Beyond the ESG Checkbox: How Businesses Can Profit from True Sustainability

One of my biggest frustrations with sustainability efforts today is how often they’re reduced to a checkbox exercise under the banner of ESG. We talk about a greener future and ethical leadership, but too often, these ideals end up as bullet points on an investor report rather than real drivers of change. The problem? We still haven’t linked sustainability directly to business strategy and long-term financial value.

Here’s the simple truth: if sustainable practices make financial sense, companies will follow through. But as long as we rely on vague goals and box-ticking exercises, sustainability will remain a “nice to have” rather than a business imperative. We require more than ideals—we need a clear roadmap that bridges the gap between values and value creation.

Moreover, companies that have integrated sustainability into their core strategies aren’t just doing good—they’re doing well. Studies have shown that sustainable business practices lead to increased profitability, risk mitigation, and enhanced brand loyalty. For instance, Unilever reported already in 2019 that its Sustainable Living Brands grew 69% faster than the rest of the business and delivered 75% of the company’s growth. A Nielsen survey in 2023 found that consumers’ sense of urgency around the changing climate is rising, with 69% saying sustainability has become more important to them over the last two years. Unfortunately, cost, access, and lack of clarity are the biggest barriers that stop them from adopting more sustainable lifestyles, but it’s clear the demand is there.

On the flip side, the risks of superficial sustainability efforts are real and significant. According to Nielsen, 77% of consumers say they would stop buying products from a company found guilty of greenwashing. This isn’t just about losing consumer trust; brands could face unprecedented impacts to their bottom lines—not only from lost sales, but also through fines or even being removed from retailer shelves. The message is clear: pretending to be sustainable without genuine action is a dangerous game.

It’s time for a new approach—one I call “pragmatic idealism.” We need the idealism to move mountains, to inspire ambitious change, and the pragmatism to make it achievable. Sustainability has to be more than a moral or legal obligation; it must be a viable, even essential, part of every business strategy.

In this article, I’ll explore what it takes to move sustainability beyond the ESG checkbox and into the core of business operations. We’ll look at regulatory challenges like the EU Deforestation Regulation, the importance of early action, and how aligning sustainable practices with financial metrics can turn ideals into competitive advantages. The goal isn’t just to satisfy an ESG score; it’s to make sustainability a meaningful driver of business success.

Defining Sustainability: Beyond Environmental Goals to Multiple Bottom-Line Impact

But before we jump in, it might be useful to agree on something first: what do we mean by sustainability? It’s a term that’s often used, but not always fully understood.

Sustainability goes beyond environmental concerns; it encompasses social responsibility, economic viability, and ethical governance. This holistic approach is often referred to as the triple bottom line—People, Planet, and Profit—or even the quadruple bottom line when Purpose or Governance is added. A company with happy, purpose-driven people is more likely to be better for other people and our planet.

The Paradox of Purpose: Why Sustainability Goals Often Fall Short

I’ve been reflecting on Alison Taylor’s Higher Ground: How Business Can Do the Right Thing in a Turbulent World and the Cambridge Institute for Sustainability Leadership’s (CISL) report Survival of the Fittest: From ESG to Competitive Sustainability. Both works highlight a fundamental paradox: businesses are being called upon to lead responsibly, yet often lack the practical frameworks to do so effectively.

Despite decades of corporate commitments and innovation, the sustainability crisis is deepening. Business is failing to keep pace with the scale of the problem, and trends on climate and nature continue to head in the wrong direction.

It’s time to revisit the fundamentals of business and sustainability.

Real-World Challenges: The EUDR Experience

Through my work with AgUnity, I’ve engaged with many smallholder farmer organisations and exporters in emerging economies, as well as Western buyers. They all felt left to navigate the complexities of the European Union Deforestation Regulation (EUDR) on their own, uncertain about what was required to become compliant.

When I visited coffee farmers in Ethiopia last year, their reaction to the EUDR was telling. Upon learning about the new regulations, they asked, “Does Europe not want our coffee? Okay, we will just sell it elsewhere—to the Middle East and China.”

