Key highlights:

• • • Human connection is now a competitive capability — Treat relationships as core infrastructure instead of cultural fluff by designing work to keep real collaboration, accountability, and regular face-to-face interaction at the center with AI in a supporting role.

    • Protect your judgment and meaning as “human-owned” — Start with independent frameworks and reasoning, then use AI to refine and stress-test; and schedule recurring “no-AI” blocks to keep analytical muscle and professional agency strong.

    • The winning model is hybrid intelligence — The standout professionals in 2026 will be those who are fluent in both human dynamics and AI assisted workflow.

Professional services work fundamentally relies on judgment, trust, and relationships. Clients engage firms for confidence and strategic guidance, while a good reputation in this sector develops through the consistent delivery of high-quality counsel. While AI can enhance these capabilities, these technologies may also erode professional value if permitted to displace the distinctly human elements that differentiate exceptional service.

The imperative for 2026 is to maintain full professional capability by embracing human strengths while leveraging technological tools. Consistent application of the following practices will protect and develop the competencies that AI cannot replicate.

Build your human connections muscle

In the near future, professionals may spend more time interacting with AI systems than they do with colleagues. Over time, AI creates opportunities to disengage from human interaction; and AI systems remain consistently agreeable, perpetually available, and never introduce tension into professional discourse.

For time-constrained professionals, this predictability may appear advantageous; however, this convenience carries a substantial cost. In professional services, relationships constitute essential infrastructure rather than supplementary benefits. When professional interaction shifts from human to machine interface, social acuity diminishes as professionals lose exposure to subtle human dynamics. Critical developmental experiences — including the ability to manage discomfort, resolve misunderstandings, and navigate the productive friction that builds capacity for maintaining and repairing strained relationships — become scarcer.

To preserve human connection capacity with intention, implement these measures:

• • • Prioritize work that requires genuine collaboration and shared accountability and keep AI as a supporting resource.
    • Establish regular face-to-face interaction, both virtual and in-person, with colleagues to invest in relationship-building conversations that extend beyond project deliverables and timeline discussions.
    • Actively engage in professionally challenging interactions, including those involving constructive feedback delivery and negotiation. These experiences maintain trust and prevent the gradual atrophy of human collaboration skills.

Protect your brain and your meaning at work

AI technologies offer substantial efficiency gains through automated drafting, summarization, and information analysis. However, excessive reliance on these capabilities may diminish the cognitive repetitions that maintain professional acuity. In professional services, intellectual capacity, which includes attention to detail and analytical reasoning, constitutes the primary asset. This capacity requires the ability to discern significance, interrogate underlying assumptions, and articulate complex tradeoffs with precision.

Delegating these cognitive tasks to AI systems daily may yield short-term efficiency while lowering costs, but this may lead to work becoming ambiguous and require less nuanced judgment. As a result, professional instincts may atrophy.

An additional consequence of AI overreliance involves the erosion of professional meaning and engagement. When AI systems generate the majority of intellectual output, professionals may risk becoming approvers rather than creators. Work devolves into review and authorization — a repetitive pattern that can lessen one’s connection to making a substantive professional contribution. Indeed, the role begins to resemble a production line of incremental validations rather than meaningful professional practice.

To avoid this, you should implement the following practices to preserve both intellectual rigor and a meaningful sense of agency over critical professional activities:

• • • Integrate deliberate cognitive exercises into weekly routines — Initiate substantive work with independent analysis — by establishing frameworks, identifying priorities, and constructing logic — before employing AI to refine structure, enhance clarity, and stress-test reasoning. Subsequently, critically evaluate AI-generated output by identifying omissions, examining underlying assumptions, and assessing potential errors.
    • Establish dedicated periods for unassisted professional work — Schedule regular intervals for research, conceptual development, and drafting without AI support to ensure sustained development of analytical capacity and professional judgment.
    • Anchor work to meaning and outcomes — Identify work of particular professional significance and maintain direct engagement with these tasks, again without AI assistance. Regularly reflect on the tangible impact of contributions, including the delivery of client value and the support of colleagues, in order to better sustain meaningful connection to professional purpose.

Hybrid intelligence is the future

The most effective professionals in 2026 will be those that are focused on their capacity to integrate human literacy with algorithmic literacy, which is a competency framework known as hybrid intelligence.

Human literacy remains the fundamental differentiator in professional services, encompassing the ability to interpret interpersonal dynamics, establish trust amid complexity, deliver constructive feedback with appropriate sensitivity, and maintain both self-awareness and relational intelligence.

Algorithmic literacy involves understanding the specific capabilities and limitations of AI tools, including honing a proficiency for output verification, tool evaluation, and sustained awareness of bias and risk considerations.

