Rethinking the sustainability playbook: from reporting exercise to strategic advantage

As business leaders navigate geopolitical uncertainty, shifting investor expectations and the pressure to deliver short-term returns, what separates organisations genuinely preparing for the future from those merely reacting to the latest headlines?

That was the question at the heart of Rethinking the sustainability playbook, a Think Ahead discussion held on 30 September and moderated by journalist and author Stefan Stern. He was joined by Dr Ioannis Ioannou, Associate Professor of Strategy and Entrepreneurship at London Business School, and Daniel Hanna (MBA 2009), Group Head of Sustainable and Transition Finance at Barclays Investment Bank.

Uncertainty and short-termism

An audience poll set the scene. Political and regulatory uncertainty was named the biggest challenge by 57 per cent of respondents, followed by pressure to deliver short-term returns at 47 per cent. Lack of finance came last.

Dr Ioannou pointed to the EU's retreat on corporate sustainability reporting rules as a case study in uncertainty. Companies that invest in compliance, only to see the law watered down, start to wonder what else might be reversed. On short-termism, he said the problem is partly structural but also sometimes an alibi. "Sustainability is a strategy, it requires innovation, courage and risk-taking," he said. "Otherwise, it wouldn't be a strategy."

The missing middle

Hanna argued that finance is no longer the main constraint, at least at either end of the market. Venture capital is plentiful, and public markets are receptive. He pointed to Barclays' work with the enhanced geothermal company Fervo, which listed in the US earlier this year, helped by surging power demand from AI-related infrastructure. The gap, he said, lies in between. Climate technologies are capital-intensive, so as they scale they face tech risk that deters infrastructure investors and cheques too big for venture funds. Public capital, he suggested, has a role in bridging that gap and crowding in private money. Without it, promising UK and European start-ups risk taking their talent, jobs and infrastructure to the US.

Is it real?

Asked how investors can tell genuine integration from marketing, Dr Ioannou offered a checklist drawn from his teaching. He looks for sustainability linked to commercial decision-making, a clear distinction between meeting the industry baseline and differentiating, and honest answers about trade-offs. "If you tell me there are no trade-offs, that means you don't have a strategy," he said. He also looks for evidence of how value is created, for governance and incentives that embed sustainability in the organisation, and for leaders who treat it as a long change-management journey. Hanna's test was similarly practical: is the firm building real capabilities that manage risk and cost, improve resilience and open new markets?

On persuading CFOs that nature has value, Hanna said translation into financial terms is key. Barclays has run a nature stress test alongside its climate stress test, and he pointed to the disruption that low water levels on the Rhine caused for BASF. Dr Ioannou suggested a simpler opener: ask how many ways the business depends on nature.

Systems, not just courage

Rather than needing more courage, Hanna said, the sector needs better coordination. Offshore wind has been built, but the grid is not ready to absorb it; policy, infrastructure and even insurance must move too. "It's less about can we be more courageous," he said. "It's how do we become more collaborative." Dr Ioannou described this as "trapped capabilities": future-fit capabilities held back by systems that undervalue them, which he said makes the case for advocacy economic as well as moral.

Optimism, and realism

Closing the discussion, both speakers combined optimism with candour. Dr Ioannou said mitigation will not be enough and called for a shift from organisational adaptation to system-level resilience. He described the anti-sustainability backlash as largely a US phenomenon and urged companies to use the quieter media spotlight to experiment. "Just do the work," he said. Hanna admitted the finance sector had counted megawatts and tonnes of carbon avoided but paid too little attention to local jobs and the distribution of transition costs, which he said had fed some of the backlash. His closing advice: focus on creating value for customers, shareholders and stakeholders, and on building resilience. "It doesn't matter what label you give it."

Explore more content from London Business School, including upcoming Think Ahead events, podcasts and feature articles, at london.edu.

The YouTube video, recording this discussion may be found here: https://www.youtube.com/watch?v=36fR83r3dLs