Corporate Sustainability is Broken: Why Companies Are Scaling Back and How to Fix It for the Future

The Broken State of Corporate Sustainability: Why Companies Are Scaling Back and What the Future Holds

Corporate sustainability as we know it is undergoing a transformation. Once heralded as the path to a greener future, many companies are now scaling back on their environmental goals. Several global corporations, including Unilever, Shell, and Volvo, have recently revised their sustainability strategies, raising concerns about the future of corporate responsibility. This trend points to a critical question: Is the current model of corporate sustainability broken, and what can be done to create a more effective and impactful approach for the future?

Corporate Rollbacks: A Growing Trend

Several major companies have recently announced adjustments to their sustainability targets, signaling a shift in priorities that is worrying environmental advocates.

• Shell: The oil giant has dialed back its climate goals, indicating a slower transition away from fossil fuels. While previously under pressure to align with global climate goals, new CEO Wael Sawan has shifted focus toward balancing short-term profitability with long-term climate objectives. Shell’s revised targets have been criticized for falling short of what’s needed to meet the Paris Agreement, which aims to limit global warming to 1.5°C.
• Unilever: Under the leadership of new CEO Hein Schumacher, Unilever reduced its ambitious target to cut virgin plastic use by 50% by 2025, revising it to a more "realistic" 30% by 2026. The company faces criticism from groups like Greenpeace for scaling back on its environmental commitments. However, Schumacher argues that Unilever must focus on areas where it can make a significant impact, such as addressing hard-to-recycle plastics, reflecting the broader challenge of achieving sustainability without stronger policy support.
• Samsung is shifting its sustainability focus toward circularity, moving away from aggressive emission reduction targets.
• Volvo: The Swedish automaker has postponed its plan to sell only electric vehicles (EVs) by 2030, citing market demand and infrastructure challenges. Although the transition to EVs is still on Volvo’s agenda, the slow consumer adoption of electric mobility and issues with charging infrastructure have caused delays.
• Microsoft has subtly reduced its pace toward carbon reduction, citing difficulties in sourcing renewable energy and the high costs of sustainable technology.
• Nestlé has scaled back its plastic reduction goals due to inadequate global recycling infrastructure.

These rollbacks highlight the challenges corporations face in balancing sustainability and profitability amidst economic, regulatory, and market pressures.

Why Corporate Sustainability Is Breaking Down

Several factors are contributing to the weakening of corporate sustainability efforts:

1. Economic Pressures: Financial challenges, including rising costs and shareholder demands for profitability, are forcing companies to prioritize short-term financial performance over long-term environmental goals.

2. Regulatory and Infrastructure Challenges: Weak global recycling infrastructure and inadequate policy frameworks hinder companies’ ability to meet ambitious sustainability targets.

3. Market Readiness: In industries such as automotive, slow consumer adoption of green technologies, such as electric vehicles, contributes to delays in sustainability progress.

4. Supply Chain Disruptions: Difficulties in sourcing sustainable materials and energy further slow down the sustainability transition.

5. Short-termism: Many companies prioritize quarterly earnings, often at the expense of long-term sustainability goals, due to shareholder pressures for immediate profits.

6. Greenwashing: Some companies engage in superficial sustainability initiatives to enhance their image without making meaningful changes, undermining genuine progress.

7. Technological and Innovation Gaps: The slow development and high cost of critical sustainability technologies, such as renewable energy and recycling infrastructure, limit widespread corporate implementation.

8. Consumer Behavior: The slow adoption of sustainable alternatives, such as electric vehicles or eco-friendly packaging, discourages corporations from investing heavily in green solutions.

These combined factors are making it increasingly difficult for companies to maintain their sustainability commitments, despite public demand for stronger environmental action.

Building the Next Generation of Corporate Sustainability

To overcome these challenges and build a more resilient future, companies must adopt a bold and systemic approach to sustainability. Here’s what the next generation of corporate sustainability should look like:

1. Adopt Systems Thinking

Companies must go beyond individual improvements and adopt a holistic approach that considers the entire value chain—from raw materials to product disposal. Embedding circular economy principles into every aspect of the business model is key to ensuring long-term sustainability.

2. Leverage Policy Advocacy for Systemic Change

Corporations must advocate for stronger regulatory frameworks that enforce sustainability across entire industries. By partnering with governments, NGOs, and industry bodies, businesses can push for global standards that promote a level playing field for all competitors.

3. Integrate Sustainability Into Core Business Strategy

Sustainability should no longer be a side project. Financial success must be directly linked to environmental, social, and governance (ESG) outcomes, with sustainability embedded into every decision a company makes.

4. Rethink Corporate Purpose

Companies need to redefine their purpose, moving away from profit maximization and toward delivering shared value for all stakeholders—including employees, customers, society, and the planet. This shift will drive innovation and enhance corporate reputation.

5. Invest in Innovation and Collaboration

Innovation in sustainable technologies and practices is critical. Collaborating across industries and with startups can accelerate the development of new, green solutions, driving progress on issues like renewable energy, carbon capture, and sustainable packaging.

6. Use Transparent, Measurable Metrics

Clear and measurable sustainability goals are essential. Companies should adopt globally recognized reporting frameworks, such as the Global Reporting Initiative (GRI) or the Task Force on Climate-related Financial Disclosures (TCFD), to ensure transparency and accountability.

7. Emphasize Circular Economy Models

The traditional linear model of production is no longer viable. Companies must shift toward circular economy models, where materials and products are reused, refurbished, or recycled continuously.

8. Foster a Sustainability Culture Across the Organization

Sustainability must be a company-wide effort, not just driven by top leadership. Every employee should understand and contribute to sustainability goals, with incentive structures that reward green behaviors.

9. Align With Investor Expectations

As ESG investing grows, companies that fail to prioritize sustainability risk losing access to capital. Businesses must proactively engage with ESG investors and integrate sustainability metrics into their financial reporting.

10. Prepare for Future Crises

Future-proofing companies against crises like climate change, resource scarcity, or pandemics requires agility and a deep integration of sustainability into core business strategies.

Conclusion: A Call for Transformational Change

The current generation of corporate sustainability is broken, but the future holds the potential for a more effective and resilient approach. Companies must embrace transformational change, shifting from incremental improvements to systemic solutions. This will involve reshaping markets, advocating for stronger regulations, fostering innovation, and embedding sustainability into the heart of corporate purpose and operations. Only through bold, collective action can we address the climate crisis and build a sustainable future for generations to come.