How to revive sustainability amid the pursuit of long term value and resilience

The recent backlash against environmental, social and ethical governance issues has fundamentally changed the way boards deliver long-term value creation and resilience. As Australia continues its journey towards net zero, sustainability strategies need an urgent rethink.

I’ve never seen a concept so thoroughly misunderstood, politicised and prematurely eulogised as sustainability. The headlines proclaim “ESG is dead.” They’re right, but for the wrong reasons. ESG is dead, and deservedly so because it drifted from its core mission — responsible value creation — into a parody of itself. What can emerge from the ashes is something far more powerful and, dare I say, sustainable.

It won’t be a boring compliance obligation. Nor an ideological weapon of the left. It will be sustainability reimagined as an anti-fragile strategy for unlocking long-term value and resilience.

Anti-fragility, a concept developed by Nassim Nicholas Taleb, author of  The Black Swan: The Impact of the Highly Improbable, describes a system that doesn’t just withstand stress, but actually gets stronger from it. Think how your muscles grow after exercise or how vaccines work by introducing a weakened pathogen. Anti-fragile systems convert chaos and uncertainty into advantage. This is fundamentally different from resilience, which merely survives change.

Sustainability enables anti-fragility, which in turn delivers long-term value and resilience.

Trump’s return — a symptom, not a cause

Trump’s return wasn’t an isolated event. It reflected a broader shift across liberal democracies towards personal freedoms over collective notions of equality that had been dominant since the global financial crisis. But recent elections in Canada and Australia suggest the trend is already reversing. The question for company directors becomes, how do we reframe sustainability to transcend culture wars and political cycles?

ESG’s downfall was partially self-inflicted and Trump simply accelerated its passing. It was initially undermined by the bad faith and misaligned incentives of its own advocates.

Ratings agencies turned ESG scores into gameable metrics. Advisers helped clients spin their climate credentials while preaching purpose. Sustainability teams pretended win-win outcomes were always possible, ignoring financial and ethical trade-offs. Management resorted to championing causes with little relevance to their business while misjudging public sentiment.

Sensing an opportunity, the Republican Party identified a new source of red meat to energise their base. They reframed ESG as elitist and out of step with Main Street concerns. The backlash became global, driven by American soft power.

The corporate retreat from ESG

Company “values” are not always deeply held. Instead, they often reflect the weighing of risk and reward. This is because the profit motive incentivises businesses to align with the expectations of politicians, customers and investors.

Until recently, some organisations chased reputational wins by virtue signalling on social issues. Today, those same claims carry financial, legal and reputational risk. 

The backlash exposes a truth — not all sustainability issues are created equal. Some are rooted in science and evidence, such as managing physical climate risks, addressing biodiversity loss in supply chains and implementing robust governance controls. These factors impact value creation, regardless of which way political winds blow. Other issues, particularly within the “social” pillar of sustainability, are more ambiguous. Diversity, equity and inclusion (DEI) can help foster inclusive cultures, but its link to superior financial performance remains contingent on context and execution.

The sustainability hype cycle

Like many professionals, you might be feeling uncertain about the world. America will not defend the global order it established after 1945, AI is disrupting knowledge work, immigration is causing social fracturing and the rise of the far right in some advanced democracies, and climate change is revealing its real-world impacts at scale. This is  all happening at once.

The era we have known all our lives is ending and a new one is being born. The accompanying sense of the unknown means many feel anxious and confused about how to position our organisations for success. In these turbulent times, we need a framework to understand how big ideas such as sustainability rise, face backlash and mature. That’s where the sustainability hype cycle comes in.

In late 2021, US$100 trillion sat in ESG funds. We hit the peak of inflated expectations. The bubble has slowly deflated since.

This doesn’t mean sustainability is doomed. As the world grows more unpredictable, visionary businesses can use their sustainability agenda to adapt and respond to unexpected shocks and tipping points.

This is a crucial point. Smart boardrooms will leverage uncertainty to make their businesses stronger relative to their less resilient and imaginative peers.

This is the concept of anti-fragility.

Sustainability as anti-fragile strategy

“Wind extinguishes a candle and energises fire,” says Taleb. “Likewise with randomness, uncertainty, chaos — you want to use them, not hide from them. You want to be the fire and wish for the wind.”

Traditional business strategies aim to predict and control outcomes in stable environments. Sustainability thinking — with its focus on systems, interconnections and long-term horizons — gives organisations the ability to sense shifts earlier, adapt more quickly and identify opportunities that others miss.

Consider Tesla. While some established car manufacturers essentially saw electric vehicles as a compliance burden, Tesla recognised the potential for batteries to transform the economics of transportation.

Systems thinking allowed the company to see connections between renewable energy, battery technology and mobility that legacy manufacturers missed. When disruption came — in the form of changing consumer preferences and tightening regulations — Tesla didn’t just survive, it thrived. In December 2024, Newsweek reported that it was more valuable than the next 35 biggest car manufacturers combined. That’s anti-fragility in action — using sustainability-driven systems thinking to turn market volatility into competitive advantage.

Leading organisations don’t just resist unexpected shocks, they gain strength from them. They are the fire, never the candle, when the winds of change blow.

Take COVID. Many people assumed things would be disrupted for a time before “bouncing back” to normal. The mistake was right there in the language. We didn’t go back. The way we live and work changed.

A better understanding of the world acknowledges that a complex system like a company evolves through cycles of growth, decay, restructuring and renewal.

