The Sustainability Goals Gap: Intent vs. Impact in Australian Business
Sustainability is front and centre for businesses across Australia, but a troubling pattern has emerged: most companies are struggling to hit their targets. Despite bold commitments and ambitious goals, the gap between intent and impact remains stubbornly wide.
Research shows that fewer than 30% of companies achieve their stated sustainability goals, with many quietly abandoning targets or revising them downward. For Australian businesses facing new ASRS compliance requirements, this failure rate isn't just embarrassing, it's becoming a material business risk.
Lee Stewart, CEO of ESG Strategy and a leading voice in sustainability, recently shared his insights on the From Startup to Wunderbrand podcast, hosted by Nicholas Kuhne. His message was clear: companies aren't failing because sustainability is too hard. They're failing because they need senior ESG leadership to approach it the right way.
3 Critical Reasons Companies Fail at Sustainability Targets
Many businesses kick off sustainability initiatives with the best of intentions but struggle to make them stick. According to Lee, the roadblocks typically come down to three key issues:
1. Lack of Leadership Buy-In and Board Engagement
The Problem: Sustainability gets delegated to a junior team member or treated as an HR initiative, without board-level oversight or executive accountability.
When sustainability sits outside the C-suite and board agenda, it lacks the authority, resources, and strategic alignment needed to drive real change. Decisions get made in isolation, disconnected from commercial objectives and risk management frameworks.
The Reality: Without executive sponsorship, sustainability goals become aspirational rather than operational. Teams lack the budget, cross-functional support, and decision-making power to implement meaningful change.
The Fix: Embed sustainability into governance structures with clear board accountability. Assign a board committee or executive owner, establish quarterly reporting, and tie ESG performance to leadership KPIs.
2. Treating Sustainability as a Side Project (Not Core Strategy)
The Problem: Companies approach sustainability as a compliance exercise or marketing initiative, separate from core business strategy.
This creates a fundamental disconnect. Sustainability goals sit in a separate document, disconnected from business planning, capital allocation, procurement decisions, and operational priorities. When budgets get tight or priorities shift, sustainability is the first thing cut.
The Reality: Sustainability isn't a side project, it's a strategic lens that should inform every major business decision. From supply chain resilience to energy costs, regulatory compliance to customer expectations, ESG factors directly impact profitability and risk.
The Fix: Integrate sustainability into your business strategy from the start. Align ESG targets with commercial objectives, embed them in risk registers, and make them part of your competitive positioning. Understand the difference between ESG and sustainability and how both drive business value.
3. Poor Integration with Business Operations and KPIs
The Problem: Sustainability goals are set at a high level but never translated into operational metrics, departmental responsibilities, or individual performance targets.
Without clear owners, measures, and accountability, sustainability remains abstract. Teams don't know what's expected of them, progress isn't tracked, and there's no consequence for inaction.
The Reality: What gets measured gets managed. If sustainability targets aren't embedded in operational KPIs, budget planning, and performance reviews, they won't be taken seriously.
The Fix: Create a clear implementation rhythm with specific owners, measures, and cadence. Develop departmental sustainability KPIs, integrate them into budget planning, and establish monthly or quarterly review cycles. Build internal capability through training or strategic leadership support.
The Real Cost of Failed Sustainability Goals
The consequences of missing sustainability targets extend far beyond embarrassment. Australian businesses face mounting risks across multiple fronts:
Regulatory Risk and ASRS Compliance Exposure
With Australian Sustainability Reporting Standards (ASRS) now in effect, large companies must disclose climate-related risks and opportunities. Companies that haven't built the governance, data systems, and capability to track and report on sustainability targets face compliance failures, audit issues, and potential penalties.
Learn from what Australian companies can learn from NZ's climate reporting reality, those that treated reporting as a compliance box-tick ended up behind schedule and underwhelming. Those that treated it as a strategic lens built capability and found competitive advantage.
Lost Competitive Advantage and Tender Opportunities
Major customers and government procurement increasingly require ESG credentials. Companies that can't demonstrate credible progress on sustainability goals are excluded from tenders, supply chains, and partnership opportunities worth millions.
Reputational Damage and Greenwashing Accusations
Setting ambitious targets and failing to deliver invites accusations of greenwashing, making misleading claims about environmental performance. In an era of heightened scrutiny, greenwashing poses significant legal, regulatory, and reputational risks.
