Amid the CSRD debacle, sustainability as we know it has come to a dead end. But we see a way forward. We’re calling it “Ability” because the next phase will depend on a few key abilities: to strengthen the competitiveness and resilience of the business; to focus on a tight set of commercially strategic ESG priorities; and to express this impact with a convincing, distinctive narrative.
The word crisis originates from the Ancient Greek term κρίσις (krísis), which means “judgment, decision or turning point.” That’s where sustainability is – under pressure from political pushback, regulatory shifts and geopolitical fracturing. The global consensus that emerged over the past decade with “stakeholder capitalism” at its centre has unravelled in a very short time.
Sustainability has become a loaded word in corporate settings, viewed by many in the C-suite as a regulatory burden and a costly requirement “imposed” by external parties. Instead, it’s time to see the opportunities in taking action on social and environmental topics. That’s why we’re changing the language to talk about “Ability” and advocating for a new phase that can be embraced not only by sustainability professionals but above all by other company players, including CFOs and those in sales, marketing, product development and innovation.
WHAT DO WE MEAN BY “ABILITY”?
Rather than doubling down on failed concepts, we see a path forward and have been working over recent months to develop a new formula.
We are turning to Ability because it signals a more active mindset: the ability to strengthen competitiveness and resilience; the ability to see social and environmental benefits from the customer or client point of view; and the ability to stand out from the crowd with a distinctive narration that underpins internal culture and external collaboration.
It’s time for a re-think and to show results for the business. A one-size-fits-all logic won’t generate ability; what’s needed is a tailored, company-specific vision centred on real impacts and a clear sense of stakeholder expectations.
At Lundquist, we’re driving this agenda forward with a new approach, in stark contrast with the mainstream standardized accounting approach, and supporting our clients with solutions built around the two pillars of an Ability approach:
Firstly, we’ve put together a process for developing and articulating a Sustainability Value Proposition (SVP) to capture the commercial value of environmental and social attributes and use this to engage and attract business-critical audiences such as investors, customers and partners (see the article by Sasja Beslik on page 12)
Secondly, we’re using our expertise to re-boot clients’ sustainability communications and make content fit for the new scenario, in which companies need to be active advocates and champion their unique and distinctive abilities rather than rely on abstract and flawed concepts like “ESG”. If you do not reach out effectively to your different audiences, you will not be recognised for your value creation (see the article by James Osborne on page 18).
We complement that support with related activities in our core sustainability offering, including strategy development, stakeholder engagement, materiality analysis, sustainability reporting and internal training.
ISSUE 1 – 2025 Lundquist Quarterly (Italian Edition)
Or write to:
“To rise from the ashes, sustainability needs a fresh, active mindset.”
Framework of Inner Development Goals.
HOW DID WE GET HERE?
It’s important to understand where we are now and what abilities are needed to find a new path. Many in the sustainability profession are in a state of shock and frustration (to put it mildly) because they thought the Corporate Sustainability Reporting Directive (CSRD) represented the coming-of-age of sustainability, institutional acceptance of the “case for sustainability” that would force the issue onto the board and C-suite agenda. Rather than feel cheated or disillusioned by today’s pushback, they need to realise why so many in business are embracing an anti-ESG position. Sustainability professionals need the ability to navigate the new scenario and prepare for a new phase, built around alliances with colleagues who are genuinely driven by sustainable development.
THE END OF THE ILLUSION
We’ve taken inspiration from the Dunning Kruger effect curve to show how we’ve gone from zero to excessive enthusiasm and back down to disillusionment in the space of a few years. The curve is usually used to explain the cognitive bias that leads non-experts to over-estimate their ability in a given domain.
It’s a good metaphor for what’s going on in ESG and sustainability and the importance of true “ability”: there is initial, exuberant enthusiasm, then crashing down to earth with cold realisation of how hard things are before finally rising again with a deeper comprehension to a stable “plateau” that can be sustained over time.
Let’s take each stage in turn.
THE END OF THE ILLUSION
We’ve taken inspiration from the Dunning Kruger effect curve to show how we’ve gone from zero to excessive enthusiasm and back down to disillusionment in the space of a few years. The curve is usually used to explain the cognitive bias that leads non-experts to over-estimate their ability in a given domain.
It’s a good metaphor for what’s going on in ESG and sustainability and the importance of true “ability”: there is initial, exuberant enthusiasm, then crashing down to earth with cold realisation of how hard things are before finally rising again with a deeper comprehension to a stable “plateau” that can be sustained over time.
Let’s take each stage in turn.
The early 2020s were marked by optimism as we raced from Step 0 to Step 1. Corporate sustainability was riding high on a wave of ambitious net-zero pledges, booming ESG investments and high-profile commitments to stakeholder capitalism. That enthusiasm has faded in the face of mounting complexity, regulatory fatigue and growing scepticism. Step 2 soon arrived.
