Sustainability Strategy vs ESG Reporting
Following a series of recent conversations in the market, a clear and evolving dynamic is becoming apparent in the world of sustainability services: a growing divergence between the demand for ESG reporting and sustainability strategy.
The Core Distinction
A key takeaway from these discussions is the differing nature of these services and how clients perceive them. ESG reporting tends to be sold into compliance or finance functions, whereas sustainability strategy often requires buy-in from the executive level. These are fundamentally different conversations — one about meeting regulatory obligations, the other about shaping long-term vision.
The current consensus? “Everyone needs reporting, and they don’t have the staff to do it. Nobody needs strategy.”
Why Strategy-Focused Firms Are Struggling
High-end consultancies offering strategic sustainability services are facing increasing challenges:
Selling to the CEO Is Harder Right Now
Strategy engagements typically require executive-level endorsement. But with tighter budgets and increased scrutiny, boards are prioritising must-do compliance over nice-to-have strategic advice.
2. Reporting Is Regulatory, Strategy Is Discretionary
New and evolving regulations such as the CSRD and SFDR have made ESG reporting non-optional. Strategy, by contrast, remains largely unregulated — and therefore easier to defer.
3. Clear Deliverables vs Long-Term Value
Reporting delivers a tangible output that satisfies immediate needs. Strategy promises long-term benefits, but the outcomes are often more complicated to quantify and slower to materialise.
4. Budgets Are Being Funnelled to Compliance
With finite internal resources and external spend, companies are focusing on what is necessary for compliance, leaving little capacity or appetite for broader, more conceptual strategic work.
Who’s Thriving in This Market
Two types of firms are faring particularly well in the current landscape:
Specialist ESG Consultancies
These nimble, execution-focused firms help clients navigate reporting requirements and manage disclosures. They’re benefiting from a widespread need for additional capacity and technical expertise.
Agile Sustainability Startups
Small, fast-growing firms offering adaptable, practical solutions are gaining traction — often starting with implementation work and expanding as they build credibility and deliver results.
A Maturing Market
What we’re witnessing is a natural progression: from the early rush of ambition and transformation to a more grounded phase of implementation and accountability. Strategy consultancies that scaled up during the recent ESG boom now face a tougher sell, not because their services are irrelevant, but because they are no longer the immediate priority.
This trend has resonated strongly across the sector. Previous reflections on this theme have generated high levels of engagement, suggesting that many are grappling with similar challenges-or opportunities—depending on where they sit in the market.