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The future of sustainability in business: why success depends on integration

Authors

  • Julie Teigland

    EY Global Vice Chair – Alliances & Ecosystems; EY EMEIA Area Managing Partner

  • Andrew Hobbs

    EY EMEIA Center for Board Matters Leader, EMEIA Public Policy Leader

Contributors

12 minute read 13 May 2025
Related topics
Sustainability
Long term value
Board governance and oversight
Public policy

The most effective companies embed sustainability into their business by default. But most don’t. It’s time to go all in on the transition.

In brief

  • There is a significant gap between sustainability strategy and business strategy: Sustainability is siloed, and boards and management don’t see eye to eye.
  • New EY research shows that this is a mistake. Companies that integrate sustainability into their business are more confident about their outlook.
  • We explore five ways to integrate sustainability strategy into your overall business strategy.

Life is full of examples of how working together is better than working separately. The star player can only win if they work as part of the team; the odd trip to the gym won’t count for much unless it’s part of a broader healthy lifestyle, and a symphony sounds best when all instruments play together in harmony.

Despite these lessons, companies are still keeping sustainability separate from their business. And that's a mistake. New research from EY shows that those who embed sustainability into their overall business strategy enjoy better business outcomes than those who treat sustainability as a standalone project:

  • They are 40% more confident in their business outlook for the next 12 months.
  • Their boards are 1.5 times more effective in achieving sustainability objectives.

In the climate of greenhushing, driven by renewed support for fossil fuels in some parts of the world, demonstrating sustainability's tangible business benefits has never been more important. Sustainability has been linked to improved financial performance thanks to reduced risk, new markets and increased resilience. But by tackling the issue as a standalone project, many businesses risk losing out.

Our latest survey of European businesses shows that companies and boards can enjoy improved performance by properly integrating their sustainability strategies into their business. And the survey identifies a leading group of Sustainability Integrators that have already done so.

Find out how to emulate their success.

Sign up to join the ecoDa/EY webinar 

The future of sustainability in business: why success depends on integration, 10 June 10am BST

Webinar Registration - Zoom
1

Chapter 1

The heat is on: European businesses can’t avoid sustainability

European businesses must prioritize sustainability due to rising pressure from investors and activists. Failure to adapt risks reputational damage and lost competitiveness in a changing market.

European businesses are under pressure to be more sustainable so they can deliver better business and customer outcomes. The new US administration may have shifted the conversation globally, but sustainability still carries weight in Europe. It remains a keystone of the EU’s policy agenda to contribute to competitiveness, decarbonization and security.

Stakeholders are putting pressure on boards and management to make sure European companies focus on sustainability issues:

  • 91% of the companies in our research are feeling the pressure from investors to accelerate their sustainable business practices.
  • 78% are feeling it from activists.

Fiona Watson, Vice President, Corporate Performance & Accountability at the World Business Council for Sustainable Development (WBCSD), agrees that investors are placing pressure on businesses to become more sustainable. “Investors increasingly recognize the value that can be realized through integrating sustainability into decision-making,” Watson says. “This provides a mandate to continue the challenge to transition toward sustainability goals.

Investors increasingly recognize the value that can be realized through integrating sustainability into decision making. This provides a mandate to continue the challenge to become more sustainable.

Fiona Watson

Vice President, Corporate Performance & Accountability at the World Business Council for Sustainable Development (WBCSD)

And when companies are getting the same message from multiple angles, they can’t ignore it - it's too much of a risk. More than a third of companies (39%) say they have suffered a reputation - damaging backlash in the press or on social media because they’ve not done enough on sustainability standards. This number falls to only 6% of those who are integrating sustainability into their wider business strategy.

Financial institutions are taking a much more commercial approach to sustainability. The focus is on managing risks, business resilience and maximizing revenues.

Gill Lofts

EY Global Financial Services Sustainability Leader

How EY can help

  • Long term value

    Long-term value is created by focusing on a broad set of stakeholders, with a distinct purpose in mind, to sustain a business for the long term.

    Read more

There's also a risk of attracting activists who engage in disruptive behaviors to get news headlines. More than a quarter (29%) of companies have already suffered this kind of backlash because of perceived shortcomings on sustainability issues.

 

According to Gill Lofts, EY Global Financial Services Sustainability Leader, the pressure companies feel to be more sustainable has changed. “Financial institutions are taking a much more commercial approach to sustainability,” says Lofts, referring to the current economic and geopolitical context. “The focus is on managing risks, business resilience and maximizing revenues. Investing in sustainability can be a slow, risky and complex process for financial institutions, and so they are increasingly linking transition transformation to the commercial realities of running the business.”

2

Chapter 2

Sustainability and business should work together, but it's not happening

The sustainability imperative is clear, but businesses are still treating it as a separate endeavor.

