When strategic language obscures responsibility instead of making it visible.
A wary optimism
Sustainability reporting was originally conceived as a transparency device: a way for organisations to expose their environmental and social impacts for public scrutiny. Over time, however, it has become deeply institutionalised, enmeshed with finance, compliance, and risk control. Paradoxically, what was designed to make corporate behaviour more transparent can end up being used to hide or justify non-compliance — or to present superficial compliance as progress.
In this article I take a look at how sustainability strategy can serve as a convenient cover for non-compliance, the mechanisms involved, whether it actually “works” for businesses or society, what kinds of policing or enforcement might be required, and whether the shift to compliance orientation has delivered environmental benefit or become another bureaucratic layer. I want to be totally clear I am not against sustainability reporting, I do question the systems we put in place to do this becoming merely ‘tick box exercises’ if we are not careful.
Four ways a strategy can hide non-compliance:
- Strategy as a broad narrative that absorbs inconsistencies
When a business publishes a “sustainability strategy”, it typically outlines broad goals e.g. net zero by 2050, “embedding ESG in operations”, “circular economy transformation” etc. These goals are by nature aspirational and long-term. A well-crafted strategic narrative allows room for ‘flexibility’—short-term setbacks, delays, or seemingly inconsistent actions can be positioned as part of the broader transformation journey. If a business misses emissions targets or continues controversial operations e.g. new fossil fuel investment, it can claim that the strategy has been updated, that assumptions changed, or that “transition risk” intervened. The danger then is the strategy becomes more of a protective shield where noncompliance or slower-than-expected progress is framed as legitimate “adjustment” rather than failure.
- Selective disclosure and boundary setting
Sustainability reports allow businesses to define what counts as “in scope” — e.g. boundary choices, exclusion of certain operations, omission of subsidiaries or parts of supply chains. By drawing narrow boundaries, businesses can omit or downplay problematic segments. In short, noncompliant or high-impact units may be excluded from disclosure.
Because the strategic narrative asserts full “alignment” or “transition” while the detailed data hides operational contradictions, the strategy can conceal more than it reveals.
- Jargon, hedges, and vague commitments
A strategic document uses language optimised for flexibility. Phrases like “where feasible”, “subject to materiality”, “in phases”, “over time”, “aligned with stakeholder feedback” all of these embed margin for procrastination. This linguistic flexibility allows noncompliance to lurk: The business can later interpret phrases like “within phases” or “over time” in ways that dilute or delay real action when questioned.
We can see here how this type of strategy design can enable evasiveness — a classic “soft promise” rather than legally binding commitment.
- Investing in appearances (ESG investments) without dismantling core investments
This is sometimes called cross-washing: the business makes visible, lower-risk ESG investments e.g. a few solar panels, carbon offsets, sustainability partner programs etc. while leaving the bulk of its high-negative-impact operations largely untouched. The sustainability strategy, then, becomes a facade: the symbolic elements augment ratings or legitimacy, while the core noncompliance stays concealed.
A recent paper on cross-washing in sustainable investing argues that businesses may tilt investments to ESG-adjacent areas to boost their ESG scores, while not materially altering core high-impact activities. ‘Crosswashing in Sustainable Investing’ (Hassani & Bahini, 2024), (arXiv:2407.00751).
In short, strategy can become a rhetorical and structural frame where noncompliant behaviour is cast as “transition”, “learning”, or “piloting”. The ostensible commitment to sustainability can cloak weaker compliance or contradictory action.
Is this useful to businesses? Yes — and dangerously so.
From a corporate perspective, hiding noncompliance under strategy can be quite useful — at least in the short to medium term:
Legitimacy with stakeholders. The business can claim that it has a sustainability strategy and is making moves — which often suffices for many audiences (investors, NGOs, customers) that may not have capacity to deeply audit what they do.
Risk mitigation. The strategic narrative gives the company wriggle room if pressures or costs escalate. It can “pivot” or “delay” without appearing to renege entirely.
Ratings and ranking capture. ESG ratings agencies, sustainability indices, and similar frameworks often award recognition for the presence of a strategy or for public commitments, even when the measurable outcomes are still limited. In such cases, the mere existence of a strategy can enhance a company’s perceived legitimacy within the ESG ecosystem.
Regulatory buffer. In jurisdictions where sustainability disclosure is regulated, having a credible strategy with some metrics may reduce the risk of enforcement or criticism — effectively setting a higher threshold for scrutiny or challenge.
But the danger is that this dynamic weakens accountability, demotivates stronger action, and turns sustainability into a form of rhetorical compliance.
Has sustainability reporting produced much by the way of environmental gain — or is it just another bureaucratic layer?
