About 23% of Fortune 500 companies claim to participate in the Sustainable Development Goals framework. However, a peer-reviewed study found that only 0.2% had developed concrete methods and tools to evaluate their progress towards the relevant SDGs.
This represents a disconnect between the environmental commitments of business leaders and the reality in their organizations and their impact on society at large.
Businesses claim to recognize the need to face how to participate in the economy, but they refuse to free the supply of goods and services from relentless consumption and externalization of costs. They seem institutionally incapable of dealing with this inconvenient truth.
Much progress in the global ESG movement has been repeatedly challenged—and even seen as greenwashing. If the business community really wants to sink the moniker of greenwashing and be part of the solution, it must implement a radical transformation that proves it knows how to solve the problems arising from destructive business models, from climate change to pollution and loss of biodiversity.
This does not mean hiring some person who can write an ESG report or even a “head of sustainability” who also does other corporate social responsibility (CSR) initiatives. However, companies need a long-term plan to build institutional competence and hire experts who understand scientific and technical issues.
Most companies do not have qualified people who have the knowledge of how to reduce their carbon footprint, develop mitigation scenarios against growth projections, or even map the effects to stakeholders.
Only 29% of the nearly 1,200 Fortune 100 board directors have relevant ESG credentials, according to a 2021 study from researchers at the NYU Stern Center for Sustainable Business. Even then, these credentials generally concentrate on the social pillar, neglecting environmental expertise.
Meanwhile, more than half of the 250 largest companies in the Fortune Global 500 have no leadership-level representation for sustainability, and two-thirds of NASDAQ 100 companies have no board members or leadership teams in charge. for the sake of sustainability.
That lack of in-house capability means becoming an external consultant—one who tries to maintain the status quo and increase efficiency, rather than pursue more fundamental changes in the business model.
No large multinational corporation would appoint a non-specialist to manage treasury, cash flow, or legal compliance. Nor should anyone serving in this important position do double duty in another role.
It’s not a question of economics, investor relations, communications, or even risk assessment. It’s about building science-based inquiry systems, which then drive business value and decision-making. That requires experts who know what they are talking about and know what they are doing. Without basic scientific competence, the right questions will never be asked.
Unfortunately, companies make the common mistake of outsourcing their sustainability transformation to external climate or sustainability experts, consultants, ESG report writers, or green funders. Typically, they are hired to demonstrate that business-as-usual solutions are possible, while still complying with ESG reporting mandates or ambitious—even unrealistic—zero commitments. This so-called solution is positioned as a business opportunity to gain management buy-in, thereby stifling honest inquiry and innovation.
After working in sustainability for more than 30 years with some of the largest global companies, I have witnessed the birth of the first CSR projects and reports, reporting exercises from the Global Reporting Initiative (GRI), and now the transition to ESG and sustainability reports.
In many companies, these efforts take up more resources than doing anything to reduce the social-environmental impact or invest in employees who can go beyond the status quo.
Businesses need to start doing three things if they want to stay ahead of the curve, meet the demands of consumers and regulators, and fulfill their role in the social contract.
First, a large part of the workforce must have the opportunity to learn about key issues, understand how the company’s operations affect society, and be allowed to participate in finding solutions. Sustainability training should not be seen only from the point of view of compliance or for a small group of designated sustainability experts, but as an opportunity to build competencies that empower employees to act in the value chain and innovate. A minimum critical mass is required to influence decision-making in the company on a daily basis and lead to a transformation of culture and practice.
Second, they need to hire scientists and technical experts to lead their sustainability efforts—and make sure they can adapt their business models and innovate.
Finally, like a company’s chief financial officer or general counsel, the chief sustainability officer must have the technical expertise—as well as the autonomy and power—to carry out his or her duties. These roles are too important to be entrusted to senior managers with no experience or expertise, or to one serving in multiple roles.
Without the preconditions of an unwavering commitment to pervasive competence in organizations, the talk of sustainability that is sweeping the business world will remain talk.
Chandran Nair is the founder and CEO of the Global Institute for Tomorrow.
Opinions expressed in Fortune.com comment pieces are solely the opinions of the authors and do not necessarily reflect their opinions and beliefs. fortune.
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