Transition is inevitable, the issue is one of pace

The report states that a global industrial and economic transition is underway, driven by physical limits, technological change and escalating environmental and social instability. Quantitative risks include a potential 50% global GDP loss by 2070–2090 without immediate action, and climate-driven banking crises costing 5–15% of GDP annually. Systemic pressures climate, resource scarcity, ecosystem decline and inequality, are already affecting markets, supply chains and asset values.

The key issue is speed. Without accelerated transition, unmanaged decline is likely, marked by crises, state interventions and weakening government capacity. Businesses face dual existential risks: systemic instability if transition fails, and competitive displacement if it accelerates faster than they can respond. Market incentives still favour incumbency, and many firms remain locked in incrementalism. The report recommends that businesses actively reshape markets through policy engagement and innovation to avoid abrupt, costly shifts.

Why progress is stalling: Opposition, inertia and fragmentation

Progress in many Western economies has slowed due to active resistance from sectors benefiting from the status quo, political movements downplaying climate risks and regulatory rollback. Opposition actors influence narratives, undermine science and push deregulation, despite other regions (notably China) accelerating green industrial strategies.

Businesses often hesitate due to short-term cost concerns, uncertainty and complacency. Citizens express climate concern but do not consistently back policy due to affordability barriers, mistrust and lack of clear narratives.

Fragmentation across sustainability efforts, competing agendas, technical complexity and greenwashing, impedes coordinated progress. Some ESG-related service providers reinforce incrementalism. The report emphasises the need for aligned strategies and clearer public communication of transition benefits.

Market-driven change is possible but requires concerted action

Historically, markets have transformed rapidly when policy, innovation and public support align. The report notes that trillions in global investment will be required but highlights evidence that targeted incentives enable technological breakthroughs and cost declines, as seen in renewables and public health interventions.

The report argues that decisive public–private partnership is required to set rules that internalise systemic risks and reward sustainable competitiveness. Businesses must advocate for market reforms that create predictable investment environments.

How business can drive market change

Shift mindset: from compliance and incrementalism to value, competition and transformation

Sustainability must move from compliance to competitive strategy. Markets are being reshaped across sectors—energy, transport, food and manufacturing—and incumbents risk displacement. The report recommends that firms anticipate disruption, invest early and work to influence market conditions. Waiting for certainty is regarded as high-risk.

Escape the ESG trap

The report highlights that defensive ESG, excessive reporting and voluntary commitments with limited impact divert resources from meaningful action. Businesses should:
• streamline reporting to what is strategically useful;
• participate only in initiatives capable of reshaping market incentives; and
• redirect investment into readiness for transition and policy engagement.

Prepare for transformation and competition

The report calls for board-level ownership, integration of sustainability into governance and use of forward-looking risk tools. Quantitative frameworks (e.g., assessing effects on EBITDA, avoided costs and upside growth) should be used to evaluate sustainability investments. Firms should differentiate between areas suited to competitive action and those requiring policy intervention to correct market failures.

Innovate to create and protect value

Future competitiveness depends on scaling transformative technologies (e.g., alternative proteins, battery storage, green hydrogen) and enabling system-wide innovation. Pre-competitive collaboration is needed where shared infrastructure or standards are required. Businesses should shape consumer demand through improved affordability, convenience and performance, and identify leverage points that can trigger positive market tipping points.

Change the rules of the game

Businesses must advocate for policy reform across taxation, standards, industrial strategy and infrastructure investment. Effective interventions include emissions targets, industrial policies, subsidy reform, carbon pricing, standards, public procurement and financial market reforms. Firms should also support transparent lobbying, counter disinformation and signal readiness to invest, helping governments justify ambitious policy.

Build momentum for change

To achieve scale, the report recommends shifting from reliance on a small group of leaders to mobilising the “middle” of industry. Trade associations must be aligned or reformed, and obstructive ones challenged or exited.

Public engagement is essential. The report emphasises accessible narratives that position transition as economically beneficial, fair and aligned with national competitiveness. The goal is to build public and political support for structural change.

Conclusion

The report concludes that accelerating transition is essential to avoid escalating systemic risk and secure long-term competitiveness. Businesses that integrate strategy, innovation and policy engagement will be better positioned to manage disruption and capture emerging opportunities. Delay increases the likelihood of abrupt, costly adjustment driven by crisis rather than choice.