Key insights:

• • • Human rights and environmental sustainability in sports are inseparable — Environmental harms from major sporting events — such as pollution, extreme heat, and flooding — directly undermine fundamental human rights including health, housing, and safe working conditions.

    • Mega sporting events require an integrated, lifecycle-wide approach — From supply chains and stadium construction to urban planning and event delivery, the sports industry’s environmental footprint and human rights impacts span the full lifecycle of these events, demanding a single, integrated playbook.

    • Accountability extends to sponsors and partners, not just hosts and organizers — As scrutiny from regulators, media, and civil society grows, sponsors and corporate partners are increasingly seen as responsible for the combined human rights and environmental impacts of the events they support.

This blog post was co-written with Sreeratna Kancherla and Anna J. Christians of the Henekom Group.

Sports are entering a defining decade. The convergence of climate and nature risk, growing environmental accountability, and increasing scrutiny of how mega sporting events affect the communities that build and host them has brought a long-overdue challenge to the center of sports governance.

Due to their scale, frequency, and global reach, the upcoming FIFA World Cup 2026 and the 2028 Olympics to be held in Los Angeles, alongside competitions such as the 2027 Rugby World Cup and the ICC Men’s T20 World Cup, form part of an ambitious pipeline of major events in a generation. How the sports sector responds to that challenge will shape how the next era of global sport is planned, delivered, and remembered.

Human rights due diligence during mega sporting events and environmental sustainability are often thought of as neighboring agendas, related but managed separately. In practice, however, they are inseparable. When air quality deteriorates, the right to health is at stake. When flooding displaces communities, the right to housing and livelihood is at stake. When extreme heat makes outdoor labor dangerous, the right to safe working conditions is at stake.

The environment is the condition in which human rights are either protected or violated, and sustainability, properly understood, is the commitment to preserving those conditions for current and future generations.

The need for an integrated playbook

The case for an across the lifecycle of sport reflects the scale and complexity of the sporting industry’s impact, with emissions comparable to those of a midsize country, according to . The industry’s heavy reliance on plastics across stadiums, equipment, and apparel contributes to pollution that worsens the global environmental crisis. And those environmental choices carry human consequences at every stage, for the workers who build the facilities, the residents who live alongside them, and the fans who attend the events.

The environmental footprint of the sports industry touches people across the entire lifecycle of a major event. The supply chains necessary to deliver a mega-sports event span facility development, apparel, technology, and food & beverage. These industries are among the highest risk for labor exploitation, migrant worker abuse, and unsafe working conditions. When a host city builds a stadium and hosts events there, the environmental impact is measurable and so is the human rights impact on the workers building the stadium. Indeed, this impact extends to the neighborhoods that may be displaced to make room for it, and to the residents left to live alongside its infrastructure once the event has ended.

You can find more about the resources, tools, and information that cities and organizations need to addressĚýhuman trafficking around large-scale sporting events at the Thomson Reuters Institute’s Large-Scale Public Events Toolkit here

In addition, major events that rely on street circuits or temporary urban infrastructure can significantly reshape public space and surrounding neighborhoods. Air pollution, construction zones, and rising short-term rental demand also may displace residents and the unhoused population, restrict access to services, or place pressure on already fragile housing markets. In these cases, mega-sports event planning intersects directly with citizens’ rights to housing, mobility, and access to public space.

Expanding accountability

, rooted in the , is the structured process that makes those consequences visible and gives sustainability strategy its human accountability. Because environmental and human rights impacts are inseparable in practice, that accountability extends beyond organizers and host governments to the sponsors and corporate partners of the event. Many operate in sectors which already face scrutiny over their global supply chains; and therefore, alignment with a contentious event can amplify these vulnerabilities while inviting additional public and regulatory attention.

As the regulatory landscape, advocacy groups, and the media intensify their focus on the impact of these mega-sport events, sponsors are increasingly seen not only as influential stakeholders, but as actors with a degree of responsibility for the combined environmental and human rights impacts of the events they fund and support.

Moving from principle to practice

For example, Mercedes-Benz Stadium in Atlanta — home of the NFL’s Atlanta Falcons along with a venue for soccer and concerts — demonstrates that environmental performance and community impact are the same priority and can be pursued through a single design brief. Indeed, it was the first stadium worldwide to receive for zero waste, and its 2.1-million-gallon system helps prevent flooding in neighboring communities. Additionally, the stadium created targeted employment through the and delivered staff training to more than 700 people.

The same integrated logic is now being applied at the event level. Ahead of the FIFA World Cup 2026, host city organizing committees in Houston and Dallas introducedĚýthat address labor exploitation, including human trafficking risks, alongside targeted environmental measures. These measures are treated as a single procurement workstream to be addressed through an integrated response.

