Sustainability as a Leadership Challenge: Why ESG Fails Not Because of Methodology, but Because of a Lack of Leadership

Why ESG Is Becoming a Management Priority Today

Sustainability is no longer a marginal issue. It is simultaneously subject to regulatory requirements, strategically relevant, and operationally demanding. ESG impacts investment decisions, risk assessments, business models, and corporate culture—and thus central leadership issues.

And yet, in practice, the same pattern emerges time and again: companies have strategies, roadmaps, materiality analyses, and reports. ESG is formally embedded— but, surprisingly often, without having any real impact on decision-making.

The reason for this is rarely a lack of standards, data, or tools. ESG does not fail because of methodology. ESG fails because of a lack of leadership.

Background for this post

• Why ESG transformation falls flat without leadership
• Why ESG Governance Is Not a Structural Problem, but a Leadership Problem
• How ESG Evolves from Reporting to Actual Management

Leadership as a Catalyst: Strategy, Structure, and Culture in the ESG Context

Strategy, structure, and culture are essential prerequisites for transformation— but it is leadership that brings them together.

In the context of ESG, this means:

• Strategy: Level of ambition, climate goals, materiality, risk profile
• Structure: Governance, Roles, Processes, Reporting Logic
• Culture: Prioritization, Accountability, Decision-Making Discipline

Many organizations are working intensively on these three levels—but often in isolation. Sustainability strategies exist alongside corporate strategy, ESG committees alongside existing decision-making structures, and reporting processes alongside operational controlling.

What is missing is the kind of leadership that integrates ESG into the core of business decisions. Here, leadership does not function as an additional component, but as a catalyst:

She ensures that ESG is not just described, but actually implemented.

Why ESG Transformations Fail Despite Strategy and Reporting

In consulting practice, a recurring pattern emerges—regardless of company size or industry:

• Climate goals have been set, but they are not linked to investment decisions
• Materiality analyses are methodologically sound but have no strategic impact
• ESG reporting is well established, but it has little influence on management decisions

These symptoms do not indicate an implementation problem, but rather a leadership problem.

After all, ESG requires decision-making under uncertainty:

• Which ESG issues are truly business-critical?
• In what areas are we willing to accept short-term setbacks in order to build long-term resilience?
• Which conflicting goals are consciously resolved—and which are merely postponed?

Without clear answers, the organization is left in limbo:

ESG is everywhere—but nowhere is it truly a deciding factor.

What does good ESG governance really mean?

Currently, ESG governance is often viewed in structural terms: committees, policies, responsibilities, and tool ecosystems. These elements are important—but they only have an impact when they are driven by leadership.

Effective ESG governance is not characterized by complexity, but by clarity:

• clear priorities at the executive level
• Consistent decisions across strategy, risk, and investments
• clear accountability for achieving goals

In this context, leadership does not mean micromanagement, but rather the ability to chart a clear course. Leaders determine which ESG issues take priority—and stand by those priorities even when it becomes uncomfortable.

Governance: ESG as a Management Issue

A key difference between mature and immature ESG management lies in how reporting is handled. In many organizations, reporting is viewed as an end point. In organizations with strong leadership, it is a starting point.

This change in perspective means:

• Not: What do we need to report?
• but rather: What do we want to steer—and how do we make progress visible?

Standards and systems such as CSRD, VSME, EcoVadis, and CDP provide structure and enable comparability. However, they do not replace leadership decisions regarding which information is relevant to decision-making —and which is merely documented. Leadership is demonstrated here through the ability to focus and prioritize reporting, and to consistently link it back to strategic questions.

Sustainability: Balancing Ambition and Feasibility

The leadership aspect is particularly evident when it comes to climate goals.

Science-based targets (e.g., SBTi) have their value—but only if they are implemented.

Both extremes are equally problematic:

• A lack of ambition undermines credibility
• Overly ambitious goals without follow-through undermine leadership

Leadership lies in consciously balancing this tension. This requires:

• a realistic understanding of one's own organization
• Clarity regarding investment capacity and time horizons
• the willingness to gradually put ambition into practice

Sustainability management is therefore not merely a communication exercise, but an ongoing decision-making process.

The Five Glaciers Perspective: Making ESG Leadership Measurable‍

In our view, the key difference lies not in whether companies implement ESG practices, but in how effectively they do so. We are currently observing a clear dividing line—particularly among small and medium-sized enterprises and in the private equity sector:

• Companies that build ESG frameworks
• Companies that are developing ESG governance capabilities

Architectures create order. The ability to steer creates impact. In the ESG context, good and successful leadership is demonstrated not primarily through statements or mission statements, but through three measurable indicators:

1. Prioritization – Which ESG issues take precedence over other corporate goals?
2. Coherence – Are materiality, climate goals, risk analyses, and investment decisions aligned?
3. Responsibility – Who bears the consequences when goals are not met – and what are the implications?

“ESG rarely fails due to a lack of data—but because no one makes a binding decision about what matters most.”
- Kevin Möller, CEO of Five Glaciers Consulting

External Support: Coaching Instead of Substitution

Leadership cannot be delegated—not even in the context of ESG. The value of external support therefore lies not in taking over ESG responsibilities, but in empowering leadership to make decisions.

Five Glaciers Consulting deliberately positions itself as a strategic sparring partner: We help clarify priorities, structure conflicting goals, and align ESG governance with the ability to steer the organization—not with maximum formalization.

Sustainability is not a methodological issue. It is a leadership issue.

Companies that view ESG as a leadership responsibility provide direction in an increasingly complex environment. They use governance not as a tool for control, but as a guiding principle. And they view reporting not as an obligation, but as an expression of strategic clarity. The difference is fundamental: between organizations that manage sustainability and those that shape it.

‍