How to Overcome Barriers to Sustainable Value Creation

The business world stands at a critical inflection point. As tariff uncertainty and geopolitical tensions continue, the planet’s health declines and social inequalities widen, corporate action on sustainability has never been more urgent. Why? Because perpetual growth simply is not possible on a finite planet, and because sustainability offers huge business opportunities.

The latest Intergovernmental Panel on Climate Change (IPCC) report leaves no room for ambiguity: We need to take decisive action to ensure humanity’s viable future. Potsdam Institute for Climate Impact’s publication on tipping points shows the irreversible, interrelated effects that have already taken hold globally. Meanwhile, the world is on track to meet only 16% of the Sustainable Development Goal targets, with limited progress or a reversal of progress on the remaining 84%.

Waiting for governments and regulators to lead systemic change is not enough. Companies, which control substantial portions of global GDP, capital flows and innovation capabilities, stand at the front line of this transformation.

And there is an advantage to acting fast. Indeed, many leading companies consider sustainability a strategic differentiator for their shareholders and other stakeholders. A recent survey of 500 global CFOs by management consulting firm Kearney found that 69% expect a higher return on investment from sustainability initiatives compared with conventional investments,¹ while a separate EY survey of 1,200 global CEOs found that 74% face balance sheet risks from stranded assets or partial impairments caused by ESG factors.²

For board members and executives it’s no longer a question of whether to act—it’s how. There aren’t easy answers. It’s clear that many organizations—and those who lead them—are struggling to make progress on sustainability.

Usually this isn’t due to a lack of intent; many corporate leaders understand the urgency and have already made ambitious, visible commitments. The challenge lies in navigating three connected levels of barriers that together make sustainable transformation hard: systemic, organizational, and individual.

However, when considered holistically, executives and non-executives can consistently and simultaneously drive immediate progress at all three levels.

Overcoming systemic barriers to sustainability

There are fundamental systemic barriers across our global economic, geopolitical and social systems. Without addressing these system-level challenges through policy reform and collective action, corporations often struggle to make meaningful progress on sustainability. Moreover, industry barriers can make corporations see sustainable transformation as risky or costly. For example, they may perceive a first-mover disadvantage, or free-rider problem, in which they bear the cost of innovations while competitors benefit from those investments later.

However, with businesses increasingly recognizing the effects of climate change and geopolitical conflict on their value chains and income statements, it’s becoming clear that blaming systemic barriers or expecting external solutions to address the free-rider problem is no longer viable. Immediate action is imperative.

Solving these systemic barriers is undoubtedly complex—yet there are good examples of how the business community can overcome them.

• Advocate for change. Organizations have unique power to influence systemic transformation through policy advocacy because of their economic significance and technical expertise. Some are advocating system transformation through the pricing of externalities; for instance, the EU Emissions Trading System (EU ETS). Other collective measures for which companies can advocate include regulation, education, or soft laws and governance codes. Effective advocacy includes providing evidence-based input on feasible changes, participating in policy consultations, and building coalitions with peers to amplify impact.
  
  
• Create purpose-specific alliances across the value chain. Leaders also can catalyze industrywide transformation by strategically wielding their market influence and by facilitating cooperation. By setting ambitious supplier requirements and collaborating with customers, companies can create ripple effects that transform entire sectors. Some leading organizations, such as the Mission Possible Partnership, have committed to optimize entire value chains, or created competitive pressure by publicly sharing their sustainability innovations and best practices and challenging peers to match their commitments. (See, for example, the IDH Transforming Markets initiative.) And of course, companies can embrace standards, for instance from the Science Based Targets initiative or become sustainability champions in industry associations. Even as the overarching systems that underpinned commercial successes of the 20th century are called into question, focused alliances to deliver specific results still will be possible and might lead to even more progress.

Overcoming organizational barriers to sustainability

The organizational level presents perhaps the most visible set of challenges. Many companies struggle with entrenched cultures that resist change, incentive structures that don’t encourage sustainability efforts, and knowledge gaps regarding sustainability initiatives.

In our research with 3,800 senior leaders globally, we found that 63% of employees say they’re motivated to find ways to improve sustainability, yet only 10% frequently discuss sustainability objectives with their managers. Employees at all levels of the organization are ready—and eager—to play a leading role in transitioning their organizations toward a more sustainable future, but senior leaders are missing multiple opportunities to harness their employees’ collective potential.

Many successful board members and executives adopt these approaches to overcoming organizational barriers:

• Strategic integration. Rather than treating sustainability as a separate initiative, successful companies are weaving it into their core business strategy, evaluating every major decision through both financial and sustainability lenses. Integrated sustainability shapes everything from product development and supply chain decisions to capital investments and market expansion plans. It allows organizations to move beyond isolated sustainability projects to fundamentally rethink their business models and kickstart sustainability transformation at scale.
  
  
• Focus. Not all 17 of the UN Sustainable Development Goals are equally relevant to all companies; moreover, if companies are not yet advanced in their sustainability transformation, it probably makes sense to focus on a limited number of goals. A double materiality assessment plays a key role in this. Such an analysis makes clear what effect a company has on the outside world (think pollution and child labor), and how sustainability matters can affect a company (for instance, how droughts or floods can affect the company’s supply chain).
  