Leadership, legacy & the decade ahead

The organizations that will define the next decade of global sports are those that treat human rights and environmental sustainability not as parallel strategies but as two expressions of the same obligation to the people and communities on which sports depend.

This means designing facilities with both environment and humanity in mind from the outset, managing worker rights and environmental standards together across supply chains, and placing extreme heat measures, labor protections, community access, and sustainability targets within a single accountable governance framework.

Governing bodies, organizing committees, sponsors, and host cities that act on this integrated approach have the opportunity to build systems that are more responsible, more durable, and more trusted to define what credible and future-ready sports event management looks like.

You can find more about the impact of mega-sporting events on communities here

Key highlights:

• • • The governance-implementation gap is alarming — While nearly half of companies have AI strategies and 71% include ethical principles, a massive disconnect in execution persists.

    • AI governance is now a material investor risk — AI disclosure among S&P 500 companies jumped to 72% in 2025 from 12% in 2023, and investors are treating AI governance as a critical factor in overall corporate governance.

    • Regional disparities signal competitive risks — European, Middle Eastern, and African companies are leading in AI governance (driven by regulatory pressure), while only 38% of US companies have published AI policies despite being innovation leaders.

of 1,000 companies indicates a between the speed at which businesses are embracing AI and their preparedness to govern it effectively. These findings from , which offers a panoramic view across 13 sectors, are a wake-up call for every CEO, board member, and investor.

Indeed, nearly half (48%) of the companies sampled disclosed that they had AI strategies or guidelines in place, yet significant transparency gaps related to the environmental, social and governance (ESG) impacts of AI adoption remain.

When “ethical” principles lack substance

It is encouraging to see that 71% of companies with an AI strategy include principles around AI that include concepts such as ethical, safe, or trustworthy because this signals an awareness of the critical conversations happening around responsible AI. However, the AICDI data reveals a significant gap between stated principles and actual practice, more specifically:

• • • Environmental blind spots — A staggering 97% of companies failed to consider the environmental impact of their AI systems, such as energy consumption and carbon footprint, when making deployment decisions. As AI models grow in complexity and scale, their energy demands will only increase. In addition, investors are likely to adopt green AI as a non-negotiable concept in the future.

• • • Narrow social lens could open up reputational issues — More than two-thirds (68%) of companies with AI strategies did not adequately assess the broader societal implications of their AI technologies. Failure to understand and mitigate potential negative impacts on communities, vulnerable populations, or democratic processes is a recipe for reputational damage and legal challenges on the full spectrum of the human side of AI. Indeed, investors are growing more sophisticated in their understanding of these systemic risks.
    • Governance on paper and not in practiceĚý— While 76% of companies with an AI strategy reported management-level oversight, only 41% made their AI policies accessible to employees or required their acknowledgement. That means these policies are just words on paper if they are not understood, embraced, and actively practiced by those on the front lines of AI development and deployment. This gap in governance can lead to inconsistencies, unforeseen risks, and a fundamental breakdown in trust, both internally and externally.

Gaps in AI governance exist across regions and sectors

The AICDI data reveals fascinating regional and sectoral differences as well. For instance, companies in Europe, the Middle East, and Africa are generally ahead in publishing AI policies and establishing dedicated AI governance teams — action that is likely driven by the European Union’s looming AI Act. This highlights the proactive stance some regions are taking and offers a glimpse into what might become a global standard.

Despite the United States being a hub for AI innovation, only 38% of companies in the Americas published an AI policy. This discrepancy suggests a potential future competitive disadvantage for those lagging in governance.

Not surprisingly, sectors also varied in corporate oversight of AI initiatives. Financial, communication services, and information technology firms were more likely to have responsible AI teams than companies in energy and materials. This makes sense given their direct engagement with data and often consumer-facing AI applications, but it again points to a broader need for cross-sectoral AI governance best practices.

How companies can meet investor expectations

AI has rapidly become a mainstream enterprise risk. Fully 72% of S&P 500 companies disclosed at least one material AI risk in 2025, up from just 12% in 2023, according to the Harvard Law School Forum on Corporate Governance.