How to Turn Sustainability Goals into Business Results
In his conversation with Nicholas Kuhne, Lee highlighted that the key to achieving sustainability goals is making them a core part of your business DNA. Here's how:
Embed Sustainability in Governance and Decision-Making
- Make it board-level: Assign a board committee or executive sponsor with clear accountability for ESG performance. Establish quarterly reporting and integrate sustainability into risk management frameworks.
- Create cross-functional ownership: Sustainability isn't just for the sustainability manager. Procurement, operations, finance, HR, and marketing all have a role. Establish working groups with clear responsibilities and decision-making authority.
- Build governance rhythm: Monthly operational reviews, quarterly executive updates, annual board strategy sessions. Treat sustainability with the same rigour as financial performance.
Align ESG Targets with Commercial Objectives
- Find the business case: Identify where sustainability drives profit, reduces risk, or creates competitive advantage. Energy efficiency saves money. Waste reduction improves margins. Supply chain transparency reduces disruption risk.
- Set targets that matter: Focus on material issues, the ESG factors that significantly impact your business and stakeholders. Don't spread resources across 50 initiatives. Prioritise 3-5 high-impact goals.
- Integrate with strategy: Sustainability shouldn't be a separate document. It should be embedded in your 3-year business plan, capital allocation decisions, and strategic positioning.
Build Internal Capability and Accountability
- Invest in capability: Train your leadership team and operational staff. Build data systems to track performance. Develop reporting processes that integrate with existing business systems.
- Consider strategic leadership: Many mid-market companies aren't ready for a full-time Chief Sustainability Officer, but they need senior strategic guidance. A Fractional CSO provides board-level ESG leadership on a retainer basis, helping you develop strategy, build governance, and achieve targets without the overhead of a full-time executive hire.
- Create accountability: Tie ESG performance to leadership KPIs and performance reviews. Celebrate wins, address gaps, and maintain momentum through regular reporting and recognition.
Watch the Full Interview
See the complete conversation between Lee Stewart and Nicholas Kuhne on the From Startup to Wunderbrand podcast.
Watch on YouTubeThe Fractional CSO Solution: Strategic Leadership Without Full-Time Overhead
For Australian businesses serious about achieving sustainability goals, the challenge often isn't commitment, it's capability and capacity.
A Fractional Chief Sustainability Officer provides:
- Strategic ESG leadership embedded in your business, not external consulting
- Board-ready governance with clear accountability and reporting
- Capability building that makes your team self-sufficient over time
- Commercial focus on profit, risk, resilience, and competitive advantage
- Regulatory readiness for ASRS compliance and disclosure requirements
The model is particularly effective for mid-market companies (100-5,000 staff) that need senior strategic guidance but aren't ready for a full-time CSO hire. Typical engagements run 6-12 months, with monthly retainers that provide ongoing support, governance oversight, and capability development.
Frequently Asked Questions
Q: Why do most companies fail at sustainability goals?
Most companies fail because they treat sustainability as a compliance exercise rather than a strategic business function. The three main reasons are: lack of executive buy-in, treating it as a side project instead of core strategy, and failing to integrate ESG targets with business operations and KPIs.
Q: What percentage of companies achieve their sustainability targets?
Research shows that fewer than 30% of companies achieve their stated sustainability goals, with many abandoning targets or quietly revising them downward due to lack of resources, capability, or strategic alignment.
Q: How can Australian businesses improve sustainability goal achievement?
Success requires three elements: board-level governance and accountability, integration with commercial objectives and risk management, and building internal capability through training or strategic leadership (such as a Fractional CSO).
Q: What is a Fractional CSO and how does it help with sustainability goals?
A Fractional Chief Sustainability Officer provides senior ESG leadership on a part-time or retainer basis, helping businesses develop strategy, build governance, and achieve sustainability targets without the cost of a full-time executive hire.
Q: What are the risks of failing to meet sustainability commitments?
Risks include regulatory penalties under frameworks like ASRS, exclusion from tenders and supply chains, reputational damage, greenwashing accusations, and lost access to sustainable finance.
Ready to Make Sustainability a Competitive Advantage?
Lee Stewart's insights provide a practical roadmap for businesses looking to turn sustainability from a buzzword into a strategic advantage.
The companies that succeed at sustainability goals don't treat them as separate initiatives, they embed them into governance, strategy, and operations. They build capability, create accountability, and align ESG targets with commercial objectives.