By Tanya Singh
December 10, 2024
This article is a contribution from Next Gen Assembly 2024 Member, Tanya Singh.
Sustainability has grown from a niche concern to a mainstream imperative. Over the past decade, investors have funnelled over $1.6 trillion into environmental, social, and governance (ESG) initiatives. Yet, paradoxically, the crises these investments aim to address—climate change, biodiversity loss, and resource depletion—continue to accelerate. Why has this monumental financial effort fallen short, and what does it reveal about the way we define and pursue sustainability?
This is a moment to pause and reflect. Beyond dollar figures and initiatives, are we asking the right questions about the systems that govern these efforts?
The sheer scale of investment might suggest progress, but when examined closely, the cracks begin to show. Many of these funds are directed toward risk mitigation rather than systemic transformation. The question is not just about where the money goes but how it aligns with the deeper causes of environmental and social crises.
The Trap of Short-Term Returns: Our economic model rewards immediate returns, creating a culture that discourages long-term, transformative investments. Think of it this way: rethinking a company’s entire supply chain to make it more sustainable may require years of investment with limited short-term returns, yet stockholders often expect quarterly gains. This dissonance creates a system where investments are diluted across initiatives that look good on paper but may not be sustainable or impactful in the long run.
Impact-Washing and Metrics: Another challenge is, in some cases, the reliance on superficial metrics to gauge sustainability impact. For instance, some social ratings of companies can give the impression of strong performance, even when critical issues like forced labor or harassment persist in their supply chains. It is important that the metrics used reflect a company’s true environmental and social footprint, to avoid contributing to an illusion of progress without real impact.
The Financialization of Sustainability: When sustainability is treated as just another asset class, we miss the point. ESG has grown into a marketable, often lucrative niche within finance, making it vulnerable to the same pitfalls as any other asset class—namely, a focus on profit rather than people and the planet. If the goal of sustainable investment is to maximise shareholder returns, we are caught in a cycle that perpetuates, rather than solves, our environmental crises.
Moving forward requires us to revisit the very idea of value—how we define it, measure it, and align it with our collective goals.
Redefining Value Creation Beyond Financial Returns: Could we imagine a model where a company’s environmental and social impact holds equal weight to its financial success? One potential pathway involves reshaping public narratives. What might it look like to juxtapose media coverage of sustainability-focused companies with those lagging behind? Could this kind of transparent storytelling inspire greater accountability and elevate sustainability as a norm rather than an exception?
Aligning Impact Metrics with Investments: A critical piece of the puzzle is aligning impact metrics with investment decisions. If sustainability investments are to lead to true systemic change, they need to be measured in ways that reflect long-term environmental and social benefits—not just short-term financial outcomes. One emerging approach is the Return on Sustainability Investment (ROSI) framework, which offers a more nuanced lens for understanding the value of sustainability. Unlike traditional ROI, ROSI captures both tangible benefits—like cost savings from resource efficiency—and intangible ones, such as brand loyalty or improved workplace morale. For instance, decarbonising a supply chain may seem like a significant cost initially. But ROSI invites us to think holistically: What if those costs translate into long-term energy savings, reduced regulatory risks, or stronger customer loyalty? What would it look like to quantify sustainability not as a compliance expense but as a strategic advantage? Yet adopting ROSI requires more than just numbers; it demands a shift in perspective. How might we embed this mindset across organisations and industries? What barriers—cultural or structural—must we overcome to fully embrace it?
True sustainability investment is not simply about profit—it is about creating long-term value for both people and the planet. Achieving this will require difficult conversations and a willingness to challenge conventional views of growth, success, and value. We must rethink not only what we invest in, but also how we invest, ensuring that the returns we seek reflect real, measurable impact for future generations.
This path—though uncomfortable—is essential. It asks us to shift from short-term thinking to long-term transformation, where true sustainability and profit can coexist as mutually reinforcing goals.
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