  
• Coalitions of the willing. Sustainability front-runners create an internal network of change agents who share enthusiasm for sustainability and are ready to take action, regardless of their formal responsibilities. This could be within boards or executive teams, but also across organizational layers and functions. These champions pilot sustainable practices, share success stories, and demonstrate the business value of sustainability initiatives. They are often well-placed to showcase workable solutions and gradually build broader support through peer-to-peer advocacy and demonstrated results. Over time, these internal coalitions develop into more formal structures and governance models to ensure that sustainability initiatives are not underfunded or relegated to peripheral “nice-to-have” projects.
  
  
• Aligned incentives. Organizations serious about sustainability transformation also back their ambitions with concrete, science-based targets and rigorous external validation. Beyond this, they incorporate ambitious and measurable sustainability metrics into reward systems, ensuring that sustainability goals get the same attention as financial targets. These incentives should be substantial enough to influence behavior, be clearly measurable to enable fair evaluation, and cascade throughout the entire organization to create consistent motivation. It’s crucial that incentives are designed to drive genuine long-term progress rather than short-term fixes, and that they dovetail with other business objectives rather than compete with them.
  
  
• Sustainable leaders. Organizations that take sustainable transformation seriously are updating their hiring criteria, actively recruiting leaders with sustainability credentials and incorporating sustainability into succession planning. In 2023, 66% of the position specifications we wrote referred to sustainability, versus only 15% in 2019. By making sustainability expertise and mindset core requirements in leadership hiring decisions, organizations build the leadership pipeline needed for genuine transformation, ensuring leaders and teams have the right mix of technical and leadership skills. These leaders also are likely to become magnets for future talent.
  
  
• Capability building. Companies making progress on sustainability are investing in specific learning and development programs to help their boards, executive teams and employees develop the skills necessary for sustainability transformation. Leading companies focus on developing their executives’ full potential in sustainability, aimed at maximizing financial and non-financial value creation. This capability building ensures that the entire organization can contribute to achieving its financial and sustainability ambitions.

Overcoming individual barriers to sustainability

Perhaps the most overlooked aspect of sustainable transformation is the profound personal journey that leaders experience. This often determines whether organizational transformation succeeds or fails, requiring leaders to decide between short- and long-term results, which stakeholder needs to prioritize, and which aspects of sustainability to focus on.

We see board members and executives adopt the following approaches to defining their purpose and overcoming personal barriers to sustainability action:

• Commitment to the journey. These leaders recognize that personal transformation toward sustainable leadership is both profound and challenging—requiring fundamental shifts in mindset, values and ways of seeing the world. This transformation is neither linear nor comfortable—it often involves confronting long-held assumptions, acknowledging inconvenient truths about a business’ impact, and wrestling with complex trade-offs (e.g., impact versus financial success and status.) But being brave enough to explore the depth of this personal journey is the first step toward authentic sustainable leadership. For some, such first steps are triggered by a profound life change, such as the birth of a child, the loss of a loved one, leaving their job or becoming a grandparent. For others, it is the result of their upbringing, or a realization over time that they want to have both a financial and a social/environmental impact.
  
  
• Experiential learning. You can’t define your purpose by running from one meeting to another; it requires deep personal reflection. For instance, experiential learning through nature-based leadership programs can catalyze powerful personal transformations and help develop clearer perspectives on sustainability challenges. Leaders who want transformative experiences may find that rotating through another function or line of business, particularly if based in another country, provides additional perspective on how business can drive positive change and helps them understand and question the assumptions in their home region. The Sustainable Development Goals can be a powerful and concrete source of inspiration for people looking to redefine their purpose.
  
  
• Professional development. Coaching, mentoring or formal education are crucial for developing a person into an effective sustainability leader. This professional development should combine technical knowledge with leadership skills, helping executives understand both the scientific foundations of sustainability challenges and the organizational dynamics of driving change. Working with experienced sustainable transformation practitioners can provide valuable insights, help leaders navigate common pitfalls and offer practical strategies for implementing sustainable practices. This might involve formal sustainability education programs, one-on-one coaching relationships, or participating in sustainability leadership networks in which peers can share experiences and best practices.
  
  
• Career choices. Leaders committed to sustainability benefit from thoughtfully evaluating where they can create the greatest positive impact. Usually, executives and non-executives extrapolate their past career into the future. A much more effective approach is the reverse: What do you want to be remembered for when you retire? Once you know that, you can start considering what types of roles or organizations allow you to most effectively use your skills and experience to reach that goal, keeping in mind factors such as compensation, location and time commitment.

Authors

Hans Reus is a senior member of Russell Reynolds Associates' Sustainability and Technology practices. He is based in Amsterdam.
Susie Sell is the Global Content Marketing Director at Russell Reynolds Associates. She is based in Singapore.

Footnotes

_{¹ Kearney “Growth investments must value resilience and sustainability” < https://www.kearney.com/service/sustainability/article/growth-investments-must-value-resilience-and-sustainability> Accessed May 13, 2025
² EY, “How CEOs juggle transformation priorities–the art of taking back control,” April 2024}