Risk is pushing sustainability into the core of strategy and governance - but are organisations ready?

The strongest message in these survey results is that sustainability is no longer being pulled from the periphery to the core of strategy and governance by purpose. It is being pushed there by risk.

Physical climate risks, AI advances, accelerating regulation and legal liability for harms are all expected to have a big impact on sustainability strategy in the years ahead, while geopolitical fragmentation, transition risk and supply chain disruption are seen as major threats to business value.

Consequently, risk management ranks well ahead of value protection, cost reduction and revenue creation as the dominant driver of change in organisations' approach to sustainability.

Expanding reporting obligations are expected to trigger a range of organisational developments. As well as enhancing data quality and board oversight, this includes strengthening enterprise-wide sustainability literacy, supported by sustainability professionals with strong skills in change leadership and stakeholder engagement.

Such moves suggest meaningful attempts to hardwire sustainability into mainstream governance architecture, but there is clearly still a lot of work to do.

Respondents believe that sustainability will become more strategic, more important to reputation, and more dependent on enterprise-wide capability. They are also highly attuned to the need for narrative discipline – recognising that trust depends on honest storytelling rooted in verifiable data and credible action.

However, only 1 per cent expect a substantial increase in resources, with majorities expecting funding for decarbonisation, adaptation, nature and biodiversity, capability building, and community investment to remain flat. This suggests that strategic intent and narrative maturity are running ahead of operational follow-through.

While climate transition overwhelmingly dominates the priority list, nature and biodiversity remain grossly underweighted as strategic priorities and threats to business value. That is increasingly hard to square with research, such as the recent UK national security assessment, which links nature loss and ecosystem degradation to cascading impacts ranging from crop failures and intensified natural disasters to economic instability and interstate conflict.

Respondents are also likely underestimating litigation risk. While expectations are high that companies and their directors will be held accountable for misleading sustainability claims, and liable for harms caused, only 9 per cent view litigation and liability as a significant threat to value. This gap matters, indicating that litigation is also seen as a standalone risk, rather than a foreseeable consequence of weaknesses in governance, substantiation, due diligence and board oversight.

Ultimately, the question for organisations and their boards is not simply whether they recognise climate and nature breakdown, technological disruption, and geopolitical fragmentation as sources of systemic risk. It is whether they are governing them as such in practice. In an increasingly volatile, regulated and litigable environment, those are very different things, and bridging that gap requires legal rigour as much as managerial will.

Irrespective of short-term political turbulence, recognise that business-as-usual cannot continue indefinitely. Seek expert advice to better understand escalating systemic risks, the inevitability of sustainable transition, and the necessity of transformation to preserve future resilience and competitiveness.

Carry out a double materiality assessment to properly evaluate the business’ impacts and dependencies on social and ecological systems, and the risks and opportunities they are likely to give rise to over the short, medium and long term. Use scenario planning to stress test resilience of the current business model and strategy.

Based on a deeper understanding of impacts, dependencies, risks and opportunities, anchor corporate purpose and strategy in how the business can best contribute to a just and sustainable future. Explicitly articulate the interdependence of business and systemic resilience to encourage bold innovation, focused on directing core capabilities towards solving problems of people and planet.

Ensure that governing body structures, competencies and understanding of duties reflect accountability for achieving purpose outcomes, and empower all decision-makers to prioritise purpose outcomes through aligned policies, processes and procedures.

Embrace the reality that sustainable transition is a process, and challenges and setbacks will occur. Put in place robust crisis management strategies and response plans to provide for swift mitigation and remediation of any adverse impacts, and establish mechanisms to apply lessons learned from any incident, addressing root causes and reducing the likelihood of reoccurrence.

Build coalitions and collectively advocate for market reforms that will weed out free riders and reward superior contributions to the wellbeing of people and planet. This is key to transcending the perceived tension between commerciality and sustainability.