light.
National and regional policies focused on low-carbon energy, efficiency, and electrification—like solar, electric vehicles, and smart grids—also create new markets and jobs. Today’s tariff wars and resulting supply chain uncertainty open new opportunities to apply sustainability solutions to other pressing challenges. For example, circular production methods can reduce environmental impacts and make supply chains less vulnerable to foreign interference.
The situation and responses will be different for each sector and company. Companies should find where geopolitical, economic, societal, and sustainability priorities align, then choose actions that address sustainability and other issues simultaneously and contribute to resilience and competitiveness. Additionally, governments should support areas of cross-strategic value financially, through market reforms, and by protecting them against unsustainable and unfair competition.
Policymakers should also acknowledge where sustainability policies go too far for the current geopolitical context and threaten their industries or societies. For example, Europe’s timeline for e-mobility and its quotas for sustainable aviation are proving too ambitious for European carmakers and airlines to implement and have hurt their global competitiveness. The steep fines companies face when they can’t live up to those policy goals erode competitiveness further. Contrary to what policymakers hope to achieve, such policies also undermine public support for the low-carbon energy transition. To build and keep momentum, governments need to revise counterproductive sustainability policies.
Build stronger collaborations and defend hard-won ground
The slogan “United we stand, divided we fall” is relevant here. As actors facing myriad sustainability challenges with short- and long-term impacts, companies can benefit from helping to start and maintain innovative, solution-oriented collaborations between businesses, investors, and governments.
Governments and regions that want to continue fighting for the ambitions agreed upon in the Paris Agreement and the Kunming-Montreal Global Biodiversity Framework should align policies and practices and form alliances of the willing. They should also lower barriers to fair trade and open their markets. While others build walls and deny the need for cooperation, alliances can show that free trade and deep collaboration are essential to overcoming the threats posed by climate change and nature loss.
Companies and industries also need to cooperate much more closely and determinedly than previously to be effective collaboration catalysts. They should not give in to short-term temptation to retreat like members of some financial net-zero alliances have recently, or fail to form a united front when it counts, like in response to whipsawing U.S. Tariffs and trade policy.
It is also true that some ambitious collaborations have run into antitrust regulations aimed at avoiding corporate collusion. While effective collaborations on sustainability and supply chain resilience can be pre-competitive, they too often get ensnared in antitrust rules. To accelerate needed cooperation on sustainability, policymakers should allow industries more leeway to work together and shield them from unreasonable allegations.
Prioritize and advance
While sustainability is under pressure, continued progress is possible and imperative. This requires focusing investment and action on climate and nature, plus the narrow set of social issues that are truly material to each organization, finding sustainability solutions that address other pressing topics, and clearing the path for deeper collaboration.
When times are difficult, it is critical to show ways to address the most material geopolitical, economic, societal, and sustainability issues at the same time. Radical prioritization is the necessary path forward for business, society, and the planet.
The opinions expressed in Coins2Day.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Coins2Day .