This is the central normative question: Has the rise of strategy-based sustainability reporting actually delivered ecological or social benefits — or is it simply a new bureaucratic layer with limited substantive impact?
Evidence of limited impact
Overselling the reporting movement. Kenneth P. Pucker, (2021) in “Overselling Sustainability Reporting” argues that enthusiasm about the transformative power of ESG reporting has been overstated. He contends that many businesses engage in selective measurement and reporting that fails to translate into real change. Harvard Business Review
Greenwashing remains rampant. Reviews of the greenwashing literature e.g. Montgomery et al., 2023, confirm that as ESG and net zero commitments proliferate, so do misleading claims and superficial narratives. PubMed Central.
Weak enforcement and regulatory resources. According to a Reuters report, EU regulators admit that national authorities often lack the resources and expertise to detect or punish greenwashing effectively. Huw Jones, Reuters, “Regulators lack resources to tackle greenwashing, says EU watchdog. 4 June 2024.
Fines and enforcement cases are modest. While notable cases e.g. DWS, (see below) attract headlines, they are still relatively rare relative to the scale of sustainability reporting globally.
So while some incremental progress may occur, there is good reason to suspect that much of the ostensible “progress” is symbolic or marginal.
Real examples where strategy conceals noncompliance or weak compliance
DWS / Deutsche Bank (asset management)
Perhaps one of the more high-profile cases: Not for the first time, DWS, Deutsche Bank’s asset management arm, was accused by German prosecutors in 2025 over allegations that it overstated ESG commitments in its marketing materials and fined €25 million (a drop in the ocean for an organisation such as DWS). The investigation found a gap between DWS’s strategic narrative and actual portfolio allocations.
This case illustrates a business projecting a sustainability strategy to investors and the public, while actual portfolio management did not always align. It is a case in which strategy served as a communicative front, and discrepancies were only revealed through regulatory scrutiny.
Allbirds (footwear)
Allbirds faced a class-action lawsuit (Dwyer v. Allbirds, 2021) alleging misleading environmental marketing — specifically that its “low carbon footprint” claims failed to account for the full lifecycle of emissions, including upstream production and transport. The case highlights how sustainability narratives can omit or understate supply-chain impacts, even when technically accurate in narrow terms. The judge ultimately dismissed the complaint in 2023, finding the claims insufficient to mislead a reasonable consumer. Bloomberg Law, “Allbirds Defeats Greenwashing Lawsuit Over Sustainability Claims”, April 11 2023.
Though the court dismissed the case, it underscores the tension between high-level strategic branding and detailed compliance across supply chains.
Fashion brands and greenwashing accusations
Fast fashion brands frequently face accusations of promoting a “sustainable collection” while their core business model remains based on rapid turnover and waste. For example, Shein has recently been investigated by Italy’s antitrust authority for misleading environmental claims in its “evoluShein” collection, while its overall emissions reportedly rose. AP News
Such examples suggest that the business’s sustainability strategy and its communication may mask deeper contradictions.
Policing, financing, and whether the layer is “necessary”
How should it be properly policed?
Policing sustainability strategies that risk becoming a form of cover is challenging but nevertheless essential. The following approaches illustrate both the practical steps and the tensions involved:
Mandate binding commitments and accountability clauses
Regulators should require that strategic sustainability goals are anchored with explicit, measurable interim targets, and penalties or clawback clauses if those are missed.
Independent verification and audits
Strategic narratives deserve the same scrutiny as numbers. External assurance shouldn’t stop at verifying data points; it should also test whether a company’s sustainability story holds up against its actual investments and actions. Otherwise, auditing becomes an exercise in box-ticking.
The rush to meet new reporting requirements has already spawned a familiar ecosystem: new ESG divisions inside the global consulting giants, and a mushrooming of small compliance boutiques — echoing the boom that followed the rise of ISO 9002. Many of these business’s focus on validating process rather than outcomes, eager to capture the government grants available to help businesses build their ESG strategies. The result is a familiar pattern — the machinery of compliance grows ever more sophisticated, but the outcomes it was meant to secure barely move.
Whistleblower mechanisms and internal oversight
Businesses need credible internal checks — board-level oversight, independent committees, and clear channels for people to raise concerns when strategy drifts from reality. This is no longer a voluntary gesture. Under the EU’s new Corporate Sustainability Due Diligence Directive (CSDDD), companies are expected to create safe, confidential systems for employees and third parties to report breaches or risks linked to environmental or human rights harm.
The Directive builds on the earlier EU Whistleblower Protection Directive (2019/1937) but extends it into the sustainability domain, explicitly recognising that those closest to the work are often the first to see when a strategy is out of step with operations. It requires businesses to maintain non-retaliatory reporting mechanisms and to show how these link to their due diligence processes.
