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.