After the Sustainability Recession: It’s time to expand our focus from responsible business to regenerative markets

John Elkington • December 19, 2024

John Elkington, Founder of Volans and an ISSP Sustainability Hall of Fame Honoree, is widely recognized as one of the founders of the global sustainability movement. In this piece, he signals that if sustainability is to deliver, our understanding of what it is likely to involve must also expand. No longer simply about transforming businesses, sustainability must be about transforming markets. His most recent book — Tickling Sharks: How We Sold Business on Sustainability — was published in June 2024 by Fast Company Press. 


I began mapping the ups and downs in the sustainability agenda thirty years ago. There have been a series of upwaves since, with ever-taller peaks truncated by sustainability recessions — though the intervals between the peaks are shrinking.


This time around, the ESG agenda was hit soonest and hardest, but the wider sustainability agenda will be under pressure through the second Trump administration. Weirdly, though, I feel more optimistic than I have for years — because experience suggests that the critical work is done in downwave, recessionary periods.


So, while sustainability champions — including thousands of newly-minted chief sustainability officers (CSOs) — spotlight the need to move beyond incrementalism to systemic solutions, it is not clear that they yet know what this will involve.


One implication is that truly effective solutions will be structural. This means restructuring not just individual businesses but also reconfiguring the markets they serve.


Take the Ford Motor Company. It split itself into two operating units — one (“Ford Blue”) focuses on the company’s legacy business anchored around the internal combustion engine, while the second (“Ford Model E”) is configured to become a nimbler player in the electric vehicle market. Model E may be struggling, but the increasing urgency of such solutions to fundamentally structural challenges will be increasingly obvious.


Nor is Ford alone. Solvay, a Belgian multinational chemical company, is another pioneer that  has gone structural. While its core business has doubled down on established product lines like soda ash, peroxides, and specialty chemicals, Solvay has spun out a new venture, Syensqo, to focus on a range of “breakthrough” opportunities in such areas as renewable materials and green hydrogen.


The interesting thing here is that the new venture already boasts revenues well ahead of the legacy business. At this stage, such examples reflect corporate restructurings in response to emerging market trends. Yet they also raise the question of how soon tomorrow’s business success stories will be based on conscious market restructurings, driven as much by policymakers (as in the case of the EU’s Green Deal and the US Inflation Reduction Act) as by incumbent corporates and insurgent entrepreneurs.

 


Markets Wobble As Politicization Grows


The more exposed a company is to financial markets, the less independence of thought it is often allowed when it comes to sustainability-directed transformations. Where people might once have blamed the gods for their mishaps, today’s business leaders blame market realities (specifically macroeconomic, political, and financial factors) for their failures to deliver on publicly announced commitments in the sustainability space.


Think of Shell CEO Wael Sawan, with his announcement of a lower ambition for his energy company’s climate targets; of Mercedes-Benz CEO Ola Kalenius throttling back on his company’s target of 100 percent electric vehicles by 2030; and of Unilever CEO Hein Schumacher declaring that the FMCG giant’s long-vaunted sustainability goals had failed to deliver sufficient shareholder value — and dialling back on the speed and scale of change in some areas.


The market travails of BlackRock CEO Larry Fink, who found himself embroiled in a furious anti-ESG storm, will feature in many future business school case studies. Standing back, it is evident that, even if Fink and BlackRock were correct in their analysis of the longer-term market trajectories, they misjudged the political consequences of the recent boom in market interest in ESG.


Progress always triggers counter-measures from those economically or ideologically trapped in the old paradigm. So, as the transition builds, expect growing tensions — alongside climbing casualty rates, both for leaders and businesses. Once again, whether or not they care to embrace it, there is a critical role for governments in ensuring that most of the actual and potential victims of such transformations are compensated, or reskilled and re-employed.

 


Sustainability is our biggest market failure


If sustainability is to deliver, our understanding of what it is likely to involve must also expand. It is no longer simply about transforming businesses, critical though that may be. Increasingly, too, it must be about transforming markets — to the point where necessary outcomes are secured by new market default settings.


Talk to many CSOs meanwhile, though, and while they are increasingly happy to talk about business models, they may be significantly less comfortable when it comes to discussing wider economic models. For that, it can be more productive to turn to the smaller number of Chief Economists in business. They include some of the most interesting — and provocative — thinkers in today’s private sector.


As Dow Chief Economist Rafael Cayuela told me, “sustainability is our biggest market failure — but solving these challenges is our biggest-ever market opportunity. We are seeing a phase change in key markets, where sustainability shifts from being considered simply as a cost, an additional set of constraints, to an increasingly powerful set of market drivers.”

 


At best, tariffs are short-term remedy


Anyone wanting a better sense of how all this might play out should consider taking a learning journey to China in 2025 — a country that is clearly committed to dominating the commanding heights of tomorrow’s economy.


