Shifting C-suite mindsets: The business case for prioritising long-term sustainability over short-term profits

Short-term mindsets prevalent in corporate leadership continue to impede the implementation of climate action.

Short-term profitability remains a trend among businesses. Yet, studies indicate that adapting operations and strategies for long-term sustainability is crucial for enduring success as markets evolve.

As the effects of climate change become increasingly evident, the necessity for corporate sustainability action has never been more urgent. Nonetheless, short-term mindsets prevalent in corporate leadership continue to impede the implementation of such action.

A recent in-depth survey of more than 200 in-house sustainability professionals, conducted by edie as part of its Sustainable Business Tracker Report, found that the biggest challenge facing organisational sustainability strategies right now is an “internal mindset focused on short-term gains”.

To assess and understand better the current landscape of sustainability leadership and the future prospects of green businesses, edie hosted a roundtable discussion as part of Business Leadership Month in March, with nearly a dozen sustainability experts engaging in a candid discussion.

The consensus in the room was clear: even in 2024, short-term thinking continues to be deeply ingrained in the mindset of C-suite professionals, posing significant challenges for sustainability professionals striving to facilitate the long-term transition to sustainable business models that ultimately deliver a just net-zero transition by 2050 at the latest.

Here, we outline all the challenges to long-term planning along with solutions and business opportunities discussed during the roundtable.

Roadblocks to long-term planning

During the discussion, sustainability professionals deliberated on the notion that chief executives often have short tenures, limiting their ability to prioritise long-term sustainability goals that may extend beyond their time in leadership roles.

Additionally, professionals discussed that long-term goals sometimes take a back seat amidst the pressing demands of day-to-day operations, including the escalating requirements for reporting and disclosures, which further divert attention and resources away from long-term strategies.

A recent analysis has found that ESG regulations globally have increased by 155% in the past decade, with 1,255 ESG regulations introduced worldwide since 2011. Many sustainability professionals perceive reporting as a current burden, as it often entails retrospective analysis rather than forward-looking initiatives.

In addition, the roundtable participants concluded that the dynamic nature of business growth introduces uncertainty, complicating the management of long-term goals.

For example, constant changes in baselines make it challenging to align sustainability efforts with evolving business trajectories, especially when compounded by current technological constraints.

A recent survey by the Science Based Targets initiative (SBTi) found that among companies failing to fulfil their commitment to establish verified net-zero targets, the second most significant challenge cited was uncertainties surrounding future technologies necessary for achieving long-term sustainability goals.

Nevertheless, despite the obstacles discussed, the roundtable unanimously agreed that establishing long-term goals is imperative for business success, emphasising that long-term planning remains key to providing a pathway for where the company is heading.

The business case for long-term sustainable goals

With an increase in evidence of climate change impacts on communities and ecosystems, consumer attitudes are now shifting. An increasing number of consumers are expressing concern about industries’ environmental footprint and the ethical aspects of production and consumption.

A survey from Sensu Insight found that 86% of UK adults want to see more transparency from businesses on their environmental impacts, initiatives and targets.

The roundtable participants concluded that amidst this evolving consumer landscape, publicly declaring sustainability targets presents not only a business opportunity but also serves as a strategic approach to harmonise business profitability with sustainable practices, thereby encouraging leadership to prioritise sustainability.

In addition to consumers, investors are increasingly prioritising businesses’ disclosure of climate and nature risks, as well as their sustainability commitments.

This heightened investor focus on sustainability is due to the supply chain risks posed by climate change and the upcoming regulations mandating investors and asset managers to disclose the environmental and social impacts of their investment portfolios.

Professionals at the roundtable concluded that establishing long-term targets provides investors with certainty and facilitates the establishment of new revenue streams, making it a significant focus for finance teams.

Moreover, on challenges associated with future uncertainties, sustainability professionals concurred that anticipating future trends could greatly aid in overcoming such barriers and provide a competitive advantage.

For example, discussions underscored the evident necessity of transitioning to renewable energy in the long term, particularly as countries strive to achieve their net-zero goals.

More than 400 companies are currently committed to a global initiative, RE100, that commits them to power 100% of their operations using renewable energy. Collectively, these companies presently surpass 500 terawatt-hours (TWh) of electricity demand annually, exceeding France’s annual energy demand.

The roundtable participants also agreed that through long-term planning, sustainability can become ingrained in the daily duties of employees, fostering a culture of innovation and providing a pathway to more sustainable and efficient products.

Looking ahead: The future of sustainability leadership

As the discussion neared its conclusion, optimism and confidence filled the room as sustainability professionals rallied around the belief that collective action led by business leaders certainly has the potential to drive transformative change and effectively address climate change challenges.

Amidst this sentiment, the crucial importance of courageous sustainability leadership emerged as a recurring theme.

Reflecting on their journeys within the environmental sector, professionals also noted significant progress in climate action over the years, with a clearer vision of the ‘endgame’ now emerging more than ever before.

Interestingly, the experts reached a consensus on a somewhat paradoxical notion: the ultimate goal of the sustainability officer is to render their own role obsolete, paving the way for a future where sustainability is intrinsic to every facet of business operations.