Between Two Worlds: Sustainable Business in the Turbulent Transition

Industry Investment Rating - The report does not explicitly provide an investment rating for the industry, but it emphasizes the urgency and importance of transitioning to sustainable business practices, particularly in the context of climate change and nature crises [8][90] Core Viewpoints - The transition to a sustainable economy is underway but will require perseverance and ongoing ambition, as the process is likely to be disorderly and disruptive [9][91] - Businesses must rapidly address climate and nature crises while preparing for the impacts already underway, as emissions continue to rise and nature degradation worsens [8][90] - The development and deployment of technology must be approached wisely, with caution against over-reliance on unproven technological solutions at the expense of policy reform and behavior change [10][94] - There is a growing tension between economic growth and environmental goals, necessitating a fundamental rethink of economic systems and business models [11][98] - Companies have a critical role in promoting truth, democracy, and cooperation, especially in the face of political polarization and misinformation [12][102] - The agenda for boards and the C-suite has become more complex, requiring strategic foresight and agility to navigate a rapidly changing landscape [13][105] Key Developments in Sustainable Business - The energy transition has moved from aspiration to reality, with clean energy technologies becoming cheaper and more widely adopted, though fossil fuel demand remains high [41][42] - Climate change and nature crises have intensified, with record-breaking temperatures, extreme weather events, and biodiversity loss posing significant risks to business and society [46][47] - Social cohesion and democracy have come under strain, with rising inequality, political polarization, and misinformation complicating efforts for sustainable business [49][50] - Geopolitics and trade have entered a new era, with decoupling between China and the West, supply chain disruptions, and increased protectionism [53][55] - Technology has grown more powerful, with mixed results, as some innovations fail to scale while others, like AI, hold promise but also pose risks [61][63] Evolution of Sustainable Business Practices - Climate and nature have become material risks for business and finance, driving the adoption of net zero commitments and nature-related disclosure frameworks [69][71] - Business and human rights have matured, with justice and equity emerging as new concerns, particularly in the context of climate justice and the just transition [74][75] - Sustainability disclosures have become increasingly mandatory and harmonized, with governance accountability rising to the board level [75][76] - Responsible development of technology has emerged as a concern, with businesses expected to ensure that new technologies respect human rights and ethical principles [80][81] - The ESG backlash has complicated efforts, with political and social resistance slowing progress on sustainable business commitments [84][85] Strategic Insights for Business - Businesses must accelerate progress on climate and nature while preparing for the disruption already underway, as the impacts of these crises are becoming increasingly existential [90][91] - The transition to a sustainable economy will require ambitious vision and commitment, complemented by strategic foresight and agility to navigate a turbulent and disruptive period [91][92] - Companies should balance technological innovation with policy reform and behavior change, avoiding over-reliance on unproven solutions like carbon dioxide removal [94][95] - A fundamental rethink of economic systems and business models is urgently needed to address the tension between growth and environmental goals [98][100] - Businesses have a unique role in promoting truth, democracy, and cooperation, particularly in the face of political polarization and misinformation [102][104] - Strategic foresight is essential for navigating the rapid and complex changes ahead, with scenario planning and horizon scanning helping businesses prepare for future uncertainties [107][109]