To attract and retain investor confidence, companies need to take concrete steps, including:

1. 1. 1. Conducting a comprehensive AI audit — Companies need a thorough understanding of where AI is currently deployed across their products, operations, and services. The AICDI offers a to help with this, which allows companies to evaluate current AI governance maturity and benchmark themselves against peers.
      2. Establishing robust, transparent, and accessible AI governance frameworks — Companies need to move beyond vague principles by developing clear, actionable policies that address environmental impact, societal implications, data privacy, fairness, and accountability. Critically, these policies must be accessible toĚýallĚýemployees, and their acknowledgement should be a requirement. Training and continuous education are paramount in order to embed these principles into daily operations.
      3. Proactively disclosing AI governance practices —ĚýCompanies should seek to anticipate investors’ concerns by incorporating specific disclosures on AI oversight mechanisms, transparency measures (including environmental and risk assessments), and how they’re preparing for evolving regulatory landscapes. Companies that showcase their commitment to responsible A as a strategic advantage will gain stakeholder trust.
      4. Embracing industry standards and collaboration —ĚýBy using global frameworks, such as the (which grounds the AICDI’s work), companies can strengthen standardization efforts. They should also participate in collaborative efforts and industry forums to share best practices and collectively raise the bar for responsible AI.
      5. Comparing your performance with peers —Companies can benchmark their responses against sector and regional peers. Also, they need to identify leaders and laggards to understand where a company stands and where it needs to improve. AI is an evolving field, and therefore, corporate AI governance frameworks must evolve as well — and the key ingredient for this is responsible innovation.

By any measure, AI is transforming our world; however, its benefits will only be fully realized if companies prioritize their responsible governance. For investors, AI governance is fast becoming a material risk and opportunity. And for companies, it’s no longer an option but rather a strategic imperative that can go a long way toward building trust, mitigating risks, and securing a sustainable future.

You can learn more about the , the corporate foundation of ¶¶ŇőłÉÄę, here

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 insights:

• • • Elevate AI governance to the board — Companies should tie their AI deployment to enterprise risk management with explicit KPIs for energy intensity, water withdrawals and consumption, and supply‑chain human rights.

    • Make transparency a competitive asset — Implement auditable disclosures on AI workload footprints, water stewardship, and supplier traceability, and then link executive compensation and vendor contracts to measurable efficiency and resiliency outcomes.

    • Demand transparency despite practical challenges — Although demanding transparency from suppliers may not be practical now due to current challenges, collectively asking for detailed information sends a notable requirement to AI infrastructure providers that the company is seeking to drive change and preserve trust in an AI-driven economy.

AI now sits at the center of corporate sustainability governance as it supercharges data gathering, analytics, and reporting. Indeed, there is is areas of energy optimization, emissions monitoring, land‑use assessment, and climate scenario analysis.

At the same time, AI’s rise is colliding with sharply growing electricity and water demands from data centers and concerns over geopolitically exposed supply chains. The governance challenge for companies therefore is to manage risk at this intersection. This means treating AI as a capital‑intensive, cross‑border infrastructure program whose environmental footprint and supply dependencies must be actively governed.

Why electricity and water are now board‑level AI risks

AI has turned electricity and water from background utilities into constraints that should be dealt with on the board level. Indeed, AI magnifies water risk across cooling, power generation, and chip manufacturing. This makes sourcing and efficiency choices strategic imperatives for many organizations.

Electricity demand — AI use and the data centers that power the tools already account for a significant and rising share of electricity use in the United States. The finds , a figure poised to grow as AI workloads scale. Forward‑looking projections from the U.S. Department of Energy indicate that by 2028 could be attributed to AI workloads.

If you translate those projections into , you can get an idea of the potential magnitude of the problem. Together, these sources suggest that the fastest‑growing part of AI’s energy appetite is not just for training models, but the steady, pervasive inference capabilitiesĚýrequired to power AI features in everyday products and operations.

Direct and indirect water use — Data centers powering AI also negatively impact local water footprints. It shows up in three places: i) data‑center cooling; ii) the electricity feeding those facilities, including thermoelectric and hydroelectric generation; and iii) AI’s own hardware supply chain. In regions already facing scarcity, these demands compound local stress. For example, the average per capita water withdrawal is 132 gallons per day; yet a large data center consumes water .

This makes data centers one of theĚý in the country, which incidentally is home to . At the end of 2021, aroundĚý from moderately to highly stressed watersheds in the western US. This is a common situation as well.

Geopolitical exposure — The hardware that powers AI includes advanced logic and memory chips, which depend on concentrated manufacturing nodes and supply chains with access to critical minerals. Extraction and processing of inputs, such as lithium and cobalt, are often clustered in jurisdictions with elevated levels of human‑rights, environmental, or geopolitical risk. This potential amplifies exposure to export controls, sanctions, or resource nationalism, especially directly for companies’ supply chains and indirectly for those companies using AI.

Companies need to ensure their communication on legal and policy issues are pointing in the same direction in regard to these concerns. Indeed, companies need to deepen value‑chain due diligence while navigating evolving supply‑chain and AI‑specific regulatory regimes.

