The opinions expressed here by Trellis expert contributors are their own, not those of Trellis.
In conversations all year, I keep hearing the argument that we’re in the middle of a “healthy correction” from the alleged ideologically driven excesses of 2018 to 2021. In response, the prevailing advice is to double down on the business case, while avoiding political backlash.
Although this is a convenient narrative, it’s not a very convincing one. During this peak of enthusiasm, the business case narrative also dominated, but tended to be framed as a broad, unstoppable, win-win trajectory that would benefit everyone. This was always unrealistic. A shift to acknowledging trade-offs would’ve occurred even without the political headwinds in the U.S. today.
Rather than just doubling down on ROI arguments (which themselves are nothing new), there’s a need for a bigger philosophical shift. I’m not only thinking of the risks from an anti-climate action U.S. administration or commitments, goals and aspirations that have become dangerous. I mean something more fundamental — the underlying assumptions and theory of change no longer hold, so we need a new approach.
5 assumptions that no longer hold
Here’s why the theory of change doesn’t work anymore:
- First, sustainability works because it anticipates future regulation. One of the prime risk management arguments for sustainability is that it helps companies get ahead of new regulations. But today, with regulations fragmented, uncertain and globally inconsistent, companies need to anticipate reversals.
- Second, global pledges aren’t the way to drive change. The latest failure to secure a global plastics treaty is just one sign that flagship voluntary agreements secured at the United Nations are no longer dependable or broadly credible. Corporations that take policy alignment seriously, such as Unilever, are increasingly pivoting their attention to the national level and understand that their government relations and sustainability leads need to work in close alignment.
- Third, the general public has much more idiosyncratic and mixed views on sustainability than is commonly argued. The underlying assumption of stakeholder capitalism is that everyone broadly wants the same sustainability commitments from corporations. But this view turned out to be too simplistic. Political reversals have made it clear that some members of the general public view these priorities as elitist and irrelevant. Managing the energy transition means acknowledging that some people are very concerned about losing jobs and livelihoods that rely on the fossil fuel economy, and it’s a bad idea to dismiss these fears outright. Pretty much everyone wants clean air and water — and to be able to provide for themselves and their families, so it’s important to prioritize basic fairness first.
- Next, reputational risk is not a linear accountability mechanism. Because sustainability has traditionally been framed as providing reputational upside, there’s been insufficient consideration of the fact that activists are as likely to target leading companies as laggards. Starbucks was targeted on labor rights,