There has been a calculated attack on “woke businesses” from a small but loud group. As a result, businesses have quieted down their sustainability-centered communications over the past year but they are not backing away from their commitments to sustainability. In fact, they’re doubling down with:

• 92% of CEOs staying the course on sustainability strategies.
• 54% of CEOs saying sustainability is a higher priority than it was 12 months ago.
• 52% of business leaders globally planning to increase investments in sustainability in 2024.

What we’re witnessing isn’t a backing away but instead a quiet maturation of corporate sustainability across the four Rs:  Reckoning, Regulating, Retooling, and Regenerating.

1. Reckoning

The year 2020 had an impact on purpose and sustainability, and transformed how businesses talk about themselves and show up in communities. During this period of social upheaval customers expected businesses to respond: 86% of consumers expected CEOs to speak out, and 68% expected businesses to fix societal problems when government did not, according to the 2021 Edelman Trust Barometer.

Businesses did step up, but they soon learned navigating the complexity of social and environmental issues wasn’t quite as straightforward, leading to divisiveness and pushback from discerning stakeholders who became keenly aware of the say-do gap emanating from companies.

Lesson learned: When performative commitments to social issues are put under pressure, businesses retrench and suXer bottom-line consequences. An example of this was Bud Light experiencing an eight–month decline in sales last year after the controversy over collaborating with transgender influencer Dylan Mulvaney on social media promotional post.

Companies have witnessed the impact of getting it wrong and are now taking the time to ensure public-facing commitments are backed by measurable action.

2. Regulating

Governments around the world are intensifying and standardizing sustainability reporting regulations. This means a substantial expansion in the metrics businesses need to collect, report, and audit annually. Although many companies recognize the need for these metrics, they also acknowledge their under preparedness with three–quarters of businesses globally saying they aren’t ready for new environmental, social and governance (ESG) rules.

As businesses work to get their reporting ducks in a row, they are also adapting to new green claims directives aimed at tackling greenwashing in advertising. Any claims made in sustainability communications like “eco-friendly,” “natural,” “recycled,” and “biodegradable” must be substantiated with scientific evidence to avoid litigation.

Lesson learned: Reporting requirements and claims regulation are forcing marketers to carefully evaluate when and how to use such messaging because unsubstantiated claims are bad for profit, people, and the planet.

As companies find footing in this new environment, we predict continued growth in sustainability communications. After all sustainability is a proven business accelerator: Products marketed as sustainable grow at a rate 2x faster than conventionally marketed products.

3. Retooling

Companies are also reevaluating their sustainability goals. When sustainability goals started to gain prominence 10-to-15 years ago, they lacked a theory of transformational change, such as what is our destination, how will we get there, what are the indicators that we’re on the right track. Without a roadmap, it can be diXicult to integrate a sustainability strategy into your business strategy. As a result, many well-respected sustainability champions are adjusting their commitments for greater eXectiveness.

Lesson learned: A decade after launching its Sustainable Living Plan, Unilever conducted a systematic review of its performance and acknowledged that it was spread too thin, having “too many long-term commitments that failed to make suXicient short-term impact.” The company launched a new strategy with more defined goals materially linked to the business. By focusing on issues tied closely to the company, Unilever can drive impact faster because it has greater influence over the processes involved.

However, this should not be viewed as a scaling back; it’s a maturation of the discipline. By more clearly outlining the impact target and activities that will get them there, businesses can take meaningful steps toward sustainable impact.

 4. Regenerating

Following this quiet period of sustainability communications, the World Economic Forum (WEF) underscores the importance of more purpose-driven companies moving towards regenerative business models that promote “the restoration and regeneration of natural resources and social systems… [going] beyond sustainability and seek[ing] to create positive impacts on the environment, society and economy.”

We agree. It’s the destination businesses must arrive at to support the transition away from fossil fuels and to address issues threatening humanity. Companies need to accept they can no longer tinker around the edges of existing business practices and hope to achieve the required level of transformation.

This is not as radical as it sounds. As Jesper Brodin, CEO of Ingka Holding BV, and co-chair of the WEF Alliance of CEO Climate Leaders, said at Davos this year, “How could it be possible to build a future business model on depletion of [natural] resources? It’s simply the absolute worst idea.”

Lesson learned: Relying on eroding natural resources is a bad business model. Doing the right thing shouldn’t be viewed as a barrier to profitability. The transition will not be painless, but the outcome bolsters both a resilient bottom line and the planet. Ingka Holding is the largest IKEA franchisee holding company and IKEA is a great example of how a company can grow while investing in the regenerative transition. Last year the business reported a 24% reduction in supply chain emissions from 2016 and a revenue increase of just under 31% over the same period.

I am optimistic that businesses that have evolved through reckoning, adapted to regulations, and retooled their commitments will be well-positioned to make the final transition towards regenerating.