Recommended actions for companies

These intersections have clear implications for corporate governance. AI’s promise to accelerate decarbonization, improve transparency, and strengthen decision‑making will be realized only if leaders can properly manage the physical, political, and social realities underpinning the technology. Recommended actions to manage risk in areas in which AI and geopolitics converge include:

Demand transparency in electricity and water consumption of AI infrastructure — Companies building AI infrastructure need to conduct AI workload planning. Companies using AI can demand transparency of their suppliers’ 24- to 36-month forecast of training and inference by region with overlays in grid carbon and local water stress to better understand their indirect environmental impacts.

De‑risk impact by incentivizing clarity in supply chains — Companies using AI can begin asking AI infrastructure companies to provide due diligence in tier 2, 3, and 4 suppliers, all the way down to smelters, refiners, and miners to make sure that companies are not indirectly contributing to environmental and social harms.

The bottom line

While these recommendations generally align with evolving corporate practices in sustainability and risk management, the challenge of implementation will vary based on the company’s size, influence over suppliers, and existing governance structures. The most challenging aspect will likely be achieving transparency and clarity in supply chains, which requires cooperation from suppliers and the investment of potentially significant resources.

At the same time, however, if more companies collectively ask for this level of detailed information from their AI infrastructure providers, it will send a notable demand signal. Indeed, AI is both a sustainability tool and a sustainability liability, but its benefits will be realized only if leaders confront the physical and geopolitical constraints that make AI possible.

Those companies that begin asking for this level of transparency can preserve the trust that underwrites their license to navigate successfully in an AI‑driven economy.

You can find out more on the sustainability issues companies are facing around the environment 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

Key insights:

• • • Traditional board oversight models are outdated — Amid multiple crises threats, corporate boards that still rely on legacy governance approaches risk falling behind as today’s interconnected crises demand proactive and adaptive oversight.

    • Questioning assumptions about growth — Boards must continually challenge their assumptions about growth and risk utilizing four key strategies, including red team exercises, translating trends into strategic trade-offs, embedding sustainability anticipation, and linking culture with capital.

    • Sustainability is a central filter for all board decisions — Boards that proactively integrate sustainability into their culture, risk management, and strategic planning are better positioned to thrive amid regulatory pressures, climate risks, and stakeholder expectations in a volatile global environment.

Last year, corporate boards demonstrated greater readiness to address sustainability issues with significant financial implications, especially compared to their preparedness in 2018, according to the . For example, Environment, Social & Governance (ESG) board committees among Fortune 100Ěýcompanies increased to 89 in 2024, compared to 22 in 2018.

At the same time, it is hard to know if this progress is adequate. As climate shocks become more severe, AI transforms industries, and stakeholder expectations evolve, corporate boards of directors are encountering a dynamic business environment that contains multilayered risks.

Boards operating in the traditional oversight models may soon find themselves struggling as the governance tactics of the past prove inadequate in the face of these newer changes.ĚýFurthermore, the future operating environment for companies is becoming increasingly complex, with a heightened risk of polycrises, in which multiple, interconnected crises converge to create unprecedented challenges.

Moreover, boards of directors as fiduciary stewards of companies’ strategies are now expected, by regulators, investors, and stakeholders, to demonstrate fluency in climate and sustainability issues. In fact, more than 50 jurisdictions have introduced requirements or expectations for directors to possess climate-related competence. This profound shift requires boards to take a much more aggressive, forward-looking orientation in which every operating assumption is questioned.

In this context, sustainability is no longer a peripheral concern, but rather a central filter through which every decision must pass, as companies must navigate the intricate relationships between environmental, social, and economic factors to ensure long-term resilience and success. This reality means that boards must take proactive and integrated approaches to effective governance and oversight. Indeed, those that prioritize sustainability, risk management, and strategic adaptability are more likely to thrive in a world characterized by uncertainty, interdependence, and accelerating change.

Embracing re-evaluation strategies

To meet these new expectations in an ever-changing business landscape fraught with multi-faceted risks, boards must also question their assumptions about growth and the lens through which they are examining systemic risks. A board also needs to understand where it is prioritizing short-term wins at the expense of long-term viability.

These four key strategies can help directors prompt a critical re-evaluation of their growth assumptions and framework they use for assessing systemic risks — they can also help directors determine whether the board is prioritizing short-term gains over long-term sustainability:

1. Execute “red team” exercises

Boards often find themselves surrounded by confirmation bias because they rely on trusted advisors and management teams who often share familiar viewpoints. This environment can stifle innovation and obscure systemic risks. A red team exercise can help break this cycle by inviting a diverse group of external experts and internal challengers to pressure-test assumptions about growth, systemic risks, supply resilience, reputation, and the company’s license to operate. Such exercises encourage directors to confront uncomfortable truths and explore alternative scenarios.

Too many organizations still operate as if ESG and value-creation are in conflict when, in fact, they are not. Running red team exercises in the board room can better align their strategies with sustainable goals to better spur innovation while maintaining operational resilience as priorities.

