When sustainability stops being sustainable — And how to fix it

Strengthen Sustainability by Focusing on Real Value

1. Budget cuts are likely coming your way, so proactively streamline costs while safeguarding the initiatives that truly align with core business goals

2. Cut, Don’t Gut

   A lean sustainability program can be both cost-efficient and high-impact if guided by core business goals

3. Focus on the Future

   Smart executives not only protect the present but also secure tomorrow’s growth opportunities—especially in sustainability

4. Make It Count

   Effective sustainability is never window dressing; it’s an engine for innovation, resilience, and long-term financial health

   
   

Bring back Pragmatism and Proactivity 

We see in the current market landscape that business owners, board members, and executive leaders need to take bolder stances on reforming their corporate sustainability and ESG strategies and target goals. Sustainability executives and leaders will need to justify their existence and role in businesses to both shareholders and stakeholders.

From a broader perspective—and without taking a moral or political stance—corporate sustainability and ESG ideologies must be questioned so they can evolve, be strengthened, and stand the test of time. At present, the environmental and social disciplines within corporate sustainability are being stress-tested by a politically polarized tug-of-war at the macroeconomic scale, and internally by corporate misalignments on the materiality of ESG issues each industry and business should address. Impulsive reactions to these stress-tests are making sustainability and ESG unsustainable for business.

Let’s face it: with sustainability gaining momentum in society, many companies started investing more heavily in this space. However, it was not uncommon that the business acumen required for other company investments wasn’t fully applied to the sustainability domain. It’s not that all sustainability efforts need to be revenue-generating, but many companies are placing resources toward initiatives that are neither linked to business opportunities nor risks. As such, it is understandably difficult to trace the business value in these initiatives—and when times get tough, sustainability budgets are seemingly easier to cut.

The risk here is that companies who fail to see the value in historic sustainability spending start reducing budgets and initiatives that could create strong business value, market position, brand reputation, growth, and revenues. It would be unsurprising if some companies go so far as to strip their budgets down to compliance alone. As this could largely be handled by external suppliers, it would leave little justification for having a sustainability director or executive—and the company will miss out on a wide range of opportunities that sustainability can bring to almost every part of the business.

Connect the cost-cutting to the overall strategy and kill darlings

For sustainability leaders who want to take a pragmatic approach to safeguard their budgets and mandates, we suggest a proactive role in screening the business value of sustainability initiatives. Streamlining and keeping your sustainability and ESG strategy agile will allow a level of adaptability that can better handle this period of evolution and the risks to come.

If there are difficulties in knowing where to start, several framework tools can be ideal for this purpose. Drawing up a sustainable business canvas (see example below) can help collect the right information needed to begin. It’s important that any template you use is relevant and tailored for your business. However, the canvas should always include Return on Sustainability Investment (ROSI) financials and timelines connected to what you aim to solve and gain. For those organizations that have performed double materiality assessments, make sure it lines up with the metrics indicated as material to your company.

Start with the strategy and identify what the next big bet is for the business. In every cost-saving exercise, there must be room for future-forward innovations that align with the company’s growth roadmap. Identify high-value work. Just as you scrutinize any department’s ROI, review your sustainability initiatives through a business lens to pinpoint what’s driving tangible results. Streamline processes. Eliminate redundancies, consolidate resources, and leverage technology or shared services to do more with less. Maintain what’s core. Be bold in cutting. If an initiative doesn’t mitigate critical risks or boost competitive advantage, it might be time to pause or retire it.

Source: Sustainable Business Canvas, Nicole Zethelius, 2023

Safeguard the future for long-term success

Smart executives not only protect the present but also secure tomorrow’s growth opportunities—especially in sustainability. When budgets tighten, preserve the initiatives directly tied to your company’s strengths and strategic risks. Don’t let immediate budget pressures undercut the high-potential projects that could redefine your business in the coming years.

Make it count. Effective sustainability is never window dressing; it’s an engine for innovation, resilience, and long-term financial health. With this approach, it will be difficult for any CEO to justify cutting the sustainability budget.

By Nicole Zethelius, Sustainability Executive and Senior Advisor to Spearhead, and Siavash Habibi, Partner at Spearhead