Boards today are navigating a far more uncertain terrain than ever. From ongoing wars, trade block fragmentation, pandemic after-effects to accelerating extreme weather events, the external context is dynamic, with many calling this era a “polycrisis”.

In more stable times, sustainability would have been understood as something that could be included as part of corporate purpose, reputation or licence to operate. With broad stakeholder consensus—investors, regulators and customers all seemingly aligned, the path ahead was clear.

However, with increasing instability and compounding polarisation—climate, nature, social justice and diversity all subjects of heightened public, regulatory and investor debate—the temptation for boards and management is to “go quiet” on sustainability and systemic issues: to avoid the noise, activism, reputational exposure and the risk of being pulled into contentious debates. Earlier this year, many major firms were reported to “rebrand” their diversity, equity and inclusion initiatives for fear of backlash.

So-called “greenhushing” is also emerging as a phenomenon: companies doing work on sustainability but withholding disclosure or public commitments to minimise scrutiny. In such times, risk appetite may shrink, and boards may instinctively retreat into traditional financial oversight, management control and cost containment.

But stepping back raises its own risk; silence may be interpreted as inaction, or worse, disregard for issues that increasingly affect business value. This is already creating reputational impacts and shifting public sentiment on businesses: a 2024/25 report by policy research agency Public First indicates that 54% of people in the US and 47% in the UK now think businesses are causing the biggest challenges facing us, up from just 29% and 30% respectively in 2021—a huge shift in just three years.

Proactively managing sustainability risks needs to be understood as part of a board’s fiduciary duty, which largely requires directors to act in the best interests of the company (and often its members/shareholders) with care, skill and diligence.

Sustainability as part of fiduciary duty

It is important to recognise that fiduciary duty is interpreted differently by jurisdiction and context. In some regimes, the focus remains firmly on maximising shareholder value in the short-to-medium term. In others, the long-term interests of the company and its stakeholders explicitly include environmental/social considerations.

In the UK, the Companies Act 2006 (s172) requires directors to have regard for the long-term consequences of decisions, the interests of employees, the impact of the company’s operations on the community and environment, and maintain a reputation for high standards of business conduct. While the underlying duty remains to promote the success of the company for the benefit of its members, boards must approach nature-related risk as they would any other risk.

By contrast, in the US, fiduciary duty often remains more narrowly cast, focusing firmly on maximising shareholder value in the short-to-medium term. But even there, the trend is moving: a recent report from the Center for Climate and Energy Solutions argues the concept of fiduciary duty is being reshaped by climate risk.

Indeed, recent legal commentary suggests that ignoring climate-related risks (and sustainability more broadly) may already amount to a breach of fiduciary duty.

For example, more than 2,666 climate-related lawsuits have been filed globally, with over two-thirds filed in the last four years. On the flipside, strategically managed sustainability can unlock competitive advantages from cost-savings to improved brand trust.

In other words, regardless of definition, material sustainability and systemic risks still fall within the remit of prudent risk management and value preservation. Boards that opt to retreat may be exposing themselves and their companies to greater risk, not less. The imperative for bold engagement is even stronger under a broader interpretation.

The question for all boards is therefore not ‘Should we do sustainability?’ but ‘Can we afford not to?’

Material sustainability and systemic risks

So how should boards step up? Here are three key pillars:

1. Engage strategically with sustainability and systemic issues

• Make deep, structured assessments of current and emerging issues a requirement: A robust double-materiality assessment would include both traditional and non-traditional risks and opportunities (for example, nature/biodiversity, social equity, supply-chain fragility, transition pathways).
• Use applied futures and scenario-analysis: What does the company look like five, 10, 15 years out under different climate/social/regulatory futures? How resilient is the business model? Boards should ensure management is exploring plausible futures and embedding them into strategic planning.
• Embed sustainability into core strategy and decision-making: Sustainability and systemic risk should not sit in a “CSR silo”, but be integrated into capital allocation, investment decisions, innovation pipeline, risk management, remuneration and board agenda. For example, real estate developer British Land has embedded sustainability into board-level oversight, linking board objectives with sustainability goals.

2. Focus on the most relevant risks and opportunities

• Move away from tick-box ESG compliance to strategic focus: Boards should ask, ‘What are the one or two sustainability/social issues that could truly move the value needle for our business?’ This may differ by sector (for example, carbon in heavy industry, biodiversity in agriculture, digital inclusion in tech).
• Prioritise investment in breakthrough innovation: For example, a business that actively transforms its product or business model to align with net zero or a circular economy may capture first-mover advantage, rather than be left with stranded assets due to underestimating the pace of change.
• Integrate sustainability with performance metrics: Boards should ensure sustainability performance is tied to incentives, is reported transparently and is subject to challenge and oversight, ensuring it is not relegated to a “nice to have”.

3. Use business influence to shape a healthy operating context

• Recognise that the company does not operate in isolation: The operating ecosystem (regulation, infrastructure, social consensus, market norms) matters. Companies can use their influence, via trade associations, collective initiatives, public policy engagement or industry platforms, to shape the broader environment in which they operate. Doing so contributes to risk mitigation (such as policy certainty, sector transition) and opportunities (new markets, favourable regulatory frameworks).
• Embed positive societal and environmental influence into the business narrative: Boards should ask whether the company is merely avoiding harm or actively shaping good outcomes, which in turn builds reputation, trust, customer/employee loyalty and brand resilience. In this sense, boards should recognise the strategic value of ‘purpose with outcome’: sustainability and resilience investments are not costs but central to the value creation architecture of any business in increasingly volatile times.

The business imperative

In a world of heightened complexity, boards face a choice: do they step back into a narrow comfort zone, or step up to meet the emerging realities of systemic sustainability and risk? What’s clear is that to fulfil their fiduciary duties, whether narrowly or broadly defined, boards must elevate material sustainability and systemic risk from peripheral agenda items to central strategic considerations.

The companies that retreat will risk value erosion, reputational damage, litigation and regulatory surprise. Those that move strategically may unlock resilience, growth and market leadership. Stepping up is far from optional: it is the new business imperative for boards in uncertain times.

James Payne is director, purpose of business, at sustainability organisation Forum for the Future.