China’s pro-green-growth mindset may not be driven by sustainability priorities, at least as we understand them, but their undeniable success means that the EU is now having to slap massive tariffs on imported Chinese cars.


Tariffs , of course, will be in the limelight throughout 2025. But there really is a limit to how long you can use such instruments to hold back the future. Expect to see more market initiatives aggregating sustainability-oriented demand at scale. Consider the Climate Group’s RE100 initiative, with over 400 corporate members committed to consuming 100 percent renewable electricity. Collectively they consume more power than France — and are closing the gap with Germany.


Finally, while it’s understandable why Jeff Bezos might want to keep his Washington Post empire above the electoral fray, it’s time for business leaders to align their wider market ecosystems with their declared commitments.


One angle Volans is pursuing involves encouraging companies to review their memberships of industry federations — to test the alignment of the federations’ relevant lobbying activities against a given company’s commitments. Our recent study with InfluenceMap for Unilever is a case in point. We found that around a quarter of the federations and associations with which Unilever is currently affiliated are lobbying in contrary directions. The logical question then is what such companies should do next: stay in and fight — or publicly resign, explaining why they have done so?


In headlines, the current sustainability recession is likely to drive our agenda in more market-oriented directions, dictating increasingly structural responses from corporations, and — as a result — a continuing politicization of issues that by the 2040s will nonetheless be taken for granted.

About the Author:

John Elkington, Founder of Volans and an ISSP Sustainability Hall of Fame Honoree and author of the newly released

Tickling Sharks: How We Sold Business on Sustainability.


PHOTO: China takes on the world: BYD cars on display in Munich, Germany | Matti Blume | BYD booth, IAA Summit 2023 | Munich, Germany