They didn’t realise that such a massive market shift isn’t easy for all coffee-producing countries and would likely result in significantly lower prices.

Initially, Ethiopian coffee exporters noticed a drop in contracts due to confusion surrounding the EUDR. Western buyers were hesitant to purchase from smallholder value chains, fearing fines from the EU if their supply chains were not EUDR compliant. At that time, nobody knew exactly what compliance entailed, as everyone was waiting for additional guidance from the EU. This guidance only arrived at the beginning of October, and final decision-making around the EUDR is still pending approval by the European Parliament.

Fortunately, once buyers were assured they wouldn’t be taking unnecessary risks, the coffee eventually sold, and even reached record numbers.

However, the initial uncertainty had a significant psychological impact on both exporters and farmers, highlighting the vulnerabilities that arise when regulations are implemented without clear guidance and stakeholder involvement.

Does Europe not want our coffee? Okay, we will just sell it elsewhere

Traceability, as demanded by the EUDR, is exceptionally challenging when dealing with smallholder value chains. Farmers’ produce is often mixed for local processing, making it nearly impossible to trace products back to individual farms. The concept of tracing items “from farm to fork” or “from farm to cup” remains more of an idealistic vision than a practical reality in these contexts.

This lack of stakeholder involvement turns potential collaboration into confusion and resistance. Instead of empowering those at the beginning of the supply chain, the EUDR has, in some cases, imposed additional burdens on them and other value chain stakeholders without appropriate guidance.

It highlights the need for a balance between idealistic goals and pragmatic implementation.

Insights from Experts: Incentives vs. Regulation in Sustainable Business Strategy

Alison Taylor advocates in her book Higher Groundfor responsible leadership rooted in core values, urging businesses to:

• Make your core product well.
• Clean up your messes.
• Do no harm.
• Treat human beings with dignity and respect.

She emphasises that sustainability isn’t just about environmental stewardship, but also about how we treat people within and outside our organisations. A company that fosters a purpose-driven culture with engaged and fulfilled employees is more likely to have a positive impact on society and the environment. This proactive approach asks companies to “take the high road,” not because they are compelled by regulations, but because they are genuinely committed to responsible leadership.

Taylor tends to favour offering incentives—”carrots”—to encourage businesses to adopt sustainable practices. This approach aligns with how the U.S. government often seeks to achieve change, by providing positive reinforcement rather than imposing penalties. She believes that highlighting the benefits and opportunities associated with responsible leadership will motivate companies to embrace sustainability voluntarily.

Similarly, CISL emphasises the need to shift toward competitive sustainability, where sustainability becomes a driver of financial value. They argue that government policy should shape the market to enable it to deliver the necessary change, tackling the conflict between short-term profit motives and sustainability goals. Environmental and social impacts need to feed into financial performance through appropriate incentives and penalties.

CISL believes that markets, if given the right policy landscape, are the right place to deliver change, as demonstrated by the innovation and success in delivering renewables. They stress the critical role of business leaders in achieving policy change, advocating that businesses must use their resources to shape the fundamental market changes required for a “managed transition” with a “soft landing.”

While both perspectives aim to achieve greater sustainability, they differ in their views on the role of regulation and market forces. Taylor is cautious about over-reliance on regulatory frameworks, suggesting that too much emphasis on compliance can stifle innovation and lead to a checkbox mentality. She advocates for intrinsic motivation within businesses, driven by leadership and core values.

CISL, on the other hand, sees government policy shaping markets as essential to creating a level playing field and ensuring that all businesses move in the same direction. They believe that without systemic changes to the market facilitated by policy, voluntary efforts will not be sufficient to address the scale of sustainability challenges we face.