The CSDDD turns what was once optional into an expectation: credible sustainability oversight must include credible routes for dissent.
For non-EU jurisdictions, the lesson is clear. As ESG regulation matures globally, whistleblower protection should not be treated as a compliance afterthought but as a core accountability tool. Many frameworks outside the EU — from the UK’s Modern Slavery Act to U.S. SEC climate-disclosure rules — still rely heavily on external audits or investor pressure, leaving limited space for internal voices. Strengthening ESG whistleblowing means creating secure, well-funded reporting channels, legal protection from retaliation, and regulatory recognition that disclosures made in the public interest are a legitimate part of sustainable governance. Without that protection, even the most elaborate ESG strategy risks being silenced from within.
Regulatory random inspection and enforcement
Regulators must have the resources and capacity to audit and challenge sustainability claims — not merely to catalogue them. In its 2024 Final Report, ESMA (European Securities and Markets Authority) acknowledged that although green‑marketing and sustainability claims have surged, enforcement action remains limited. Many national competent authorities report constraints in staffing, access to reliable data and technical expertise — meaning that greenwashing remains a significant risk, for now under‑monitored.
The European Banking Authority reported a 26 per cent rise in potential greenwashing incidents last year, suggesting that the problem is growing faster than the ability to police it. Without stronger supervisory capacity — and without funding to match regulatory ambition — Europe risks building a sustainability framework that looks rigorous on paper but remains thinly defended in practice.
This imbalance raises an uncomfortable question: if even the most advanced regulatory systems struggle to enforce ESG standards, what hope do smaller markets or voluntary frameworks have? In some respects, the proliferation of sustainability strategy and reporting has outpaced the capacity to verify it. The result is a widening gap between the sophistication of the frameworks and the simplicity of the checks that underpin them — a dynamic that risks turning sustainability into yet another administrative layer rather than a lever for real environmental or social progress.
Litigation as backstop
Shareholders, NGOs and consumers should be empowered to take legal action for misleading sustainability claims or strategic misrepresentation.
The ability to bring ESG-related or greenwashing claims depends heavily on jurisdiction. In the United States, class actions have become a powerful vehicle for consumer and shareholder enforcement — covering not only greenwashing but also fiduciary misstatements in ESG-labelled funds. In Europe, national variations remain wide: Germany, the Netherlands and France have seen successful collective and NGO-led climate suits, while other jurisdictions still lack standing provisions for environmental or sustainability-related claims. The Netherlands’ 2021 Milieudefensie v. Shell judgment, which ordered Shell to cut its global CO₂ emissions by 45 per cent by 2030, showed that courts can treat corporate climate strategies as binding obligations, not mere aspirations. District Court of The Hague (2021): ECLI:NL:RBDHA:2021:5339.
Youth-led litigation has further expanded this frontier. The Urgenda Foundation case (Netherlands, 2019) and Juliana v. United States (revived in 2024 after years of procedural delay) both pressed governments to recognise a legal duty to protect future generations from climate harm. In the U.S., the 2023 Held v. Montana verdict became the first successful youth-led climate lawsuit, with a state court ruling that excluding climate impacts from energy licensing violated the constitutional right to a clean and healthful environment. Similar youth-driven actions are now pending in Canada, Australia and the European Court of Human Rights, signalling that litigation is becoming a de-facto enforcement tool where regulatory oversight falls short.
Yet most of the world still lacks clear legal pathways for such actions. Many emerging and developing economies have ESG disclosure requirements but no mechanism for class actions or public-interest suits. Even within the EU, cross-border enforcement remains patchy. Until those gaps close, sustainability accountability will remain uneven — robust in a few jurisdictions, symbolic in many others.
When standards bodies start tightening the language loopholes
Sustainability standards themselves could do more to curtail the linguistic hedging that allows companies to appear compliant while staying non-committal. Frameworks such as the International Sustainability Standards Board (ISSB) and the Global Reporting Initiative (GRI) have brought unprecedented rigour to disclosure, yet they still tolerate the soft edges of corporate language — phrases like “where feasible”, “subject to materiality”, or “in the medium term”. These qualifiers, while legally cautious, make it difficult to assess intent or progress.
While the ISSB’s IFRS S1 and S2 standards bring greater consistency to what companies must disclose, they leave wide latitude in how those disclosures are framed — allowing businesses to shape the narrative tone and emphasis to suit their own strategy. This freedom means that two companies can disclose identical data yet convey very different levels of commitment. In the TPI (Transition Pathway Initiative) 2024, many companies’ long-term “net-zero” ambitions lack credible backing: few businesses meet the Level 5 criteria for fully implementable transition plans, and many omit intermediate targets or quantifiable implementation. In practice, corporate climate language remains peppered with soft qualifiers — ‘working toward’, ‘aiming to’, ‘planning to’ — rather than firm, time-bound commitments
Under the GRI Standards, policies and management disclosures (2-23, 3-3) allow narrative description rather than mandating proven outcomes, leaving space for ambiguity. Discourse analysis in sustainability reporting documents shows modal verbs (can, may, should, will) often function as hedging devices, tempering claims of commitment or progress.