The combination of these two factors within hybrid intelligence can give professionals a potent way of fighting the accelerating cognitive deterioration andĚýagency decayĚýthat some may experience with AI overuse.

Today, organizational mandates for AI adoption are becoming increasingly prevalent and will approach universality over the next few years. While firms compete through technological capability, competitive differentiation will ultimately derive from the human excellence of their professionals — a dynamic that will similarly shape individual career trajectories.

You can find out more about how a focus on power skills can help professionals in the workplace here

Key highlights:

• • • “Nothing says strategic priority like funding” — Ioannou’s most powerful insight is that directing capital through a sustainability lens is what enables companies to build lasting strategic resilience.

    • Progress typically involves tension — Acknowledging trade-offs across cost, timing, and stakeholder impact allows organizations to navigate complexity with greater clarity, reinforce internal alignment, and demonstrate that sustainability is being pursued through deliberate, not decorative, choices.

    • Preparing for difficult obstacles — The challenge is no longer whether sustainability matters, but what we are willing to do when it becomes inconvenient. Ioannou’s perspective challenges leaders to build resilient structures and processes that can withstand hostile terrain rather than fair-weather sustainability programs.Ěý

In recent years, Environment, Social & Governance (ESG) issues have shifted from a period of mainstream momentum to an era marked by skepticism and backlash. For Prof. Ioannis Ioannou of the London Business School, the question is no longer whether sustainability matters. “The real challenge,” he writes in , “is what we are willing to do when it becomes inconvenient to say so.”

Unlike some typical ESG toolkits that focus on messaging or compliance, this playbook calls for deeper strategic reflection. It is designed for leaders who remain committed, even as external validation fades.

Here are three actions from the playbook that can help organizations move from performative commitments to those initiatives that can have a more enduring impact.

Action #1: Treat capital allocation as the litmus test of strategic intent

“Nothing says strategic priority like funding,” says Prof. Ioannou, noting that capital allocation is where strategic commitment becomes visible. When sustainability priorities shape where capital flows — what gets funded, delayed, or redesigned — they move from rhetorical statements to structural choices.

This goes beyond simply adding ESG metrics to project evaluations. Indeed, sustainability must be embedded into the logic and architecture of investment decisions, Ioannou emphasizes. “It needs to be present from the start — at the first gate — not treated as a reputational check once everything else is locked in.” That includes integrating environmental and social criteria into how initiatives are assessed, which risks are priced in, and how long-term returns are understood.

“If ESG appears in reporting but doesn’t shape executive compensation, capital approvals, or promotion decisions, it’s a signal that the organization hasn’t yet internalized it,” Ioannou explains, adding that financial and non-financial outcomes should be tied together across both individual and institutional metrics.

For many organizations, this shift requires challenging a deeply ingrained capital allocation mindset. “We’ve trained generations of business leaders… to default to short-term financial returns,” Ioannou says. “That logic often crowds out longer-term investments in resilience, innovation, and systemic adaptation.” Overcoming this legacy of short-termism means rethinking how value is defined, especially under conditions of ecological, social, and geopolitical disruption.

Action #2: Make trade-offs visible and treat them as part of serious strategy

“Sustainability work that avoids trade-offs isn’t strategy — it’s storytelling,” says Ioannou. Indeed, a defining mark of credible ESG leadership is the willingness to address the inherent tensions involving costs, timelines, stakeholder impacts, and business models and to engage those conflicts directly, rather than trying to smooth them away.

Organizations frequently frame sustainability as universally beneficial. While that instinct may serve communications goals, it does little to strengthen strategic capacity. “Real progress almost always introduces tension,” Ioannou explains, adding that confronting these trade-offs should be made routine. “Leaders should ask: What shifts as a result of this decision? Who carries the burden? What timelines change, and what expectations must be reset?”

These answers could help bring clarity into operations by translating difficult decisions into language that invites accountability. “If a supplier shift increases costs by 8% but reduces water usage by 30%, that’s not a dilemma to hide. This is a strategic choice to make transparently,” he explains.

Organizations need to normalize this mindset through scenario planning, making ESG-informed business cases, and promoting cross-functional alignment, Ioannou recommends. When sustainability decisions live only in specialist teams, they remain abstract; but when they’re interrogated through operational, financial, and reputational lenses, these trade-offs become manageable.

“It’s easy to achieve consensus when the work stays abstract,” he adds. “The question is what happens when hard choices emerge, such as when costs surface, when values compete, and when speed slows down? Navigating these tensions openly is what makes sustainability real — it’s how leadership moves from messaging to meaning.”

Action #3: Distribute ownership and build governance depth across the business

“Resilience doesn’t come from the brilliance of one ESG leader — it comes from what remains when the spotlight moves on,” says Ioannou.