Sustainability has become politicised, especially in the U.S., where the Trump-led Republican party is actively dismantling what it deems “woke capitalism” – with climate action, DE&I and ESG squarely in the crosshairs. Meanwhile in Europe, a much-hailed system of corporate transparency is being unravelled from within.
The Omnibus package in February 2025 took the axe to years of regulatory work, significantly weakening the ambition to impose wide-ranging sustainability reporting on 50,000 companies, a move originally intended to steer capital toward more sustainable business.
REALITY CHECK
The seeds were sown long ago but now that the new context has rapidly materialised with significant consequences (Step 2):
Regulatory fatigue & compliance overload: sustainability teams are swamped by reporting requirements (CSRD, CSDDD, SFDR, EU Taxonomy…) that demand huge effort, leaving little room to connect them meaningfully to business strategy. The result? Frustration at the top, burnout at the bottom.
Walkbacks & rollbacks: companies and governments alike are scaling back their commitments. Net-zero targets are being abandoned or revised and sustainability budgets are under scrutiny. Even companies like Unilever, admired for years for its leadership, have scaled back several sustainability targets while the Science Based Targets initiative (SBTi) delisted over 200 high profile companies including Walmart and Microsoft, from its net zero commitments in early 2025.
Investor and market downturn: the once-booming ESG investment landscape is facing increasing scrutiny, scepticism and regulatory uncertainty, resulting in a downturn in sustainable investments (despite strength in Europe). In 2024, inflows into global sustainable funds shrank by half, while the rest of the fund universe enjoyed a boom, boosted by a US stock rally.
In Europe, there was some optimism that CSRD would at least force sustainability onto the agendas of boards and management teams at the nearly 50,000 companies in scope: that number has been slashed by 80%, which means 4 out of 5 management teams are getting the message “sorry to have disturbed you with this ESG burden, resume business-as-usual”. This coming from a Brussels administration that has talked up the Green Deal for years.
“We need the ability to navigate towards a new phase.”
WHERE WE ARE NOW: THE QUITTING ZONE
The upshot is that sustainability is increasingly seen as a cost centre, not a value driver. Welcome to Step 3: the Quitting Zone. Leadership teams are disillusioned and pushing sustainability into a compliance role, with teams being re-assigned to less strategic roles, for example as part of finance and administration or within legal and compliance. The first wave of CSRD reports appears to only confirm this choice: the language is standardised; disclosures focus excessively on policies, processes and risks; there is little space to talk about the strategic direction and opportunities for the business.
There is a stark choice: retreat into sustainability minimalism or find a new way forward.
It’s time to turn the page and face up to the fact that sustainability as we have known it is not up to the task: doubling down on sustainability doesn’t mean shouting even louder into the hurricane. Despite all the claims that CSRD was going to be a turning point, it has to be seen as what it is: compliance. And compliance is not the answer to this problem. For sure, CSRD compliance is inevitable and inescapable (in Europe at least – we wait to see what will emerge from this year’s simplification effort).
A rigorous and standard process for producing data and disclosures is beneficial for corporate accountability and transparency. But it’s not going to get us out of the quitting zone and re-build engagement into Step 4 and towards a new, long-lasting “plateau” in Step 5.
THE SLOPE OF ENLIGHTENMENT
AND THE ROLE OF ABILITY
Our vision for Ability is a way to reframe sustainability as a business strategy that drives commercial value, innovation and market differentiation. The challenge is not whether sustainability is dead or not, but how to make it work for business (Step 4).
Our work is underpinned by a recognition that sustainability efforts will be re-born as an imperative for action by government, business and citizens alike. It’s important to see through the short-term headwinds as we swing from one extreme to another: real-world emergencies – climate breakdown, biodiversity loss, rising inequality – will demand action. And younger employees and consumers will continue to push companies to play their part.
WHAT MATTERS: THE IMPACT OF PRODUCTS AND SERVICES
Ability is where we want to be into Step 5, a roadmap to help C-suites and boards to take sustainability out of the specialist silo and connect it with financial, operational and commercial decision-making. Very often, that requires a new lens – not the corporate-wide perspective but one that works at the level of individual products and services. For some companies it may be sufficient to re-frame their efforts from this perspective; for others it may require a more profound shift, re-thinking priorities, processes and measurement. For sure, this will entail conveying the impact of products and services in a way that makes sense for business-critical stakeholders, rather than the group-level data that reporting generates. A key starting point is re-thinking the materiality process as a way to generate true priorities from this new perspective.
For sure, the companies that survive and thrive will be those that treat sustainability as a business transformation challenge, not just a reporting exercise. Your ability is on the line.
After this overview of where we are today, the following two articles will look at two key ways to build such ability: the first is about Sustainability Value Propositions and the second about the critical role of communications and engagement.
