Who owns sustainability? The emerging power struggle inside the corporation

Ioannis Ioannou is an associate professor of strategy and entrepreneurship at the London Business School. He’s a member of the European Institute of Management and Finance’s advisory council, and a director at the Alliance for Research on Corporate Sustainability. 

This article was first published on his blog, here.  

In most companies today, sustainability is no longer a sideshow. It sits – at least nominally – within strategy documents, investor briefings, and board discussions.

ESG teams have grown. Disclosure practices have matured. And the external pressure to respond to environmental and social risks has not gone away, despite the political backlash and the visible retraction of the ESG label.

But inside many organisations, another dynamic is unfolding – one that is quieter, more complex, and increasingly consequential.

As sustainability becomes more central to corporate strategy, it is also becoming more contested. ESG has stopped being a marginal initiative and has become a site of internal struggle – a proxy for deeper disagreements over who defines value, what time horizon matters, and which part of the organisation gets to lead.

The result is not simply organisational misalignment. It is something closer to a corporate identity crisis, playing out between legal departments and marketing teams, between CFOs and sustainability officers, between boards uncertain about their role, and CEOs trying to avoid controversy.

As ESG shifts from external messaging to internal strategy, the question companies must now answer is no longer just What is our sustainability ambition? but Who, exactly, owns this agenda – and at what cost?

This tension is exacerbated by regulatory uncertainty.

In the US, the Securities and Exchange Commission’s anticipated climate disclosure rule has been substantially watered down under the Trump-Vance administration, with scope limited and implementation timelines stretched.

In the EU, the Corporate Sustainability Reporting Directive remains on the books, but is under significant political pressure, with proposals for postponement and scope reductions gaining traction.

Global standards like the ISSB have made strides toward harmonisation, but enforcement remains fragmented.

What this means is that, while the regulatory signals remain broadly pointed toward more transparency, the clarity and coordination that many firms had hoped for has not materialised.

In the absence of a settled external frame, companies are left to manage internally – and this is where the fractures begin to show.

“Sustainability has, in many firms, become a test of organisational alignment – and increasingly, of leadership.”

Legal teams often take a defensive posture, focused on risk exposure, greenwashing litigation, and the reputational cost of over-promising.

Finance departments scrutinize ESG initiatives through the lens of capital efficiency and balance sheet pressure.

Operations teams, tasked with execution, are frequently sceptical of targets set without clear implementation pathways.

And marketing departments – highly attuned to cultural and political shifts – may push for quiet rebranding, emphasising ‘resilience’ or ‘responsible business’ over now-contentious ESG terminology.

Meanwhile, boards, often lacking sustainability expertise, hesitate to intervene decisively.

And CEOs, caught between investors, regulators, and public opinion, are left refereeing internal debates that are less about carbon accounting than they are about power and control.

Sustainability has, in many firms, become a test of organisational alignment – and increasingly, of leadership.

These internal tensions are not new, but what is new is that they are now visible to the outside world.

Greenwashing accusations have become more frequent, more credible, and more legally actionable. Investors, even those sceptical of ESG branding, still expect coherent narratives about long-term risk. And regulators – particularly in Europe – have begun to focus not just on disclosure, but on governance: who in the organisation is accountable for sustainability, and how are decisions made?

This is not just a communications challenge. It is a structural one.

Many firms still treat ESG as a parallel track – an initiative owned by a sustainability function with limited budget, uneven authority, and unclear links to core decision-making.

But as scrutiny increases and expectations rise, that model is no longer tenable. Fragmented accountability leads to incoherent action. And incoherent action is no longer safe.

What’s needed is not simply stronger ESG teams, but a clearer architecture for sustainability governance.

That means embedding ESG into financial planning, capital allocation, and enterprise risk – not as a reporting layer, but as an integrated decision framework.

It means aligning incentives, ensuring that sustainability targets are reflected in executive compensation – not just in rhetoric.

And it means resolving the internal power struggles that ESG has surfaced, rather than papering them over with revised language.

“When sustainability is inconvenient, who gets to say so?”

To get there, companies will have to ask hard questions about their internal politics.

Who has veto power over ESG initiatives, and why? Which functions are rewarded for long-term thinking, and which are not? How do trade-offs between financial targets and sustainability goals get resolved, and by whom? And perhaps most crucially: when sustainability is inconvenient, who gets to say so?

Boards must play a more active role here.

Governance is not just about oversight – it’s about setting direction, defining boundaries, and enabling clarity when internal mandates collide.

Too often, boards treat ESG as either a risk to monitor or a reputation to protect. But as ESG becomes a structural component of business strategy, boards must treat it as a strategic capability – one that requires investment, integration, and yes, real trade-offs.

There’s also a cultural dimension to this.

Many companies are still wrestling with outdated assumptions about who is credible on sustainability. Is it the CSR legacy function, the CFO’s office, the general counsel, or the head of strategy? In truth, it must be all of them – but that requires a cultural shift toward shared ownership, supported by structure and reinforced by leadership.

What we’re seeing now is not the death of ESG, but its migration – from external storytelling to internal systems. And that’s a more difficult, more political, and ultimately more important phase of the transition. It’s where ambition meets bureaucracy, where language meets budgets, and where purpose meets internal power.

The question of who owns sustainability is no longer rhetorical. It’s operational. It’s financial. And it’s strategic.

The firms that will emerge stronger from this moment are not necessarily the ones with the best disclosures or the most polished sustainability reports. They are the ones who resolve their internal conflicts with clarity, courage, and coherence – who stop treating sustainability as an external expectation and start treating it as a collective mandate.

Because in the end, sustainability isn’t just a set of targets. It’s a test of alignment.

And right now, the real risk isn’t that companies will do too much – but that they’ll do too little, pulled in too many directions, without anyone clearly in charge.