2. Translate trends into strategic trade-offs

Boards must be adept at discerning emerging trends to better inform the difficult strategicĚýdecisions about what to pursue and what to forego. Asking tough questions that frame trends as choices is an effective mechanism to analyze trade-offs. For example, “Do we invest in short-term returns with high-carbon lock-in, or reallocate capital toward regenerative business models that preserve long-term viability?” is a common trade-off question that many companies across industries are asking. By engaging in debates about real dilemmas rather than passive updates, directors can make informed decisions that balance immediate gains with future sustainability.

3. Build “sustainability anticipation” into board culture

To lead effectively in an uncertain future, boards must build sustainability foresight into their culture. An effective means of doing so is embedding sustainability anticipation into every board committee’s mandate. Tools such as dynamic scenario planning, transition-readiness metrics, and real-time materiality assessments that address emerging risks can help boards to anticipate and adapt to future challenges.

4. Link culture and capital

Most companies view sustainability as just a function rather than a filter for every business decision. This is why linking culture and capital at the board level is an essential step in making boards genuine hubs of foresight. Indeed, pulse surveys, stakeholder feedback, and behavioral data are necessary sources boards can use to make sure that sustainability is a foundational principle across all business decisions and used as a lens for value creation.

Looking ahead

The time for passive governance is over. By adopting these strategies, boards can navigate the complexities of today’s business environment for long-term viability for tomorrow. As the risks of interconnected crises — polycrises — intensify, making sustainability a fundamental criterion for every business choice is crucial for companies and can provide a profitable operating path in the years to come.

You can find out more about how companies are addressing the challenge of sustainability here

This , which came out February 12, reflects a return to a more traditional approach regarding the shareholder proposal process. In addition, it is also a shift back to previous principles-based rulemaking that focus primarily on financial materiality, according to , Special Counsel at Sullivan & Cromwell. The guidance also signals a potential reversal of previous rules passed in 2021, which had allowed stockholder proposals with “broad societal impact.”

This move by the SEC has important implications for shareholder proposals that raise social and ethical issues because a company could choose to exclude a proposal based on economic relevance of the stockholders who are supporting a proposal, according to Hu. Indeed, this new guidance essentially reverses the SEC’s 2021 action that allowed proposals touching on “broad societal significance” to bypass the ordinary business exclusion.

The 2021 action allowed such shareholder proposals to go forward based on two considerations: i) whether the proposal addresses issues essential to the management’s daily operation of the company and which makes it impractical for shareholders to directly oversee these matters; or ii) whether the proposal excessively controls or interferes with the company’s management processes.

Impact of this new SEC guidance on ESG

The effect of the ordinary business exclusion and the evaluation of shareholders’ economic relevance is expected to lead to , including those related to environmental, social & governance (ESG) and anti-ESG issues, according to analysis by Sullivan & Cromwell. In particular, the ordinary business exclusion emphasizes the need for a company-specific materiality analysis when determining whether shareholder proposals can be excluded from proxy materials. As a result, this shift is widely expected to make it easier for companies to exclude shareholder proposals from their proxy statements, particularly those related to ESG and political policies.

In addition, the return to principles-based and mandated reporting on financially material matters has two important implications for companies and their ESG reporting:

Strengthened separation of financial and sustainability data — This SEC guidance strengthens the likelihood that financial material information will be the sole focus of SEC filings and that non-financially significant information, like specific ESG disclosures, might be relocated to sustainability reports rather than being included in SEC filings, according to Hu. This distinction could help streamline SEC documents and makes sure that they remain focused on financial data relevant to investors.

Distinction between financial and sustainability reporting timelines — Before this new guidance, some companies were moving toward the simultaneous release of their annual financial reports and sustainability reports. This was a challenge for companies because “the reliance on third-party data, especially for Scope 3 emissions, presents hurdles in timely and accurate reporting,” Hu states. However, the focus now on principles-based reporting of financially impactful information ensures that the timelines are likely to remain different.

What should companies do now?

To navigate this murky environment, Hu advises companies to seek legal counsel to ensure compliance and strategic alignment with the evolving regulatory environment. In addition, companies should:

Monitor legal requirements — Make sure legal requirements are the foundation for their disclosures and decision-making processes. A company-specific materiality assessment is crucial in determining what issues are financially material and significant to the company’s business model, and thus, to shareholders.

Focus on principles in disclosures — Ensure that all filings align with the SEC’s principles-based approach to disclosure. Companies should focus only on financial information in their SEC filings and reserve other information for sustainability reports or other documents that cater to a wider stakeholder base.

