How Sustainability Transformations Quietly Lose Their Edge

Corporate sustainability is experiencing a shift as net-zero pledges are being quietly abandoned and regulatory pressures are decreasing in certain regions. Shareholders are now demanding stronger business cases, and sustainability leaders are often required to defend their function rather than advance it. The question "Where is the value?" has become more prevalent and is often framed as a choice between profit and purpose.

While many sustainability transformations do not fail dramatically, they lose their edge as goals become softened and ambition narrows.

The reasons behind this decline are complex, as the process often unfolds gradually and becomes evident only much later. Researchers found that the difference between success and failure in startups targeting sustainability or social impact can be attributed to the team's mindset. Both idealistic and pragmatic teams treated profit and purpose as mutually exclusive, either focusing on growth first or developing a business case before addressing social impact.

In contrast, teams that successfully built durable models held the two objectives in tension, adopting a "both/and" mindset (paradox thinking). They were slower to commit to a fixed business model, created simpler prototypes, and remained open to feedback from stakeholders that could complicate their plans.

Established companies pursuing sustainability transformations can learn from this research. The cognitive composition of the team running the transformation is crucial, as they are responsible for defining the function's purpose, setting metrics, and choosing the language. This early decision-making process, known as structural imprinting, becomes increasingly difficult to reverse as the venture progresses.

By understanding and addressing the mental models within the team, older companies can better navigate the complexities of sustainability and maintain a strong focus on both commercial viability and sustainability ambitions.