A Framework for Action: Three Key Principles for Sustainable Business Success

Drawing from both Taylor’s and CISL’s perspectives, as well as my experiences, I propose three principles to balance idealism and pragmatism in sustainability:

1. Anticipate and Prepare for ChangeEvery business model, however successful, reaches an end. Companies must plan for sustainability transitions to remain viable. Boards of directors have a fiduciary duty to anticipate when current models may become obsolete and to prepare accordingly. The sustainability transitions are going to happen—maybe next year, might be they’ll take longer—but they will happen.
2. Start Early and Learn by DoingEarly action allows for gradual adaptation. By starting now, businesses can experiment, learn, and adjust strategies over time, reducing the risk associated with sudden shifts. Waiting can create a crisis. If competitors start preparing, and you don’t, you’ll be at a significant disadvantage when change occurs.
3. Align Sustainability with Financial ValueIntegrate sustainability into long-term financial strategies to make it a source of competitive advantage. When businesses see sustainability as a driver of financial value, they are more likely to act rather than just promise. Clear regulatory frameworks, aligned with incentives, can provide the necessary guidance and motivation.

Pragmatic Idealism in Practice: Balancing Purpose with Profit

By combining proactive leadership with collaborative regulation, we can create a system where doing the right thing across all aspects of the triple bottom line also makes good business sense. This “pragmatic idealism” balances the incentives-focused approach favoured by Taylor with the regulatory frameworks advocated by CISL, ensuring that sustainability isn’t just a moral imperative but also a strategic one.

We need an approach that encourages businesses through positive incentives and highlights the opportunities in sustainability—both in environmental stewardship and in fostering purpose-driven, fulfilled employees—while also implementing effective regulations to guide industry-wide change.

It’s about ensuring that sustainability isn’t just a checkbox or a marketing label, but a practical reality shared across the supply chain.

Conclusion: Making Sustainability a Strategic Imperative for a Resilient Future

Change can happen faster than we think. It’s imperative that we start preparing now. By embracing pragmatic idealism, we can navigate the complexities of sustainability and create a future where doing the right thing aligns with doing well in business.

The journey toward true sustainability will require us to embrace these paradoxes and address them in ways that bring all stakeholders into the conversation. By integrating the insights from Alison Taylor and CISL, and focusing on both moral and financial imperatives, we can encourage businesses to take meaningful action.

How Businesses, Policymakers, and Consumers Can Drive Sustainable Change

To stimulate meaningful change, everyone has a role to play:

• Businesses: Approach sustainability strategically. Set clear, measurable targets across People, Planet, and Profit, and publicly report progress. Embrace incentives and see sustainability as an opportunity to innovate and lead.
• Policymakers: Establish policies that incentivise sustainable practices and support a just transition to ensure vulnerable communities and workers are not left behind. Engage with stakeholders at all levels to create effective and inclusive regulations that combine incentives with appropriate regulations.
• Consumers and Employees: Choose products that are sustainably sourced and support brands committed to responsible practices. Advocate for workplaces that value purpose, engagement, and well-being. Your choices can drive market demand toward more sustainable options.

By making sustainable living and working appealing and accessible, we can motivate a collective shift toward a more balanced and resilient economy.

Final Thoughts

Let’s imagine a world where our economies thrive while forests flourish, where businesses grow by nurturing the environment and their people, and where communities enjoy prosperity alongside a healthy planet.

Each of us, through our daily choices and actions, can contribute to this future—whether it’s supporting sustainable businesses, fostering positive workplace cultures, reducing waste, or advocating for better policies.

By working together to build an economic system with purpose—one that serves People, the Planet, and Profit—we can ensure a thriving future for generations to come.

References

• Taylor, A. (2024). Higher Ground: How Business Can Do the Right Thing in a Turbulent World. Harvard Business Review Press.
• Hooper, L., & Gilding, P. (2024). Survival of the Fittest: From ESG to Competitive Sustainability. Cambridge Institute for Sustainability Leadership (CISL).
• DiMauro, J. (2024). Book Review: ‘Higher Ground’ by Alison Taylor. Impact Investor. Available at: https://impact-investor.com/book-review-higher-ground-b-by-alison-taylor/

Picture credits

Photo by Kristina Flour on Unsplash