How Should Companies Handle the Sustainability Backlash?

Introduction

In recent years, corporate sustainability has faced unprecedented challenges. What was once a burgeoning movement, celebrated for its potential to align business with planetary health, is now under siege. Political polarisation, populist backlash, and shifting regulatory landscapes have left many companies questioning their sustainability commitments. But this moment is not the end of sustainability but a critical juncture — one that demands resilience, pragmatism, and strategic foresight.

The crisis

The sustainability movement, after decades of progress, finds itself at a crossroads. Writing in Harvard Business Review, Georg Kell, Martin Reeves, and Helena Fox note that “a shifting political landscape — intensifying rivalry between nations, increasing social polarisation, and a populist backlash against sustainability efforts — is radically redefining the conditions under which corporations must survive and thrive” [1]. In the US, sustainability commitments are being unwound, while Europe faces pushback against stringent reporting requirements like the Corporate Sustainability Reporting Directive (CSRD) [2]. Even the term “ESG” has become politically charged, with companies quietly removing it from their communications [3].

This retreat is not merely rhetorical. Dr Ioannis Ioannou, a leading expert in sustainability leadership and corporate responsibility, observes that “many companies are quietly backing away” from sustainability, exposing the fragility of commitments made during more favourable times [4]. Yet, this backlash does not negate the underlying imperatives. Climate disasters are intensifying, with the number of weather-related disasters increasing fivefold in the last 50 years [5]. Six of the nine planetary boundaries — critical thresholds for Earth’s stability — have already been breached, raising the risk of irreversible damage [6]. The question, then, is not whether sustainability matters, but how companies should navigate this turbulent period.

The rebound

Despite the current retreat, there are compelling reasons to believe that sustainability will regain momentum. Renewable energy, for instance, has reached a tipping point. China accounted for 40% of global renewable capacity expansion between 2019 and 2024, and renewables now represent nearly a quarter of the EU’s energy use [7]. These advancements are not easily reversed, as they are underpinned by massive infrastructure investments — $300-400 billion annually in global power grids over the past decade [8].

Moreover, planetary realities will eventually reshape politics. As climate impacts become more severe — evidenced by events like the Los Angeles fires — public opinion will likely demand stronger action [9]. Kell, Reeves, and Fox argue that “a deterioration of climatic conditions may even enhance the probability and intensity of a bounce back” [10]. Businesses that recognise this inevitability can position themselves ahead of the curve.

Another driving force is the economic viability of sustainable business models. Companies like Maersk, which invested in low-carbon fuels and electrified port operations, have turned sustainability into a competitive advantage [11]. Similarly, car-sharing platforms, home solar systems, and circular economy models are proving that sustainability can be profitable. As David Carlin notes in Forbes, “sustainability is no longer seen as an additional cost” but as a driver of economic opportunity [12].

Navigating the backlash

In this liminal period, companies must avoid two extremes: blind idealism and outright abandonment of sustainability. Instead, they should adopt a pragmatic, long-term approach.

Leaders must prepare for a future where sustainability rebounds. This means reducing exposure to environmental risks and pre-empting future regulations. Kell, Reeves, and Fox advise companies to “be guided by the long-term scenario of a sustainability rebound,” as this mindset builds resilience and trust with stakeholders [13]. For example, Interface, a global flooring company, pioneered a closed-loop recycling model in the 1990s, which now supplies over half of its materials from recycled or bio-based sources [14]. By embedding sustainability into their business model, they turned it into a source of efficiency and customer engagement.

Sustainability has become politicised, but shared values like environmental stewardship and intergenerational responsibility can still bridge divides [15]. Companies should anchor their strategies in these principles while remaining attuned to political realities. As Kell, Reeves, and Fox suggest, “operating from your own company’s values and principles creates a pragmatic basis to plot a steady course” [16]. This approach fosters consistency amid external volatility.

With international collaboration faltering, local initiatives offer a path forward. Elinor Ostrom’s research shows that polycentric approaches — multiple independent initiatives — can foster widespread agreement on norms [17]. Companies like Nike and New Belgium Brewing have successfully localised sustainability efforts, building trust and resilience from the ground up [18].

Sustainable integration

Sustainability must be woven into core business functions, not treated as a standalone project. Carlin highlights that sustainability teams are increasingly seen as “internal experts” rather than just reporting specialists, with their input sought in strategic decisions [19]. This integration mirrors the rise of data protection as a cross-cutting priority. When sustainability is embedded into operations — such as supply chain optimisation or energy efficiency — it becomes harder to reverse and more likely to deliver tangible benefits [20].

Navigating the sustainability backlash requires a new leadership mindset — one that embraces contradictions between short-term pressures and long-term goals.

Rebuilding trust

One of the most critical lessons from the current backlash is the need for greater transparency and accountability in sustainability efforts. Many companies initially embraced ESG as a branding exercise, leading to accusations of greenwashing when commitments were not met. As Loannou notes, “not every company was ever serious about this work,” with some adopting sustainability language merely because it was fashionable or financially advantageous [21]. This has eroded public trust and fuelled scepticism. To regain credibility, businesses must move beyond performative pledges and demonstrate measurable progress. This means setting clear, science-based targets, regularly reporting on outcomes — even when they fall short — and engaging stakeholders in honest conversations about challenges and trade-offs.

For example, firms like Unilever and Patagonia have maintained stakeholder trust by openly sharing their sustainability data, including setbacks, while outlining concrete steps for improvement. Similarly, Carlin’s observation that “credibility will come from delivering measurable results” underscores the shift from rhetoric to action [22].

Transparency also requires democratising the sustainability conversation, which has often been dominated by technical jargon and elite circles. As Loannou points out, terms like “net-zero by 2050” or “Scope 3 emissions” may be essential but fail to resonate with workers, consumers, or small businesses [23]. Companies must communicate their efforts in accessible ways, tying sustainability to tangible benefits like cost savings, job creation, or community resilience. This approach not only counters disinformation but also rebuilds the broad-based support needed to withstand political headwinds. In a period of backlash, trust is the currency that will determine which companies emerge stronger — and which are left behind when the pendulum swings back toward sustainability.

Staying the course

Leaders must internalise that setbacks are inevitable but temporary. Kell, Reeves, and Fox urge companies to “guide your organisation based on your core values,” avoiding the cost of frequent strategy shifts [24]. This clarity helps teams navigate uncertainty without losing sight of critical objectives.

While idealism can inspire, pragmatism ensures survival. Companies should focus on specific, defensible priorities — like materials efficiency or climate risk mitigation — that align with both short-term gains and long-term sustainability [25]. As Carlin notes, “the time for pledges and announcements has passed”; credibility now comes from delivering measurable results [26].

Periods of uncertainty present opportunities. Companies that act decisively — whether through localisation, innovation, or resilience-building — can outpace competitors distracted by the backlash [27]. For instance, firms investing in renewable energy or circular economies are not just future-proofing their operations but also unlocking new markets [28].

Moving forward

The sustainability backlash is real, but it is also temporary. Companies must look beyond short-term politics and focus on the inevitable rebound. As Loannou puts it, “The firms that endure will not be those that retreat the fastest. They will be the ones that used this moment to clarify their strategy, recommit to their purpose, and lead with resilience” [29].

The question is no longer whether sustainability will matter again, but whether companies are prepared for its resurgence. Those that integrate sustainability into their core operations, champion localised solutions, and align it with economic value will not only survive the backlash but emerge stronger. As Carlin concludes, sustainability is evolving — not retreating — and businesses must evolve with it [30].