For most European businesses, sustainability is siloed


How EY can help

  • EY Sustainability

    Sustainability and ESG services that help protect and create value for business, people, society and the world. Explore the depth and breadth of EY services and solutions.

    Read more

One reason sustainability is getting sidetracked is that it seems to be struggling to build its profile within businesses. Fewer than one in five companies (18%) say their sustainability strategy focuses on long-term issues, and only 19% say it aligns with their wider business purpose.

 

What’s more, the majority of companies (57%) say that if they need to make cuts, sustainability initiatives are more likely to be discontinued than other initiatives. This tallies with the fact that 39% of companies believe sustainability has always been - and remains - a lower priority than commercial objectives.

 

Tellingly, companies that integrate their sustainability plans into their business don’t subscribe to these views - only 2% believe sustainability is a lower priority than commercial objectives, and only 4% would wind down sustainability initiatives before commercial ones if business conditions worsened.  

3

Chapter 3

The board and management think differently about sustainability

Our data shows that boards and senior management teams think about sustainability very differently. This could be one reason why sustainability is tackled separately within the broader business.

When they look at their sustainability strategies, boards and management teams see two different things 


How EY can help

The vast majority of board members (82%) say their sustainability strategies are completely standalone. But only a quarter of senior leaders (CEO and C-suite) agree - they’re more likely to think that sustainability is embedded in the overall business. 

Sustainability cannot remain a siloed initiative; it must be recognized as a critical pathway for thriving businesses.

Gerard Gallagher

Global Sustainability Leader - Clients & Industries

The differences don’t stop there: 81% of boards say that sustainability initiatives are the first to be cut when times are hard, compared with only a third (33%) of senior leaders. And boards are more likely than senior leaders to prioritize commercial objectives over sustainability.

The mismatch here is significant and could be due to a range of factors at different companies. But the advice is the same: Boards and management teams must have an honest and open conversation to ensure they align on both short-term market changes and the long-term vision. 

EY Global Sustainability Leader - Clients & Industries, Gerard Gallagher says that to see the value in sustainability, boards must think more long-term. “Sustainability cannot remain a siloed initiative; it must be recognized as a critical pathway for thriving businesses.” 

The gap between boards and senior leaders’ views on sustainability is notable. But the differences between these two groups’ perceptions of each other are even more startling. Boards have a much higher opinion of themselves when it comes to their approach to sustainability.

Boards rate themselves as effective at sustainability activities; but management rates them lower


This suggests that management teams think boards could do more to support them with their sustainability strategy and execution.

This mismatch could be why 80% of investors say companies are failing to articulate the rationale for long-term sustainability investments, according to the EY Global Corporate Reporting and Institutional Investor Survey.

4

Chapter 4

The evidence: Fully integrating sustainability makes business sense

Integrating sustainability boosts business confidence and board effectiveness, driving better outcomes.

Most companies (55%) see sustainability as something separate from their commercial business. But some leading companies have gone in the opposite direction. Their sustainability strategies are deeply embedded within the business, with leaders at all levels aligned. This group represents 27% of the businesses in our survey, and we call them Sustainability Integrators.

Compared to the rest - those with less alignment between sustainability and their business - Sustainability Integrators:

  • Are 40% more confident in their business outlook for the next 12 months
  • Have boards that are 1.5 times more effective in achieving sustainability objectives

Sustainability Integrators are much happier with how their boards perform


Sustainability Integrators are highly confident about the effectiveness of their boards across a range of issues.

That’s not all. Sustainability Integrators are more confident about their business outlook, and their greater integration of sustainability issues into the business could be a contributing factor. On average, Sustainability Integrators are ahead of the rest of the companies in all the metrics we asked about.

Sustainability Integrators are more confident about growing profitably in the next 12 months


5

Chapter 5

Five ways to emulate the success of Sustainability Integrators

Integration is the way forward. Here’s how companies can do it.

1. Ensure that the board and management are aligned on sustainability

The integration of sustainability and business cannot happen in practice if senior leadership is not aligned in theory. As things stand, they are not.

The misalignment is clear and must be addressed. The sustainability agenda is being reshaped by global dynamics, and companies must use this opportunity to reshape their own approaches. This will be effective only if boards and management teams agree.

Using a “value bridge” framework can help drive more productive conversations between boards and management teams. The exercise revolves around having a factual, data-led, industry-focused conversation based on risk analysis, which can help executives stress test and scenario plan. Using a structured framework can facilitate better discussions and ensure progress.

2. Stop thinking sustainability is someone else’s job

One major problem with not integrating sustainability into the wider business strategy is that it creates silos that are hard to break. Sustainability Integrators avoid this by making sure all board members - not just one leader - take responsibility for sustainability issues: 50% of them say they do this, compared with just 8% of the rest. 