Enlightened leaders embrace uncertainty, reimagining their actions, plans and strategies as experiments that must be constantly re-evaluated. Evidence-based sustainability is the corporate discipline best equipped to deliver anti-fragility.

Pursuing long-term value

The current corporate climate doesn’t signal the end of sustainability. It marks a shift in how it must be framed and executed. The path forward lies in positioning sustainability as the pursuit of long-term value and resilience.

After all, every capable decision-maker understands the paradox of making money. That forces beyond the balance sheet — shifting social norms, political trends, emerging technologies, demographic changes, resource scarcity and climate change — ultimately shape markets and shareholder returns.

Sustainability is shorthand for this understanding. It endures because it is anti-fragile in responding head-on to challenges no serious business can afford to ignore — escalating climate risks, nature loss, competition for talent and pressure from stakeholders for transparency.

Up the slope of enlightenment

Sustainability’s trough of disillusionment is real, but Australia’s recent federal election could signal the way out. Progress on the climate and nature agenda is expected as Labor negotiates directly with the Greens in the Senate. The Liberal Party may strengthen its position on climate action to regain urban competitiveness.

The real work now lies in transition planning, natural capital management, tracking scope 3 emissions and adapting to a global electric economy powered mostly by renewables, with firming support from batteries and gas as a transitional fuel. A tougher Safeguard Mechanism will tighten baselines, restrict offset use and compel emitters to pursue genuine decarbonisation. Relying on offsets is set to become more expensive. Cutting emissions at source — as some have done — is now the safer bet.

Our key stakeholders are listening again. Now we must deliver something more authentic and valuable than the phoney logic of “do well by doing good”. We must be honest that sustainability always involves costs, risks and trade-offs. Progress is hard-won and often takes longer than expected. Some forms of green tape are counterproductive and hamper good business decision-making.

Thriving through disruption

Sustainability strategies are no longer about avoiding downside. Instead, they must focus on surfacing insight, rebalancing capital allocation and giving boards and executive teams the power to make smarter, longer-term decisions.

Consider this: Companies in the S&P 500 had an average lifespan of 33 years in 1965 and 20 years in 1990. They have just 14 years today. In this environment, anti-fragility isn’t optional — it’s essential for survival.

For directors, this moment represents a career-defining opportunity. They sit at the nexus of capital, strategy and stakeholder expectations — precisely where these forces converge.

Boards aren’t just narrating their company’s story. They’re shaping how it competes, adapts and survives. In a chaotic world, that makes directors the most important strategic players in defining sustainability as a system of strategic advantage.

Three immediate moves to build anti-fragility

1. Renovate business models

Australian companies have relative policy clarity, with no federal election until 2028, and decarbonisation a central economic priority. The Safeguard Mechanism, mandatory climate reporting and Nature Repair Market are already reshaping how value is created.

Consider BHP, which is positioning itself for the energy transition by reshaping its portfolio to focus on future-facing commodities like copper, nickel and potash — essential materials for electrification and renewable energy. It has divested from thermal coal while investing billions in resources critical to decarbonisation. By systematically analysing how the energy transition will affect demand patterns, BHP is turning climate disruption into a strategic opportunity.

The global trajectory on nature adds more impetus. Under the UN’s Global Biodiversity Framework, nearly 200 countries have agreed to set aside 30 per cent of land and sea for nature by 2030. Nature could soon become the new carbon — priced, disclosed and regulated.

Institutional capital is shifting toward jurisdictions with policy stability. While the US looks to repeal or downgrade the Inflation Reduction Act, Australia is pushing ahead. Transition costs borne now will become competitive advantages later. As the Indo-Pacific electrifies, Australia is well positioned to export renewable energy, green materials and transition expertise. That’s anti-fragility in action, using disruption as a springboard for value creation.

2. Incorporate geopolitics into materiality

Geopolitics is no longer an externality. It is the organising force behind capital, trade and energy flows — and it’s rewriting the rules for sustainability. The assumption that global markets operate in a stable, rules-based order has collapsed. We’re seeing a world reorganising into spheres of influence, with governments asserting direct control over supply chains, industrial policy and access to capital. Geopolitics must now be embedded in materiality assessments. This means understanding how international affairs are reshaping the cost, return and risk of capital:

• Cost of capital: Liquidity is fragmenting along geopolitical lines.
• Return on capital: Political friction reduces margins.
• Risk to capital: Governments can reshore industries, nationalise assets or restrict capital flows.

To lead in this new environment, your sustainability, risk and IR teams need to understand how sanctions regimes, transition diplomacy and strategic dependencies influence business outcomes.

3. Broaden scenario planning

Most corporate scenario planning still operates within linear assumptions. But climate change, AI disruption, demographic collapse and biodiversity loss are not independent variables. They collide and cascade.

Dutch financial services company ING demonstrates this approach well. It developed scenarios that combined climate impacts with technological disruption and social inequality. This allowed ING to identify lending opportunities in climate-resilient infrastructure that also addressed social challenges — creating anti-fragile value through their ability to thrive in multiple disruptive scenarios simultaneously.

Visionary companies are beginning to explore second- and third-order effects. What happens when the transition to renewables collides with rare earth scarcity and geopolitical fragmentation? How might labour markets evolve under simultaneous pressures from automation, migration restriction and climate relocation?

Anti-fragile organisations don’t try to predict the future, they rehearse how to act when the future arrives differently than expected. That means setting predefined trigger points — concrete indicators that signal when a given scenario is beginning to unfold.

This article first appeared under the headline 'Going beyond ESG' in the October 2025 issue of Company Director magazine.