Turns Out CFOs Missed the Memo That ESG Is Dead

There’s a lot happening in the world today. Economic and geopolitical uncertainty is surging. News headlines read like obituaries for corporate responsibility: “DEI is Dead,” “Trump Will Bury ESG, But It Was Already Dead.” Lots of doom, lots of gloom. And while these values are unmistakably under attack, they will not disappear. 

In fact, a recent Kearney survey of 500 Chief Financial Officers (CFOs) found that financial leaders are intensifying their sustainability commitments. As is so often the case, widespread instability can present uncommon clarity. 

Of the 500 CFOs surveyed, 92% plan to increase corporate sustainability investments, with more than half committing to significant increases. For CFOs, corporate sustainability is more than a discretionary concern; it’s a core business imperative.

As corporations pursue financial and environmental returns, Work on Climate’s Corporate Sustainability Report, released in February, offers several actionable recommendations.

Move Beyond Compliance

According to Kearney, CFOs are increasingly treating sustainability as a core financial strategy. A remarkable 93% of the CFOs in Kearney’s study saw a clear business case for investing in sustainability, with 69% expecting a higher return on investment (ROI) from sustainability initiatives compared with conventional investments.

Work on Climate’s Corporate Sustainability Report identified four stages in a company’s sustainability journey: Pre-Sustainability, Compliance, Implementation, and Expansion. Our research suggests many companies stall at compliance — where sustainability is a regulatory checkbox rather than a foundational business driver. 

Sustainability sponsors should clearly define how these initiatives help an organization meet its financial goals, gain competitive advantage, and reduce climate risks. According to Kearney, nearly two-thirds of CFOs already measure the cost of sustainability inaction. CSOs and other sustainability professionals should work with CFOs to clearly define business-centric messaging to protect and advance pro-climate action and investment within the organization. 

If your organization is stuck in a compliance-oriented mindset, consider taking these three actions today:

1. Reframe Sustainability as Business Resilience: Communicate how sustainability investments help manage financial risks (e.g., regulatory changes, supply chain disruptions, or consumer shifts).
2. Align Sustainability With Core Business Goals: Ensure that sustainability efforts drive growth, improve efficiency, and create short-term value. Rather than broad, long-term sustainability goals, Kearney found most CFOs are directing funds towards initiatives with measurable short-term impact (i.e. increasing sustainable materials usage, improving energy management, reducing waste and investing in sustainable partnerships and innovation). Use this inclination to gain a foothold as you pursue broader organizational transformation.
3. Educate Leadership Teams: In the early stages of corporate sustainability transformation, focusing executive education on clearly defined business goals can help embed sustainability principles across corporate functions.

Future-Proofing Your Business Requires More Than A CSO

Kearney’s report emphasizes the need to integrate sustainability into corporate strategy, building on prior thought leadership on how businesses can make real progress toward net zero targets. This, of course, requires building necessary capabilities within the organization, often through upskilling and outside hiring. 

Because they are early in their sustainable transformation, companies at this stage typically make only one sustainability hire. As a result, many fall prey to singularly focusing on “sustainability unicorns”: folks with both deep sustainability expertise and industry knowledge. 

The problem is there are limited pools of senior-level talent with more than 10+ years of experience leading sustainability initiatives. There is, however, a large and growing pool of job seekers wanting to pivot into sustainability in order to find more meaning in their work— passionate individuals with highly applicable skills, but little direct climate experience. 

Companies should not overlook these people; they may already be employing some of their best candidates, but in different roles. Many of the most effective sustainability champions already sit within your workforce. From procurement managers to product designers, we’ve seen how cross-functional collaboration lights the spark for sustainable innovation.

“I embedded sustainability across functional areas. That’s been more effective than trying to work from a central point and influence people from afar.”
– Chief Sustainability Officer, a public software corporation

Consider these internally-focused strategies to build up your team’s capabilities:

1. Build Internal Sustainability Capacity: Upskill existing employees in sustainability-related skills rather than relying solely on external hires.
2. Integrate Sustainability Into Functional Roles: Ensure finance, operations, legal, and procurement teams are trained in sustainability considerations relevant to their functions.
3. Develop a Long-Term Talent Strategy: Partner with workforce development initiatives to create pathways for junior and mid-career professionals to enter sustainability roles.

Regulatory and Market Risks Aren’t Going Away

While the Kearny study does not specifically address proactively managing regulatory and market risks, it’s clear CFOs recognize the importance of integrating sustainability into corporate strategies, at a minimum, to mitigate potential regulatory and market risk.

Recently, Target shareholders sued Target for failing to warn investors about how removing DEI and ESG (environmental, social, and governance) policies could cause stock prices to plummet.

By the end of February, Target Corporation’s stock tanked by approximately $27.27 per share, erasing about $12.4 billion in market value.

For CFOs, sustainability is, at its heart, a strategy for managing and mitigating risk. Our report found that framing sustainability efforts as a way to mitigate not just regulatory risks but broader market risks, including shifting consumer expectations and supply chain vulnerabilities, helped companies make the leap from Stage 1 (Compliance) to Stage 2 (Implementation).

Viewed through a risk mitigation lens, consider these actions to boost corporate readiness:

1. Anticipate, don’t react: It’s not enough to react to regulatory changes. Anticipating changes—and building the internal capacity required to navigate them—will help companies navigate shifting policies and regulations. Companies that wait until regulations take effect risk falling behind competitors who have already integrated compliance into their operations.
2. Adopt a whole-of-company approach: Similarly, we found that developing sustainability literacy and competency across all functional roles—not just within a centralized sustainability team—helps organizations stay resilient to policy changes by embedding regulatory knowledge throughout the workforce. 
3. Don’t overlook your current talent: Our report found that many companies face challenges finding skilled professionals who can both understand and address complex regulatory requirements. Investing in upskilling existing employees while seeking outside talent will quickly improve corporate readiness and increase your competitive advantage.

Sustainability Drives Innovation and Competitive Advantage

While viewing sustainability through the lens of risk mitigation and regulatory compliance can ease early adoption of corporate sustainability programs, it remains an insufficient view of the full potential sustainability offers. As more companies recognize the financial and strategic benefits of sustainable transformation, they are discovering new ways to reduce costs, open new markets, and strengthen brand loyalty.

Kearney’s survey highlights that CFOs increasingly see sustainability as an opportunity to innovate and expand their market reach. The CSOs we spoke with agree: embedding sustainability into business models not only boosts resilience, but also creates long-term value. When companies stop seeing sustainability as a cost or a box to check and start seeing it as a catalyst for growth, they position themselves to thrive in an evolving marketplace increasingly shaped by the pressures of climate change.

The Bottom Line

Kearney’s report makes it clear that there is, perhaps surprisingly, little daylight between the objectives of CFOs and CSOs. Corporate sustainability and ESG have for too long been relegated as side projects when, in reality, they are foundational to corporate strategy and fiscal health. 

Given major policy swings and geopolitical reshuffling, it might seem tempting to wait it out and see where the cards fall. But when the senior-most executives responsible for company financials believe it’s time to double down on sustainability investments, we should take notice. Integrating sustainability into corporate strategy isn’t just a moral imperative—it’s a financial one. 

No one is navigating this moment alone. Across industries and continents, a new cohort of financial and sustainability leaders is reshaping what good business looks like. Companies that take action now, building the talent, systems, and mindset needed to make sustainability a core business function, will be the ones that thrive amidst uncertainty and change.