**Navigating Sustainability Amidst Regulatory and Political Shifts**
By: Simon Weaver, Global Head of ESG Advisory at [KPMG International](https://kpmg.com/xx/en.html)
The global endeavour for sustainability faces a critical juncture. Shifting political landscapes and widespread uncertainty are significantly increasing the risk of a disorderly transition towards a sustainable future.
Recent months have seen a surge in regulatory activity, from the EU omnibus announcement to new ISSB-aligned standards in Asia. However, this progress contrasts starkly with the potential shift towards deregulation in the United States. This diverging regulatory environment presents a complex and unpredictable backdrop for businesses. While many CEOs initially viewed the climate crisis as a challenge to embrace, the commercial realities of achieving ambitious net-zero targets have led to a notable corporate retreat. Concerns about negative perceptions from adopting a non-commercial stance are causing businesses to withdraw from their commitments.
This hesitation is further exacerbated by a disconnect in current approaches. Emphasis on Scopes 1, 2, and 3 emissions, and even the term “net zero” itself, may inadvertently hinder genuine decarbonisation. Companies often spend more time debating emissions beyond their control rather than investing in impactful actions. Real progress requires executives to collaborate with political leaders and governments to address macro policy gaps spanning multiple industries, rather than leaving businesses to navigate a fragmented landscape alone.
In my daily interactions with corporate leaders and regulators, two distinct scenarios are emerging and becoming embedded in strategy. Firstly, companies often pursue “low-hanging fruit” for quick wins, which fails to drive meaningful change. Secondly, many are deferring crucial action to the public sector and regulators, neglecting the collaborative dialogue needed for achievable and beneficial targets.
These scenarios reflect a mix of diverging regulations. While frameworks like TCFD have successfully engaged boardrooms with achievable goals, others, such as CSRD, face criticism for being overly prescriptive and a “tick-box exercise” rather than driving meaningful change. This regulatory fragmentation is compounded by political regression across many regions, shifting the burden onto boardrooms and CEOs. This erosion of public trust in sustainability risks further fragmenting efforts to tackle urgent social and environmental crises.
To navigate this complex landscape and avert a disorderly transition, a new direction is essential. We must embrace a “third era of sustainability” characterised by honesty, collaboration, and a strategic focus on what can genuinely be controlled and influenced. Frameworks like the Transition Plan Taskforce (TPT) offer a roadmap, guiding businesses to focus on value creation and risk mitigation. The challenge remains to translate longer-term sustainability risks and opportunities into actionable financial forecasts and strategic decisions.
The balance between realism and ambition is now critical. Many companies risk effectively “giving up” on their climate and broader ESG targets, failing to set new ones as existing commitments slip. Business leaders must balance short-term pressures with long-term scenarios, goals, and realities. The modern world, with its inherent uncertainty and rapid change, demands more agile thinking and responses. This raises a fundamental question: are companies prepared to be honest with themselves and their stakeholders, acknowledging that many underlying assumptions are now unlikely to materialise?
The coming months are likely to be dominated by an increasingly uncertain geopolitical environment. By fostering partnerships, maintaining a resolute commitment to progress, and adopting an honest, collaborative approach focused on value creation and preservation, we can steer away from a disorderly transition and collectively build a more sustainable future.
