Idea in Brief

The Hope

Over the past two decades, many people bought into the idea that if corporations committed to measuring and reporting on their sustainability performance, the payoffs would be profound. Companies would do less harm to the planet and more good for society. Investors and consumers would reward strong performers. Rigorous metrics would become the norm. Over time, the result would be a more sustainable form of capitalism.

The Reality

It hasn’t worked. Reporting is riddled with problems, and sustainable investing is overhyped. Meanwhile, environmental threats continue to mount, and inequality continues to grow.

A Better Approach

Metrics can and should be improved, and stakeholder pressure will incrementally advance sustainability. However, we also need stronger civic engagement, sharper regulation, different incentives for investment, and a rethinking of what makes a company or society successful.

Over the past 20 years many forward-thinking academics, consultants, executives, and NGO leaders have promoted a theory outlining how businesses can prosper while pursuing a greener and more socially responsible agenda. These people, whom I refer to collectively as “Sustainability Inc.,” believed that if companies committed to measuring and reporting publicly on their sustainability performance, four things would happen:

A version of this article appeared in the May–June 2021 issue of Harvard Business Review.