Sustainability rule-makers could tighten this by requiring companies to explain the basis for uncertainty or justify the use of qualifying language, much as financial statements demand footnotes for estimates or assumptions. Generic strategy statements — “embedding sustainability”, “transitioning to low carbon”, “striving for inclusion” — should trigger a requirement for additional substantiation: a link to capital allocation, timelines, or measurable outcomes. The Task Force on Climate-related Financial Disclosures (TCFD) provided a precedent here: its guidance explicitly calls for businesses to distinguish between targets and aspirations, and to disclose any dependencies that could limit achievement.
The result would not be linguistic policing but accountability through clarity. As long as ESG frameworks permit a vocabulary of aspiration without evidence, ambiguity will remain a feature, not a flaw, of sustainability reporting.
But there is tension: too much policing may burden businesses or discourage ambition.
The balancing act is nuanced and requires deliberate calibration.
Is financing chasing labels rather than measurable impact?
One risk is that sustainability reporting has become a cost centre — a compliance exercise — rather than a performance centre. If businesses do not allocate sufficient capital to the substantive transitions e.g. retooling operations, supply chain decarbonisation, then strategy is underfinanced. In effect, strategy becomes window dressing, not real investment.
In many businesses, sustainability budgets are tiny relative to capital investment budgets. The strategic plan may talk of major transitions, but those projects may not be funded or may compete disadvantageously with short-term ROI investments.
Strategy without aligned investment is a shell. Without credible financing, the strategy is hollow — and noncompliance is hidden behind it.
Is sustainability reporting now just bureaucratic padding?
In many cases, sustainability reporting and strategy have become an additional layer — a new bureaucracy that businesses must navigate, allocate staff and resources to, and comply with. While intended to improve environmental outcomes, it has arguably become another layer of corporate complexity.
This layer risks crowding out deeper change, because businesses focus on satisfying disclosure demands, rating agencies, and compliance checklists rather than on transformational internal redesign.
In effect, a compliance layer has been grafted onto business—but without any assured link to measurable environmental outcomes such as reduced emissions, resource use, or ecosystem impact.
Is this dynamic serving the goals of sustainability reporting, or obscuring them behind process?
Pros
Intermediation role: The strategic narrative enables alignment across functions (R&D, operations, marketing). It can help coordinate disparate sustainability efforts under a common vision.
Signalling and expectation-setting: A publicly stated strategy sets expectations for stakeholders and can exert pressure on subsequent operations.
Incremental improvement: Even if incomplete, strategy may nudge businesses gradually toward better performance — the map sometimes leads the territory.
Cons
False legitimacy: Strategy may lend unwarranted credibility to businesses whose practices remain weak.
Obfuscation risk: Strategy becomes the rhetorical veneer that hides noncompliance, rather than revealing it.
Resource misallocation: Businesses may invest more in reporting, strategy gloss, and auditor fees than in real transition.
Diluted accountability: Strategy’s vague language weakens enforceability and makes recalibration or backtracking easy.
What good reporting could look like:
Strategic goals legally anchored: Targets become binding commitments with governance oversight, and deviations having to be explained and compensated.
Narrative-to-action alignment: Strategy should not be standalone — the narrative must cohere with capital allocation, operational changes, and resource commitment.
Transparent boundary disclosure: Businesses must justify what is excluded, together with why, and how exclusions affect overall impact.
Assurance covering narrative: External verification should include narrative coherence checks, not just number checking.
Proportional regulatory enforcement: Regulators must target not only blatant greenwashing but also systematic narrative–action misalignment. In short are they ‘walking the talk’.
Balanced incentives: Businesses ought to be rewarded (financially, reputationally) not just for having a strategy, but for consistently delivering real improvements.
The paradox is chilling: the very strategy meant to crystalise and commit to sustainability can become the hiding place for noncompliance. In today’s climate of compliance, regulation, and ESG attention, businesses have an incentive to craft strategies that promise transformation — while retaining flexibility to underperform. The result is a rhetorical shell that can conceal weaker action behind grand ambition.
Policing this dynamic is hard but necessary: regulatory resources must rise, narrative audits must become standard, litigation must serve as deterrent, and capital must flow in proportion to commitment. Otherwise, the proliferation of sustainability strategy and reporting risks becoming not a lever of ecological transformation, but a gloss — a compliance veneer — over persistent environmental underperformance.