Navigating Complexity, Volatility, and Strategic Risk

In 2024, much of the sustainability conversation centered around reporting obligations, CSRD compliance, and the operationalization of ESG. A year later, it is clear that the greatest challenge is not documentation, it is direction. The world has not become more stable. If anything, volatility has intensified: geopolitical tensions, resource fragility, extreme weather events, supply chain disruptions, and societal unrest are reshaping the context in which companies operate.

And yet, for many organizations, business as usual (BAU) continues to dominate the agenda. Not out of complacency, but out of constraint. Faced with short-term financial pressures, talent scarcity, and fragmented regulation, leadership teams are grappling with competing priorities and growing stakeholder expectations. Often with too little clarity and too much noise.

1. Compliance ≠ Strategy

CSRD has done what it set out to do: place sustainability on the agenda. But compliance is only the entry point. The real challenge is integrating ESG into decision-making: where capital is allocated, how products are designed, how risk is managed, and how leadership is incentivized.

The illusion that sustainability can remain a discrete function (handled by a CSO and a reporting team) is fast eroding. Boards are beginning to realize: the ESG maturity of a company is now a proxy for its capacity to deal with disruption. In 2025, ESG is not a label. It’s a diagnostic.

2. Risk is no longer linear

Most risk models are still rooted in linear logic: probability x impact. But today’s risks are systemic, interconnected, and nonlinear. Climate volatility is influencing migration and supply chains. Biodiversity loss is accelerating regulatory pressure. Energy instability is driving inflation and geopolitical shifts.

What does this mean for boards? It means reframing ESG not as an ethical add-on, but as a critical lens for understanding exposure, resilience, and adaptability. This requires new boardroom fluency in systems thinking, transition risk, and the ability to interpret weak signals before they become crises.

3. Leadership tensions are rising

We see it in our conversations with CEOs and supervisory boards: a widening gap between the speed of external change and the ability of organizations to respond internally. Leaders feel it, there is growing fatigue. Many are trying to drive transformation without the mandate, the talent, or the organizational alignment to succeed.

Transformation is not just about strategy, it is about power, timing, and trust. And that makes the governance of sustainability central, not secondary. When boards are only reactive, or sustainability roles are under-scoped and under-resourced, transformation stalls.

4. The talent bottleneck is now strategic

While much attention has gone to data quality and reporting frameworks, the most consistent pain point remains talent.

Across Europe, while the ESG hiring wave of recent years has plateaued, the real shortage in 2025 is subtler, and more strategic. It’s no longer a war for headcount. It’s a search for cross-functional leaders who can translate sustainability into business decisions, manage regulatory complexity, and drive alignment across the organization. These roles often fall between the cracks: too strategic for traditional ESG teams, too specialized for general management. And yet they are essential to navigating the next wave of transformation.

5. The next phase is strategic integration, not just organizational design

If 2024 was about building ESG functions and meeting disclosure requirements, 2025 is exposing the limits of that approach. Simply having an ESG team or CSO in place no longer signals maturity or impact. The question now is: where does ESG sit once the urgency of compliance recedes?

That means moving beyond org charts and into accountability, ownership, and influence.

Key questions include:

• How are ESG risks embedded into enterprise risk and strategy, instead of managed in parallel?
• Who is empowered to drive long-term value creation across functions?
• Are sustainability-linked KPIs truly shaping executive incentives, or just added to tick a box?
• Where are decisions being made and how does governance either enable or dilute action?

In many organizations, ESG has become politically isolated or structurally sidelined. The next phase is not about expanding

ESG teams, but about integration of sustainability into the power structures and decision logic of the business.

Bridging Strategy and Execution
At Kienbaum, we connect boards with Interim ESG & Sustainability Executives through our rigorous assessment services, deep sector expertise, and global leadership network. These specialists embed ESG risk into enterprise strategy, bring systems thinking to the boardroom, and ensure accountability from day one, helping you build true resilience and long-term relevance in an uncertain world

The call for 2025: recalibrate and recommit

There is no off-the-shelf solution for embedding sustainability in a time of uncertainty. But some things are clear:

• Resilience is now strategic currency.
• The quality of leadership decisions will define corporate longevity.
• Transformation starts when boards ask better questions, and not just about what we report, but why it matters.

The sustainability agenda in 2025 is about navigating complex trade-offs with clarity, courage, and competence. For those ready to lead, this is not a compliance challenge but a leadership opportunity.

Let’s continue the conversation.
What reflections are emerging in your boardroom? Where are you stuck and where are you moving? We would be glad to exchange perspectives, please don’t hesitate to reach out.

Elisabeth van Ebbenhorst Tengbergen