We are building it into areas like engineering, design, manufacturing, procurement, M&A, new facilities, and so on.

Karin Hoeing

Group ESG, Culture and Business Transformation Director for BAE Systems

And 67% of Sustainability Integrators believe their board effectively aligns on sustainability priorities, compared with only 24% of the rest. These leading companies are significantly more collaborative than the rest, which could link to their overall better business outcomes.

Karin Hoeing group ESG, Culture and Business Transformation director for BAE Systems Plc, says that at her company sustainability considerations are being integrated into relevant policies and process. “We are building it into areas like engineering, design, manufacturing, procurement, M&A, new facilities, and so on," says Hoeing. 

3. Make sure every function understands the business benefits of sustainability

Knowing what you need to do to integrate sustainability into the business is one thing; knowing how to do it is another. That’s why skills are so important.

Eighty-three percent of Sustainability Integrators say they are well supported and have adequate sustainability skills throughout their businesses. This suggests that they’re implementing training that helps employees outside the direct sustainability remit understand what they need to do and how to do it.

“We have awareness training internally and a global Supplier Code of Conduct for our suppliers," says Hoeing. "So, they're all on the same page, which is important.”

4. Encourage integration by getting the right finance in place

Sustainability won’t be integrated into the business without the right funding. It requires investment from the company to ensure close links between people and projects. 

We approach investments by asking, ‘Is it moving us forward in terms of what we’re going to achieve in our financial performance goals and our sustainability goals?

James Murnieks

GB&I Chief Financial Officer, Siemens plc

Sustainability Integrators know this, and they’re acting on it. Almost all of them (90%) say they're well supported with adequate finances from the business, compared with only 26% of the rest. And Sustainability Integrators are more effective at approving both capital (94% vs. 28%) and operational expenditure (87% vs.28%). These stark contrasts show that full integration is possible with the right funds.

Siemens’ James Murnieks says projects are financed at his company with sustainability and business objectives on equal footing.

“We don’t approach investment by just looking at sustainability,” he says. “We approach investments by asking, ‘Is it moving us forward in terms of what we’re going to achieve in our financial performance goals and our sustainability goals?’”

5. Invest in technology programs that support delivery of your integrated strategy

Sustainability Integrators understand that they can’t meet sustainability goals without the right technologies: 90% of them believe they are well supported by the right technologies, compared with only 68% of the rest. This suggests that these sustainability-assisting technologies help them to achieve their goals.

There are so many ways technology can help companies to be more sustainable, we are really only scratching the surface.

Dr. Velislava Ivanova

EY Americas Chief Sustainability Officer; EY Global Strategy and Markets Leader, Climate Change and Sustainability Services

Dr. Velislava Ivanova, EY Americas Chief Sustainability Officer, says, “technology is a great enabler for companies to be able to collect more reliable data, manage performance better, monitor more effectively their progress on sustainability and commercial metrics and ultimately make more informed business decisions, including strategic investments and capital allocations. Technology can also be an accelerator for innovation and collaboration across the value chains.”

Ivanova continues, “Think, for example, about the food and beverage sector, they have been using technologies to monitor crops to be able to better prepare for droughts, floods, soil quality or to withstand other environmental factors,” she says. “There are so many ways technology can help companies to be more sustainable, we are really only scratching the surface.”

6

Chapter 6

Conclusion: It’s time to get aligned on sustainability

Only an aligned leadership team can make this happen.

The broader business and political environment is forcing CEOs and boards to decide where they stand on sustainability. And time and time again, the long-term business case has been proven. Challenges will exist in the short term, and trade-offs will need to be made. But our research shows that an integrated sustainability strategy is the best approach - for business and the world.

Boards and business leaders must take this opportunity to realign their thinking on sustainability - but they need to do so together. An integrated strategy will fail unless every part of the business and its leadership are pulling in the same direction.

Our latest research shows that sustainability isn’t just good for business – it should underpin every part of the enterprise. Only an aligned leadership team can make this happen. 


Summary

Sustainability is not being integrated into overall business strategy - it’s seen as a separate endeavor. Now more than ever, companies must show the commercial value of sustainability, and companies whose efforts are integrated into their business can do this. Our new research shows that companies that integrate sustainability into their business strategy are more confident about their business outlook.

Sign up to join the ecoDa/EY webinar 

The future of sustainability in business: why success depends on integration, 10 June 10am BST

Webinar Registration - Zoom

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    About this article

    Authors

    • Julie Teigland
      EY Global Vice Chair – Alliances & Ecosystems; EY EMEIA Area Managing Partner
    • Andrew Hobbs
      EY EMEIA Center for Board Matters Leader, EMEIA Public Policy Leader

    Contributors

    Related topics
    Sustainability
    Long term value
    Board governance and oversight
    Public policy

    EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.