Companies are under increased pressure from investors, employees, activists and consumers to take meaningful action on sustainability — and many of them are responding. But the sustainability initiatives they launch are often limited and not systemic changes.
The initiatives are not harmful in themselves and could be part of a net-zero culture. But because they don’t really address underlying problems, they are, in effect, just sustainability theatre. Much like the term “innovation theatre” coined by Steve Blank, sustainability theatre is defined as an organisation that gives the impression that positive change is happening without the actual transformation of business practices.
The eight types of sustainability theatre
1/ 'By 2050...' empty pledges
We've all heard or seen them: pledges by corporate and government leaders to deliver a net-zero and sustainable future. There is a deadline and an ambition stated, but no concrete and timely action is announced. There is no fundamental transformation of business practice and no noticeable behavioural change beyond rhetoric.
2/ Sustainable by association
Many sustainability initiatives, like climate-related fellowships, accelerator programmes and conferences provide opportunities to make a real impact. Participation or sponsorship in these initiatives is a very cost-effective way to boost the perception of your company as one that cares about sustainability. But it doesn’t change the company's business practices, which in many cases remain not sustainable.
3/ Climate-related investments and acquisitions
It makes sense, in principle, for corporations and governments to invest in and acquire climate-related startups and technology. However, many investments and acquisitions turn out to be a small part of their portfolio. The oil majors, for example, are still only investing a small percentage of their annual R&D budgets into renewables. Shell, for example, only spends 10% of R&D on clean energy. Although it looks like companies are taking bold action, when you dig a little deeper a bigger picture emerges that is much less impressive.
4/ Boasting a new sustainable product (line)
When most products remain unsustainable, the noise and buzz that a company makes about one sustainable brand is a somewhat distorted version of the truth.
5/ Appealing to customers and partners to solve the issue
Rather than actually make a change themselves, companies sometimes put forward the idea that their customers or governments are the ones responsible for solving their sustainability challenges. One example that comes to mind is Coca Cola’s head of sustainability, who said that the drinks company wouldn’t ditch single-use plastic because of customer demand. On the other hand, Coca Cola is part of several organisations lobbying against a ban on single-use plastics.
6/ Incremental change
Many companies are taking real action, but these measures are usually incremental. They won’t meet the timeline and impact goals set out by the 2015 Paris Agreement or COP26 pledges to reduce their carbon footprint in time. When these efforts are highlighted in elaborate marketing campaigns, it gives the impression that these companies are turning things around.
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7/ Sustainability certifications
Many NGOs that give out sustainability certifications are dependent on funding from companies or related third parties, which are exerting an influence that effectively makes these certifications key elements of greenwashing strategies.
8/ Carbon offsetting
Most companies today utilise carbon offsetting as a primary “sustainability effort” as it allows them to continue business-as-usual without investing in carbon reduction measures. Carbon offsetting is an essential part of reducing the carbon footprint, but it should be used for dealing with residual carbon emissions that remain after substantial carbon reduction efforts. It shouldn’t be a substitute for reducing carbon emissions.
Why do companies do sustainability theatre instead of transforming their business to net-zero?
Given the severe warnings of the recent IPCC report, it doesn’t seem sensible for companies to perform sustainability theatre. So why do leaders, people who care for their children’s future, actively engage in it?
Here are some of the main reasons that make sustainability theatre common practice:
There is no playbook
There are many frameworks and approaches that can contribute to making your business more sustainable. This creates confusion around sustainability and results in some leaders refraining from transforming their organisations towards net-zero.
It is costly
Making your business sustainable will likely hurt (short-term) profitability and impact your clients in terms of price. We have conducted business for decades in an unsustainable manner, and the actual costs (externalities) have rarely been part of any pricing strategy or P&L calculations.
Some companies believe that being among the first movers in sustainability would make them less competitive. This poses real risks when most major polluters are not committing to taking meaningful action.
Failure of leadership
Whether it’s due to management cycles, politics, a CEO’s lack of vision or a boardroom filled with people who still have a rather imperialistic mindset, failure of leadership is omnipresent when it comes to making uncomfortable changes.
The metric issue
ESG, carbon accounting and other sustainability metrics or frameworks are prone to being manipulated as long as shareholder value is the primary metric to which business practices must adhere.
Nobody says that sustainability transformation is easy for governments and companies. However, as the most recent IPCC report affirms, there is no other option than to take the bull by the horns and accelerate efforts. Inaction and counter-efforts to conserve business-as-usual are increasingly under scrutiny, while a large carbon footprint is becoming a significant liability.
Every business leader has at least one measure that they could begin with tomorrow, which would allow them to make a considerable impact towards net-zero.
How can you start to take meaningful action?
Companies can start by making explicit the sustainability challenges they face and prioritise them according to their impact potential rather than growth or profit. The key is that the challenges are turned into sustainability initiatives that are a/ systemic in nature, b/ actionable, c/ measurable and d/ proportional and meaningful.
To do this, you need political will and a reporting framework that is transparent and immutable. You also need to develop the mindset and capabilities of the organisation.
The IPCC report published last August was only the first part, dealing with our knowledge of the physical basis of climate change. The two additional parts, highlighting the impacts of the climate crisis and ways of reducing those impacts, will be published next year.
We’ll see whether these, too, will be met with more sustainability theatre — or whether they can persuade business leaders into real action.