Balance risks and benefits regarding what information to include in SEC filings — Hu also recommends that companies should conduct a cost-benefit analysis of disclosure placement and consistency. This means considering the potential risks and benefits of including certain information in their SEC filings rather than in other reports. By taking a thoughtful and company-specific approach to disclosure, companies can navigate the evolving regulatory landscape and make strategic decisions that align with their mission and the expectations of their stakeholders.

Caution is warranted on the horizon

Once fully staffed, the SEC will likely consider changes to existing rules around shareholder engagement. Likewise, Hu said she also expects the SEC to scrutinize those actions recommended by proxy advisors as signals for the proxy season’s voting patterns, particularly on proposals related to diversity, equity, and inclusion (DEI), especially as some companies narrow their activities in this area. However, it is a little early to know the impacts, she adds.

Either way, companies must proceed with caution and strike a balance between investor expectations and regulatory requirements, while primarily focusing on issues that are significant to their specific business model and bottom line.

You can find out more about how the Securities and Exchange Commission is managing the current regulatory environment here

In fact, since the beginning of the year, litigation related to claims around environmental initiatives, net zero statements, and forced labor issues, are the key areas of increased legal activity around greenwashing, including:

Allegations of contaminants in consumer products — There has been an increase in cases alleging that consumer products contain contaminants, such as lead and PFAS, according to , a litigation partner at Morgan Lewis. For example, a alleged that products, which were being marketing towards children, contained unsafe levels of lead.

Forced labor in supply chains — Forced labor cases are also on the rise, with a focus on those that involve supply chain issues. This reflects a broader trend towards holding companies accountable for their supply chains and the ethical implications of their sourcing practices.

, a litigation partner at the Morgan Lewis, says he sees the novel application of forced labor statutes in recent legal cases being focused on consumer claims related to economic harm caused by unethical labor practices in supply chains. These claims argue that human rights violations, such as forced labor abroad, have a direct impact on consumers who buy the end products.

Carbon neutrality claims — Litigation that is targeting companies’ net zero statements have become increasingly prevalent as companies seek to show their commitment to sustainability and appeal to environmentally conscious consumers. “You’re seeing some companies no longer making claims they’re currently carbon neutral,” says , co-head of the Environmental, Social & Governance (ESG) practice at Morgan Lewis. “They still have their aspirational goal of getting there by 2030, but these legal claims are causing companies to be more conservative in statements and disclosures, rather than making specific claims about current achievements.”

At the same time, however, there is growing recognition of the need for greater regulation of carbon offset markets and more rigorous standards for verifying carbon neutrality claims. As the regulatory landscape evolves, companies will need to carefully evaluate their carbon-related disclosures and ensure they can substantiate any neutrality claims.

In addition to the expanding areas of greenwashing cases, recent changes in European Union regulations have provided more precise guidelines for judges, resulting in a shift towards more judgments confirming greenwashing claims, says , a litigation partner at Morgan Lewis based in Germany. Historically, many greenwashing allegations brought by non-governmental organization (NGOs) or consumers were dismissed. This makes this current shift noteworthy, according to Apetz-Dreier, because it represents a move towards stricter scrutiny and accountability for companies on their environmental claims.

Double-edged sword of CSRD

The EU’s Corporate Sustainability Reporting Directive (CSRD) is having a significant impact on greenwashing concerns and practices in the EU. As companies prepare to comply with CSRD’s extensive ESG disclosure requirements, there is an increased focus on accurate data collection and reporting.

Indeed, the highly prescriptive nature of CSRD is pushing companies to be more cautious and specific in their sustainability claims and disclosures to potentially reduce greenwashing risks.

However, the expanded disclosures required by CSRD may also create new litigation risks themselves, as the information reported can be scrutinized by stakeholders and potentially used as a basis for further greenwashing claims. Companies are having to carefully balance compliance with CSRD against potential legal exposure, especially as the disclosures made in Europe may have implications for litigation risks globally.

Guidance for in-house lawyers

As a result of these trends and growing risks, corporate in-house lawyers need to focus their efforts to best mitigate the increasing risk exposure of greenwashing. Some of these mitigation tactics include:

Carefully reviewing marketing strategy and disclosures — Corrado recommends for corporate legal functions to take extra care in inspecting their companies’ marketing strategy, product labels, and other advertising to ensure that corporate leaders are not making misleading or exaggerated claims about their companies’ ESG practices or sustainability. The same goes for disclosure documents.

Offering forward-thinking advice and risk management — Valenstein notes that in-house lawyers should give forward-thinking advice to their internal clients, including ways to identify areas of risk exposure and develop strategies to mitigate that. They also need to educate their boardrooms and C-Suites on the risks and consequences of greenwashing.