Read perspectives from the ISSP blog

By Ioannis Ioannou, PhD June 19, 2025
London Business School Professor Ioannis Ioannou, PhD examines the vulnerable narrative infrastructure surrounding ESG. By collaboratively engaging those most affected by ESG transitions—indigenous peoples, workers, young people, small businesses, and communities, particularly in the Global South—we can foster the trust, legitimacy, and collective commitment for meaningful progress. Who Gets to Tell the Story of ESG? For more than a decade, ESG rapidly evolved from a specialized investor consideration into an elaborate global infrastructure of standards, metrics, taxonomies, and disclosure frameworks. Investor attention soared, corporate sustainability teams grew exponentially, and ESG vocabulary— climate risk, fiduciary duty, and double materiality—became firmly embedded in corporate boardrooms and regulatory discussions globally. Yet, despite ESG’s impressive institutional and technical advancements, the narrative meant to support it remained remarkably fragile. While ESG developed sophisticated standards, disclosures, and metrics, it never invested in the narrative infrastructure to explain its purpose, build public understanding, or secure legitimacy beyond institutional circles. Without the broader stakeholder engagement and effective storytelling that would connect ESG to people’s lived realities, it became vulnerable. Critics didn’t need to challenge carbon accounting or materiality frameworks; instead, they recast ESG as a job killer, an elite agenda, or an unwelcome intrusion into everyday life. The backlash caught many ESG professionals off guard, though the warning signs were visible. ESG’s rapid adoption by investors and regulatory bodies created an illusion of momentum, but this obscured a deeper structural gap. ESG rarely connected meaningfully with those directly affected by ESG-driven transitions—workers facing disruption, small business owners adapting to shifting expectations, and communities, particularly in vulnerable regions, confronting real and immediate climate risks. For these groups, ESG often seemed abstract, distant, and disconnected from their daily concerns. Narrative infrastructure might sound like an unusual concept, but it's foundational to widespread support. It connects people and institutions, conveys meaning, and determines whether ESG is seen as genuine leadership or merely corporate branding. Robust narrative infrastructure ensures resilience under political pressure; without it, initiatives can rapidly lose whatever public approval they may have had. Constructing narrative infrastructure requires explicitly recognizing storytelling— and who contributes to that storytelling—as integral to ESG strategy, not simply a communications exercise. Effective narratives generate trust precisely because they emerge from transparent dialogue, clear accountability, and inclusive stakeholder engagement. By contrast, greenwashing uses storytelling deceptively, aiming to conceal poor performance, and deflect scrutiny. Strong narrative infrastructure, unlike greenwashing, strengthens credibility and legitimacy by openly connecting ESG commitments to shared realities, tangible actions, and measurable outcomes. It is a fundamental strategic asset for ESG success. Importantly, narrative infrastructure also concerns who gets to tell these stories. Over the last decade, the central narrators of the ESG story have largely been institutional actors: executives, investors, sustainability professionals, academics, and regulators. Their contributions have been invaluable, driven by expertise, rigor, and genuine commitment. Yet these narrators also represent a relatively narrow perspective, shaped by institutional backgrounds and professional incentives. Many important voices have remained largely excluded from shaping ESG narratives: indigenous people whose lives are often fundamentally changed by corporate activities, workers whose livelihoods are directly impacted by ESG transitions, young people deeply invested in future outcomes, small businesses continuously adapting to new ESG-related requirements, and especially communities—particularly in the Global South —directly facing the worst of climate disruptions. While these stakeholders' experiences occasionally appear within ESG reporting, they seldom influenced strategy or shape decisions in a substantial way. This exclusion poses significant, practical risks. Stakeholders naturally resist initiatives perceived as imposed from above or disconnected from their lived realities—not necessarily because they oppose ESG’s goals, but because they feel unheard and invisible within such ESG narratives. The resistance appears as political backlash, active public scepticism, or disengagement, all severely undermining ESG’s legitimacy, effectiveness, and public support. Addressing this critical weakness requires deliberately building ESG’s narrative infrastructure through inclusive, collaborative, and ongoing engagement. Practically, companies should move beyond occasional or reactive consultations toward sustained processes where stakeholders actively shape strategies. This can involve establishing community advisory boards with real decision-making power, participatory scenario planning that integrates diverse local perspectives, and internal cross-functional councils that ensure workers, communities, and youth voices directly influence ESG outcomes. Such sustained, authentic collaboration bridges the gap between institutional intentions and genuine public legitimacy. Within companies, narrative stewardship should not be limited to corporate communications or sustainability departments alone. Effective ESG storytelling depends on regular, structured collaboration across multiple functions—including strategy, human resources, procurement, product development, and finance—to ensure ESG commitments align authentically with core business decisions and reflect real-world stakeholder experiences. Companies can institutionalize this collaboration by creating dedicated cross-functional ESG committees tasked with integrating diverse internal perspectives, monitoring stakeholder feedback, and ensuring ESG initiatives clearly connect to tangible social outcomes. At an institutional level, building ESG narrative infrastructure involves establishing platforms that broaden participation in ESG discourse. It requires supporting initiatives that improve public understanding of ESG standards and practices, funding research that evaluates public perceptions of ESG alongside traditional financial metrics and ensuring ESG disclosures transparently reflect diverse stakeholder concerns. ESG narrative legitimacy grows stronger when diverse perspectives genuinely shape how ESG commitments are determined and communicated, implemented, and monitored—not merely as token inclusions, but as integral, strategic components of ESG itself. Regulators have an essential role in shaping ESG narrative infrastructure. Current ESG disclosure standards typically prioritize technical accuracy and financial materiality, mostly targeting investor needs. Broadening these frameworks to explicitly incorporate public legitimacy could significantly enhance ESG’s impact. 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Unilever’s inclusive “living wage” campaigns have similarly leveraged stories from frontline workers to connect ESG metrics with tangible social outcomes, strengthening stakeholder trust. Industry-specific initiatives, such as the Bangladesh Accord in apparel, demonstrate how authentically incorporating diverse stakeholder experiences—including employees, unions, and community representatives—into ESG reporting can reinforce accountability and legitimacy. These examples highlight how inclusive storytelling, grounded in genuine stakeholder participation, can transform ESG commitments from abstract promises into credible actions with real-world impact. ESG professionals now face an exciting strategic opportunity: intentionally building a narrative infrastructure that's genuinely inclusive, collaborative, and resilient. Yes, involving diverse stakeholders means navigating complexity, dialogue, and occasionally tough compromises. It also means embracing participatory processes that might feel messier or less predictable. But it's exactly this diversity of voices and collective authorship that generates persuasive, robust narratives—ones that not only resonate widely but can confidently withstand shifts in politics, culture, and public sentiment. Beyond strengthening ESG's narrative infrastructure, it's important for ESG professionals to step back and consider sustainability more broadly. By explicitly linking ESG narratives to overarching sustainability objectives—such as respecting planetary boundaries and enabling a just transition—professionals can better illustrate how financial markets, corporate strategies, and policy frameworks actively support broader ecological and social well-being. Making these broader connections explicit can deepen trust, enhance engagement, and ensure the interconnected ESG-sustainability story resonates meaningfully with all those whose futures depend on it. We stand at a turning point, facing a critical opportunity to strengthen ESG’s narrative foundations. While ESG’s narrative fragility has been clearly exposed, this moment also offers an inspiring chance to intentionally build a more inclusive, credible, and resilient narrative infrastructure. The future of sustainability depends not only on rigorous metrics or detailed disclosures, but ultimately on whether those whose lives are impacted recognize themselves clearly in its story. By authentically amplifying diverse voices, explicitly connecting ESG initiatives to broader sustainability goals, and developing narratives rooted in real-world experiences, we can foster the trust, legitimacy, and collective commitment necessary for meaningful and lasting progress.
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