Developing your ESG strategy – in a window of opportunity

How often does the infamous window of opportunity in fact open? Rarely, we think. But if you work in sustainability, that is exactly what has happened now.

If you are in a large publicly traded company, you have likely just cleared a major milestone: publishing your first full CSRD report. If you work in a large private company, the Omnibus proposal has granted you two extra years. And if you are in an SME and have just completed a double materiality analysis, you might feel like you have all the time in the world now that the extensive reporting requirements are no longer on the table.

Regardless of your situation, this is a golden moment to lift your gaze from reporting tasks and think strategically. At the same time, you have a strong foundation for driving sustainability forward, as the double materiality assessment is an excellent strategic tool.

So why not seize this opportunity to finally develop the ESG strategy you have been missing?

It does not have to be complicated — just four key steps. And the good news? If you have already completed your double materiality assessment, you have actually taken the first one.

1. Your starting point: The double materiality assessment

The first step revolves around the double materiality assessment, which you may already have completed. This process has mapped your positive and negative impacts on people and the environment while identifying your financial risks and opportunities. The methodology for conducting this assessment is well-documented elsewhere and is not the focus of this article.

The strategic potential of the double materiality assessment lies in the fact that you now have a clear overview of your value chain and a concrete list of impacts, risks, and opportunities. These are distributed across ten topics; five within environment (climate, pollution, water, biodiversity, and circularity), four social topics (employees, workers in the value chain, affected communities, and consumers/end-users), and business conduct.

If you are not ready to develop a full ESG strategy yet, you can also simply start by revisiting your double materiality analysis and work through the list. This will help you identify actions to mitigate financial risks and develop plans to seize financial opportunities. At the same time, you can initiate efforts to reduce negative impacts while gaining confidence in communicating your positive contributions — just as long as you avoid greenwashing, of course.

However, if you want a true ESG strategy—where ambitions are clearly defined, initiatives are prioritized, and business value remains a key focus — there is no way around taking the next steps.

2. Look ahead: 5–10 years

This step is challenging but essential. The world is changing rapidly, and if your ESG strategy only accounts for current impacts, risks, and opportunities, it will quickly become outdated. Consider your customers, suppliers, technology, regulatory landscape, and market conditions. Analyze and assess how these elements are likely to evolve over the next 5–10 years to incorporate anticipated major shifts into your strategy period, which typically spans 3–5 years.

Perhaps your company has already done this — if not, now is the time to start. You can also find valuable insights from the external stakeholders you engaged in your double materiality assessment.

Looking ahead naturally involves uncertainty, but it offers a glimpse into potential future scenarios for how your business will operate. If this feels challenging, try looking 5–10 years back — things have changed rapidly, and the pace of change is only accelerating.

If you have not already explored future scenarios as part of the external stakeholder analysis in your double materiality assessment, conducting external stakeholder interviews could be valuable for your strategy work. This will give you fresh perspectives on how customers, suppliers, technology, the regulatory landscape, and market conditions are likely to evolve – and you may uncover new insights that were not captured in your internal work.

Once you have done this, you can revisit your double materiality assessment, focusing particularly on financial risks and opportunities. Are there sustainability topics that may not seem material now but are likely to become significant in the future? For example, in 5–10 years, your customers might require you to be climate-neutral, or regulations may tighten, imposing stricter material sourcing requirements. If industry job roles shift dramatically, factors like workplace safety, working hours, or collective agreements could look entirely different in a decade. Furthermore, rising temperatures can pose a threat to your assets due to climate risks while also increasing biodiversity risks if your supply chain depends on organic materials.

We are not suggesting another massive Excel sheet where you precisely quantify risks and opportunities for the next 5–10 years. But you should be able to identify the areas where impacts, risks, and opportunities are shifting — and which are expected to become material in the coming years, particularly from a financial perspective.

Finally, remember that you may need to revisit this exercise during your strategy period, as developments are moving so fast that your ESG strategy may require ongoing revisions.

3. Use the ‘Playing to Win (Sustainably)’ Framework for your strategy

Once you have completed your analyses, you need a structured process tool to develop your ESG strategy. A simple Playing to Win-based approach can be an excellent tool. However, we have adapted it slightly and call it Playing to Win Sustainably to better fit ESG strategies — while still retaining the classic five elements.

The first element is your sustainability aspiration. This aspiration is closely linked to your company’s overall winning aspiration and identity. At this stage, you will typically formulate your bold statements, but since the Playing to Win framework is iterative, these statements will be tested and refined along the way. And remember, your sustainability aspiration should also include measurable goals.

The next element can be described as Where will we be sustainable? This covers the core themes your ESG strategy should focus on. With input from your double materiality assessment and future outlook, you can group these into sustainability themes. These may be based on the ten material sustainability topics (some of which can be clustered) or may focus on selected parts of the value chain. The themes should cover multiple impacts, risks, and opportunities, and you should select 3–5 strategic themes that will be central to your future sustainability efforts.

How will we be more sustainable? is the third element of the process and defines how you will concretely integrate sustainability within the selected themes. This step involves defining the strategic priorities that will drive your sustainability agenda forward. It may include investments in green technology, circular business models, CO₂ reduction initiatives, or other efforts that support your ambitions. It is crucial to ensure a strong link between these strategic priorities and your overall business strategy. You may also need to consider policy and action plan requirements, particularly if you need to report under CSRD in the future.

Part of the how also involves defining the role of the sustainability function itself. Is it primarily backward-looking and compliance-focused, or do you envision it as a forward-looking, business-oriented function—a kind of sustainability business partner?

The fourth element is What sustainability capabilities must be in place? This step identifies the internal competencies, organizational capabilities, and resources required to execute the strategy.

An often-overlooked aspect of capabilities is the expertise within the sustainability function itself. If your How will we be more sustainable? approach includes a sustainability business partner role, then the function’s competencies must expand beyond technical and regulatory expertise to include business acumen, analytical skills, and communication abilities.

The fifth element is What sustainability management systems are required? This covers systems and processes, governance structures, performance management, and reporting. Your ESG strategy must be embedded within the company’s management systems, requiring an ESG data infrastructure, KPIs, and incentive structures. This means establishing clear accountability, follow-up mechanisms, and a structure that ensures sustainability becomes an integrated part of decision-making across the organization.

It is important to remember that this process framework is iterative. If your capabilities do not support How will we be more sustainable?, you should revisit the framework and adjust the previous step to ensure alignment between sustainability execution and the required capabilities. This applies at every level. For example, if your sustainability aspiration appears unrealistic (whether too ambitious or not ambitious enough), it is the responsibility of those developing the strategy to challenge top management with well-founded arguments based on the other four process steps.

However, some elements may still be missing to ensure full alignment in the strategy. These missing elements form the focus of the fourth and final step in the strategy process.