To execute, corporate lawyers need to stay close to their companies’ external counsel in order to remain up to date on the latest legal developments and trends in greenwashing litigation. For example, “one of the things that we’ve been watching closely is when the FTC [U.S. Federal Trade Commission] is going to issue its new set of the green guides because it could lead to additional litigation based on guidance the agency puts out there about what types of disclosures companies can and should be making,” explains Lane.

Seek collaboration across departments —Lawyers at companies should collaborate with other in-house corporate functions, such as sustainability, communications, operations, and marketing, to ensure that companies’ messaging and disclosures are accurate, consistent, and compliant with regulations.

This collaboration is key to mitigate greenwashing risks. Compliance with CSRD is making data collection and accuracy — without exaggerating — in disclosures a critical activity in risk mitigation. Not doing so “can lead to future greenwashing claims, because those documents for the disclosure are also advertising materials,” Apetz-Dreier adds.

As the landscape of greenwashing litigation continues to evolve, companies must remain vigilant in their sustainability claims and practices. By having internal legal functions prioritizing these actions, companies can protect their reputations, avoid legal liabilities, and ultimately contribute to a more sustainable and trustworthy future for themselves and their stakeholders.

To mitigate these catastrophic effects, cities must adapt and increase their investment in infrastructure resilience, especially cities like Jakarta and Chicago, which are sinking.

These investments need to include solutions for waste management in cities around the globe, which is a major contributor to methane, a potent greenhouse gas. Annually, the world generates two billion tons of municipal waste, and a predicts that municipal waste mountains are set to grow by as much as two-thirds by 2050 in the Global South.

Alarmingly, 45% of this waste never reaches appropriate management facilities, causing significant emissions of methane. And a significant portion of this untreated refuse originates from urban areas in the Global South, where inadequate infrastructure often hinders proper collection, sorting, and safe disposal of waste in landfills.

Innovative tech could maximize investments in climate resilience

Cities across the globe from Houston to Singapore are embracing cutting-edge technology in the form of digital twins, which are virtual representations of a real-world objects or systems and are used to address various urban challenges. These advanced digital replicas are being utilized to monitor groundwater, mitigate urban heat islands, combat air pollution, and optimize waste management systems.

In urban settings, digital twins integrate information from vehicles, buildings, and infrastructure. They are updated with real-time data that is collected from various sources, including drones, sensors, and satellites. This data is then enhanced with input from smart devices, the vast network of internet connected technologies, and artificial intelligence, creating a comprehensive and dynamic model of the city.

These sophisticated tools allow city planners and managers to visualize, analyze, and predict urban phenomena, enabling more informed decision-making and efficient resource allocation. By leveraging digital twins, cities are better equipped to tackle complex environmental and infrastructure challenges.

Significant efficiencies from the use of this technology are also likely. By 2025, more than 500 cities could be using some form of digital twin technology, according to , sparking savings of $280 billion by 2030.

Technology poised to help drive action on waste

City mayors from around the world are — a global network of nearly 100 mayors of the world’s leading cities who are united to confront the climate crisis — in order to improve waste management practices, especially around reducing methane emissions. Participating cities are striving to meet a series of 2030 targets, which include establishing city-wide waste collection services, treating at least 30% of organic waste, and reducing waste disposal emissions by a minimum of 30%.

To achieve these objectives, cities are undertaking key intervention projects, such as developing sanitary landfills equipped with technology-enabled gas capture, improving working conditions in the informal sector, and introducing a comprehensive recycling system along with a waste segregation framework.

More sophisticated tools allow city planners and managers to visualize, analyze, and predict urban phenomena, enabling more informed decision-making and efficient resource allocation

Organic materials, such as food scraps, yard trimmings, junk wood, and wastepaper, make up most landfill content. As these materials decompose, they produce biogas, which includes methane. Instead of letting this methane leak into the atmosphere or go to waste, it can be captured and used as a relatively clean energy source for generating electricity or heat. This approach offers dual climate benefits because it prevents landfill emissions and reduces the need for coal, oil, or natural gas.

For example, that utilizes technology for managing biogas uses perforated tubes that are inserted deep into the landfill to collect the gas, which is then piped to a central collection area where it can be vented or flared.

However, there are to landfill methane capture, including a lack of evidence-based data, high upfront costs, and the lack of regulations and policies. This is where collaboration through C40 and the UN Habitat’s Waste Wise Cities (WaCT) can have an impact. For example, more than 400 cities have begun using a WaCT tool to uncover exactly what is happening to their waste, and then using this information to demonstrate the need for innovation and investment in their management strategies. For example, Dakar, the capital city of Senegal, collects 95% of its waste, but only 1% is sent to managed recovery and disposal facilities, resulting in a waste recovery rate of just 4%. The city’s mayors are now leveraging this data to attract external investment with the aim of transforming waste management into a source of revenue, which is a broader opportunity for cities in the Global South.