This means that boards of directors must develop the fluency to govern sustainability not as an adjacent risk, but as a core strategic focus. “Directors don’t need to master every metric, but they need to understand how climate, inequality, and systemic disruption affect the business over time,” he says, adding that boards need to treat ESG competence as a prerequisite for their directors in order to offer meaningful oversight. And this needs to be supported by tailored training, engagement with scenarios, and deepened dialogue around risk and resilience.

However, governance doesn’t stop at the boardroom. “Sustainability can’t thrive as a silo,” Ioannou explains. “It must be integrated into how the organization plans, executes, and adapts” This includes embedding ESG considerations into stakeholder engagement, procurement processes, product development, capital budgeting, and performance management.

Other key elements of this, he notes, is identifying internal champions and the importance of succession. “Look beyond the sustainability team. Who in finance, HR, or operations has the influence and insight to make sustainability actionable? …If the work vanishes the moment someone leaves, then it was never embedded. The question isn’t just what you’ve achieved — it’s what you’ve institutionalized,” he says.

As organizations seek to build governance structures that enable sustainability and continuity they also need to create lasting initiatives to support this strategy — such as ESG committees with cross-functional mandates, internal working groups linked to business planning cycles, and incentive systems that reward collaborative delivery — and foster the conditions under which the work can scale and endure.

“When the political noise fades, what matters is what you’ve built — structures, practices, and decisions that hold shape under pressure,” Ioannou concludes. “That’s the difference between performative ESG and resilient leadership.”

You can find more information in ourĚýSustainability Resource CenterĚýhere

Yet, the partners who engage there often find that these areas are ripe with opportunities for more corporate investment to lift economic prosperity and community well-being. Indeed, companies are more likely to have the bandwidth and resources to convene representatives from community organizations, members of state and local government, and small-to-medium-size enterprises (SMEs) to better pool expertise and investment to create a greater return on investment than if these companies were acting alone.

At the same time, there are players operating within ex-urban settings from which we can learn, especially from those social innovation players now working in rural areas to help increase the economic welfare of rural communities.

Community capital creates thriving rural communities

Social innovation provides two primary ways of convening partners and resources to provide holistic benefits in rural areas. , Co-Founder and President of HomeStake.com, which is using finance to drive entrepreneurship and community resilience, says his goal is to connect people and ideas to use catalytic capital to transform the investment marketplace and the ways finance can work to create opportunity, build equity, and distribute power. He pools “community capital” through financial vehicles from local investors or locally minded community investors in a given bioregion to invest in SMEs that earn between $1 million to $10 million in revenue and are situated for growth.

SMEs in rural communities are starved for multiple options of financial resources, in particular for growth equity capital, explains Stoddart, adding that SMEs in third-tier cities or rural areas receive less than 1% of the overall pool of venture capital.

The consolidation of state and local community banks — which historically has been the dominant way small businesses have received financing, usually through Small Business Administration loans — has shrunk the industry from 10,000 institutions to less than 1,000 institutions over the last 40 years. While such consolidation may be positive in theory, it has left a significant gap in the lack of capital that is critical for small business growth in rural areas and a critical aspect of a thriving middle class outside of major metro areas in the U.S.

Stoddart’s theses is that community economic development and community well-being are centered on this idea of providing growth capital and equity, as well as investment from financial sources that don’t seek to control the businesses or demand an exit at a certain period of time to satisfy investor needs. Instead, the capital that Stoddart’s group provides grows along with the businesses, while still providing a return to investors. It is not something that is targeted to an investor’s timeline or a fund’s timeline per se, but rather is more in-line with the organic growth of the business itself.

Using public-private partnerships for prosperous rural communities

Another way to benefit rural communities through social innovation is by bringing together local and regional players from the public and private sectors to collaborate collectively for the benefit of a particular rural community. , CEO at Next Stage Consulting, is a key player doing just this in North Carolina, and he documents his methodology and case studies in the firm’s .

Next Stage operates at the intersection of nonprofit organizations, municipalities, faith institutions, philanthropic groups, and community-based organizations to generate social impact in rural communities. It also specializes in building investments through social innovation and partnership with community-based organizations by acting as a trust broker to attract resources outside of the immediate area by within the regional geographic area across counties. These catalytic public-private partnerships enable a multiplier effect by pooling resources that can be quantified by measuring how much activity is generated for every $1 spent.

Next Stage’s typical clients are single-employer companies in a rural setting usually within the mining, energy, agriculture, and advanced manufacturing sectors. These companies are an essential foundation for economic prosperity within an ex-urban community and oftentimes have challenging environmental impacts because of the industry in which they operate.

