2025: Despite the Challenges, Sustainability Will Define Corporate Success

As we step into 2025, it is impossible to ignore the turbulence that shaped the past year. In 2024, we witnessed rising global tensions and several setbacks in sustainability efforts: corporate goals delayed, ESG commitments softened, and political landscapes shifting away from environmental progress. It is also clear that the UN's global sustainability agenda for 2030 is falling behind its targets. The intensifying conflicts and growing economic uncertainty, have compounded the challenge. Adding to this turbulence, there is a growing "apocalypse fatigue" - a public overwhelmed by climate warnings and a sense of helplessness in light of the scale of the challenges. In Europe there is also a new "regulatory mindset", as large companies shift into compliance mode to conform to the new corporate sustainability reporting directive (CSRD), while small and medium-sized companies remain largely unaware and unprepared for this reporting.

These realities present a formidable challenge to the required acceleration in the global sustainability agenda. Sustainability initiatives and investments often require global governance and policy alignment with a longer-term view. In contrast, the world faces high levels of disruption and division, with short-term self-interest driving business investments and national policies. For these reasons, many companies are ceding to shareholders pressure for more immediate profit-centered strategies, even when they know that a sustainability drive is a stronger strategy to support future competitiveness. In some cases, business survival becomes the sole imperative, in the face of highly competitive and unstable contexts.

Yet, in a world threatened by the consequences of climate change and growing inequalities, sustainability is key for prosperity, not only for individual companies and nations, but also for Humankind. Moreover, in a world fatigued by uncertainty and increasingly isolated, the ambition to achieve authentic and meaningful progress has the power to inspire citizens and galvanize engagement from stakeholders, tired of companies and nations with an empty purpose. The current challenges only underscore why strong and responsible leadership is more critical than ever – both business and political leadership.

Indeed, evidence from multiple studies consistently highlights that companies investing in sustainability not only contribute to a more resilient planet but also outperform their peers[1]. Organizations with clear climate strategies, responsible social practices and strong governance models, are more agile in adapting to regulatory changes, resource shifts, and market demands. They also outperform in terms of talent attraction and retention. This evidence and its "business case of sustainability" is something the Center for Responsible Business and Leadership wants to make clear in 2025.

Moreover, companies that place a holistic vision of sustainability at the core of their strategy and operations demonstrate resilience, ambition and a capacity for foresight, even when sustainability fatigue looms. For these reasons, and because they are betting their efforts on the areas that the world most needs, they will be able to drive purposeful change and pioneer the markets of the future. Adding to this, the evolving regulatory frameworks, such as the CSRD in Europe, show that sustainability is not a passing trend but a fundamental business shift. It shapes consumer trust, investor confidence, and brand reputation. The transparency brought about by CSRD will distinguish the leading companies from the laggards.

At CATóLICA-LISBON, we will continue to deploy an unwavering commitment to sustainability and pursue our mission of developing rigorous knowledge, promoting sustainability initiatives that mobilize key stakeholders, and developing ethical leaders committed to building a prosperous and sustainable future. Indeed, this is not a moment to scale back. It is a moment to lead by driving the future of business in the right direction: a sustainable economy led by responsible leaders where companies with positive impact are the key protagonists. The path forward may be challenging, but it is also filled with opportunities for those willing to champion positive change.

Wishing you all a year of health, growth, ambition and positive impact.

Filipe Santos Dean of CATóLICA-LISBON

Filipa Pires de Almeida Executive Director of the Center for Responsible Business & Leadership

?[1] Eccles, R. G., Ioannou, I., & Serafeim, G. (2014). The impact of corporate sustainability on organizational processes and performance. Management Science, 60(11), 2835–2857. https://doi.org/10.1287/mnsc.2014.1984

Friede, G., Busch, T., & Bassen, A. (2015). ESG and financial performance: Aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, 5(4), 210–233. https://doi.org/10.1080/20430795.2015.1118917

Clark, G. L., Feiner, A., & Viehs, M. (2015). From the stockholder to the stakeholder: How sustainability can drive financial outperformance. Oxford University Report. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2508281

Whelan, T., Atz, U., Van Holt, T., & Clark, C. (2021). ESG and financial performance: Uncovering the relationship by aggregating evidence from 1,000+ studies published between 2015 and 2020. New York University Stern Center for Sustainable Business Report.

Cambridge Judge Business School. (2021). Why do green stocks outperform? University of Cambridge. https://www.jbs.cam.ac.uk/2021/why-do-green-stocks-outperform/

ESG Today. (2023). Businesses embedding sustainability outperforming on profitability, talent attraction: IBM survey. ESG Today. https://www.esgtoday.com/businesses-embedding-sustainability-outperforming-on-profitability-talent-attraction-ibm-survey/

Financial Times. (2024). The business case for the planet. Financial Times. https://www.ft.com