Conclusion

As the world’s urban populations face unprecedented environmental challenges — from extreme heat, to rising sea levels, and waste management crises — many are turning toward technology for help. And cutting-edge technology solutions, such as digital twins and innovative waste management system solutions, offer a beacon of hope. By leveraging these technologies, cities can increase their investment in infrastructure resilience, mitigate the impacts of climate change, and drive significant efficiencies.

As the world’s cities continue to grow and evolve, it is essential that we prioritize investment in climate resilience and innovative technologies to create a more sustainable, equitable, and environmentally conscious urban future.

This article is based on two articles in Ěýissue on Decarbonising Cities:ĚýĚýby Amy Nguyan andĚý, by Mark Hillsdon.

Traditionally, GDP expansion has been of population increases, productivity, and debt. In the foreseeable future, however, population expansion and debt accumulation are expected to remain stagnant, placing the onus on economic growth on improving productivity, which is essential for propelling the financial prosperity of companies.

Distilling GenAI’s impact on the environment

Earlier this year, Jeff Wong, Global Chief Innovation Officer of Big 4 consulting firm EY, discussed the next frontier of technology beyond what artificial intelligence (AI) and generative AI (GenAI) is already offering. In fact, Wong hypothesized that quantum computing could become the most disruptive technology of the near future, calling it “one of the under-talked-about topics of the world.” This is a stunning prediction given that most organizations have not yet gotten their head around the opportunities inherent in leveraging GenAI.

This reality also poses a future challenge that very few people are even talking about — the implications of GenAI and quantum computing on a sustainable future. The Climate School at Columbia University posed the question, that if indeed AI can do , “will its potential to aid decarbonization and adaptation outweigh the enormous amounts of energy it consumes? Or will AI’s growing carbon footprint put our climate goals out of reach?”

According to Wong, asking a question and getting an adequate answer from GenAI requires six- to 10-times the amount of power required to generate a response compared to a traditional Internet search. In addition, the energy that the world’s data centers consume, many of which power GenAI queries, Ěýof global greenhouse gas (GHG) emissions, exceeding even those of the aviation industry.

As AI models become even more advanced and intricate in the coming years, their demands for processing power and energy will also escalate. For example, oneĚýĚýthat by 2028, there will be a four-fold improvement in computing performance, and a 50-fold increase in processing workloads due to increased use, more demanding queries, and more sophisticated models that contain many more parameters. In fact, some estimate that the energy consumption of data centers on the European continent willĚý. (Even, Forbes acknowledges the surging energy demand growth from GenAI and highlights in building out and operating data centers and computing infrastructure.)

It is important that companies consider energy efficiency and sustainability when they are generating the computing infrastructure and power that GenAI needs to deliver on all the productivity gains that it promises. For example, water and other coolants are needed to absorb the heat generated by computer components, and when this liquid cooling method is implemented effectively, it and mitigates adding to harmful environmental impact. In addition, data center providers can commit to energy efficiency and environmental sustainability through adopting .

Important actions to account for emissions when investing in GenAI

, just 22% of business leaders cited sustainability impact as a top issue in GenAI deployment even as AI models advance in capabilities and complexity and require more processing power and energy consumption. To better account for GenAI’s environmental impact, companies need to take action to understand how GenAI influences their emissions footprint. Such actions should include:

Establishing a baseline — Companies should measure their emissions as the first step, a process which itself underscores the need for using a to calculate the emissions impact of prospective GenAI applications. Next, these emissions should be allocated within companies’ designated emissions budgets. In addition, companies should make a thorough evaluation to better understand the emissions generated by initial and ongoing training of large language models, the emissions impact of subsequent modifications made to those models, and their emissions during regular use.

Building in requirements for emissions accounting — When assessing GenAI models for their practical applications — or considering any new technology implementation for that matter — companies need to justify the business case and use case of these new components. Indeed, companies always should make decisions that support their sustainability objectives, and that includes evaluating if GenAI is the most suitable option for their specific business applications.

There’s no doubt that technology is moving at a faster pace, or that GenAI is the current hot technology of today. Yet tomorrow, it could be quantum computing or even the metaverse. This makes it imperative for companies to leverage the expertise of C-Suite technology leaders and their own in-house information chiefs, says Wong, especially because these roles are evolving from service delivery functions to strategic advisers. These tech leaders need to help company management understand how the convergence of technology can help fulfill business needs while making clear the total cost on the environment for this technology’s use.

The landscape at the intersection of GenAI, sustainability, and environment impact is complex, but Wong says he is not deterred. “We’re very early in this game of understanding how large language models work and how much processing power they need,” he says, adding that the power generation requirement will be solved through creativity. “A lot of people in the technology world are very attuned to the fact that sustainability is an important issue for the planet, even outside and beyond their industry.”