Jacobson says he sees growing demand by mid-size companies operating in ex-urban areas that want to help build a community-based strategy that looks beyond their isolated efforts. This demand is driven by public companies’ efforts to extend their influence in the environmental, social & governance (ESG) space to their suppliers, which include other mid-sized companies operating in rural areas. There is no playbook, Jacobson says, noting that working in rural areas in this way “is a new space, and we are learning as we go.” Next Stage’s lessons from working in rural communities were documented in the of its recent report.

Capitalism and taxation are the two big mechanisms to making a better world, especially for people who are less well-off financially, Jacobson explains, and collaboration that leverages a local community’s resources is really the force-multiplier for driving higher returns on each $1 of public money spent.

Likewise, Stoddart says he believes a strong, viable middle class is central to a functioning democracy, and he sees the deep connection between people who are able to provide for themselves and their families and their ability to work with each other as community members as part of a that middle class. “We’re trying to fill a gap by working with one community at a time to try to develop locally owned and driven community capital,” Stoddart states.

In addition, the European Securities and Markets Authority, the European Banking Authority, and the European Insurance and Occupational Authority have proposed six further opt-in metrics, including:

• • • average share of employees on zero-hours contracts;
    • average share of employees on temporary contracts;
    • share of zero-hours/temporary employees as a percentage of total workforce;
    • average share of disabled employees in the workforce;
    • lack of complaints procedure for customers; and
    • lack of grievance procedure for communities affected by businesses in the portfolio.

These moves are additional indicators that the S in environmental, social & governance (ESG) issues are increasingly of interest to the investor community. Indeed, persistent social inequalities and the urgent need for a fair transition to a more sustainable economy have bolstered the argument for measuring and reporting social risks and impacts.

Europe gets on board

The European Supervisory Authorities (ESAs) proposed the changes in aĚý, following a mandate given to them by Commission Delegated Regulation 2023/363 in February. It will mean that all financial firms reporting under the European Union’s Sustainable Finance Disclosure Regulation (SFDR) will have to disclose the information in their principal adverse impact (PAI) statements.

At present there are 14 mandatory PAI items that firms must report. Lawmakers always intended to add more, and the consultation brings the SFDR into line with those required by the Corporate Sustainable Reporting Directive (CSRD) and set out in the draft European Sustainable Reporting Standards, published in November 2022.

The ESAs have also taken the opportunity to refine the existing PAI requirements based on feedback from stakeholders, including financial firms. Among the changes is a requirement for financial firms to state the percentage of data used to calculate their PAI that has come directly from investee companies, versus the data that is sourced from third-party data providers.

Data gaps have been a concern of financial services industry since the regulation was first proposed. The time lag between the SFDR and the CSRD coming into force meant that financial firms were required to produce data on firms in which they invested before the investee companies were themselves required to produce it by law. The proposed breakdown should help illuminate where data gaps remain and where corporations are being slow to produce their own data.

Derivatives & shades of green

The ESAs are proposing to amend how derivatives are allowed for when calculating carbon intensity of a product or portfolio. The inference is that some firms have been using derivatives to artificially mask the carbon emissions of their investments.

“Without appropriate rules concerning the inclusion of derivatives within PAI calculations, financial market participantsĚýcould be incentivized to achieve long exposures through derivatives, resulting in an underestimation of the principal adverse impacts of their investment decisions,” the ESAs stated in its consultation.

The regulators further noted that derivatives should be netted at individual counterparty level for the purposes of PAI calculations. The ESAs are also proposing to remove the ability of asset managers to choose what shade of green they use in illustrative diagrams in their disclosure documents. This was after regulators observed that some firms were abusing flexibility to imply their products were greener than was the reality.

Investment styles & carbon credits

The regulators are proposing changes to disclosure documents to increase investor understanding. Asset managers will have to set out in a fund’s objectives whether they intend to reduce the greenhouse gas (GHG) emissions by divestment, exclusion, or by working with investee companies to reduce emissions.

Likewise, investment firms will have to explain if, and to what extent, they intend to achieve their GHG emission targets by using carbon credits. “Plans to purchase such carbon credits and their use over time should be disclosed separately. Given the greenwashing concerns surrounding these carbon credits, it is critical that investors are fully informed regarding the use of such credits and regarding their quality,” the ESAs stated.

This change brings SFDR reporting into line with that of CSRD. Among the 43 consultation questions is one asking about financial firms’ preferences with regards to making SFDR reporting requirements machine-readable. The consultation closes on July 4.

The specificity of these moves by European regulators adds to the momentum building for including social metrics into regulatory reporting requirements. The connection between the environment and people is evident; and institutional investors maintain a long-term investment horizon.

This inclusion takes a multi-decade view of how the transition to a sustainable global economy impacts people internally and externally, the main component of the social part of ESG. For companies to thrive into the future, flourishing workers in thriving communities on a healthy planet are all required.