ESG and Sustainability: The Cost of Solving the Wrong Problem By Giselle Hudson - Founder of The Hudson Alignment Studio
LINKAGE Q3 (2026) - NAVIGATING UNCERTAINTY: SUSTAINABILITY, RESILIENCE AND THE FUTURE OF BUSINESS The pressure to act can make any activity feel like progress. • A company sees rising employee turnover and launches a wellness programme. • A community objects to a proposed development, and the response is a stronger communications campaign.• A supply-chain disruption leads to a search for another supplier. • An environmental concern produces a visible green initiative. Each response may be entirely reasonable yet, the more important question is whether the response addresses what is actually driving what we see. That question matters increasingly in the context of Environmental, Social and Governance [ESG] and sustainability. Organisations are being asked to pay closer attention to the environmental and social consequences of how they operate, the quality of their governance, the resilience of their business models and the risks that may affect their long-term prospects. Yet the more pressure there is to demonstrate action - the greater the temptation to move quickly from concern to solution.There is an important stage between the two: understanding.That need to understand before acting is reflected in current sustainability standards, which require organisations to identify and assess the sustainability-related risks and opportunities relevant to their own circumstances. There is no single list of ESG actions that every organization can simply adopt. What looks like the same problem on the surface can have very different causes from one organization to another.Consider employee turnover. This could be driven by compensation, poor supervision, workload, inflexible work arrangements, limited opportunities for advancement, a toxic team dynamic or a labour market in which particular skills are scarce. A wellness programme may be useful, but if the real issue is management behaviour or pay, it will not solve the problem. The organization may spend money, communicate the initiative enthusiastically and still watch the same people leave.The same is true of community resistance. Leaders may interpret opposition to a project as a failure of communication and decide that stakeholders need more information. Sometimes the community understands the proposal perfectly well and objects to its likely impact. In that case, better communication will not resolve the underlying concern.For ESG and sustainability, that makes decision quality especially important.RECOGNISE THE PROBLEMBefore leaders ask, “What should we do?”, they need sufficient clarity about what they are dealing with. 1. What do we know? 2. What are we assuming? 3. What are we treating as fact just because it has been repeated often? 4. Whose perspective is missing? 5. What evidence contradicts our preferred explanation? 6. Which effects are causes, and which are symptoms? 7. What constraints are shaping the situation? 8. What happens elsewhere in the system if we intervene here?These questions do not delay action for the sake of analysis…they improve the basis on which action is chosen.The cost of getting this wrong can be substantialGETTING THIS WRONG CAN BE COSTLYThere is the obvious financial cost of an initiative that does not work, but also the time, attention and organizational energy consumed while the actual problem remains unresolved. In some cases, the organization continues to invest in the original solution simply because so much has already been committed to it.Understanding the situation accurately matters, especially in ESG and sustainability because many of the issues involved are interconnected.A decision intended to solve an environmental problem may create social consequences. A procurement decision made primarily on cost can introduce labour, supply-chain or reputational risk. A policy intended to strengthen governance can become another layer of procedure if the behaviour that created the problem is never examined. The visible issue may sit in one part of ESG while its causes sit somewhere else. That is why diagnosis matters before resources, reputation and momentum become committed.The Volkswagen emissions scandal is a useful example. What appeared as an environmental failure also exposed governance failures around compliance, oversight and accountability. This example shows how poor decision-making can ultimately surface as an ESG failure.Current sustainability standards increasingly recognize this connectedness. IFRS describes sustainability-related risks and opportunities, as arising from the relationships between a company and its stakeholders, society, the economy and the natural environment across its value chain. That framing asks leaders to look beyond isolated initiatives and consider how the business depends on, affects and interacts with the wider system in which it operates.Best Practice Is Not a Substitute for UnderstandingThere is value in learning from what other organisations have done. Benchmarking can reveal possibilities and reduce unnecessary experimentation. But another company’s solution is the product of another company’s circumstances. Its workforce, operating model, geography, risk exposure, stakeholder relationships, resources and constraints may be very different.Copying the solution without understanding the conditions that made it appropriate can create a polished answer to the wrong question.The same applies to ESG trendsA topic can become prominent enough that organisations feel they should be doing something about it simply because their peers are. The pressure to demonstrate progress can subtly reverse the decision process: the initiative appears first and the problem it is supposed to solve is identified afterwards. That is an expensive way to strategize.Materiality offers a useful discipline here…Not every ESG issue has the same significance for every business, and not every visible concern requires the same response. The task is to determine what matters in the organisation’s particular circumstances before deciding what to do about it.The challenge for leaders is to know enough about the situation to distinguish evidence from assumption, symptoms from causes, and urgency from pressure. Decisions will always contain uncertainty, and better decisions will depend on having enough understanding to know what deserves attention and why.There is also a governance dimension to considerTHE GOVERNANCE DIMENSION TO CONSIDERGood governance is often discussed in terms of structures, policies, oversight and accountability. Governance is also expressed in the quality of the questions leaders permit themselves to ask before committing resources. A board or executive team that challenges its own assumptions, seeks perspectives that complicate the preferred explanation and asks what would have to be true for a proposed solution to work is strengthening the quality of the decision before it is made. That is especially important when an organization sincerely wants to do the right thing. Good intentions can create their own blind spot.When an initiative is framed as environmentally responsible, socially beneficial or ethically desirable, questioning it can feel like resistance to the goal itself. Responsible leadership requires separating the desirability of the goal from the quality of the proposed response.An initiative can be well intentioned and still be poorly diagnosed.For businesses trying to translate ESG and sustainability commitments into meaningful action, the question may therefore need to move one step upstream. Before asking, “What is the solution?”, ask, “What exactly are we solving?”That question will not produce a sustainability strategy by itself. It can, however, prevent an organization from spending valuable time, energy and money on a response that does not address what is actually driving the issue.In an environment where businesses are expected to act responsibly, demonstrate resilience and create long-term value, speed matters…action matters…but so does the discipline to understand what actually needs to be solved, before committing to the fix.ABOUT THE AUTHORGiselle Hudson is the founder of The Hudson Alignment Studio. Known as The Pre-Fixer™, she helps leaders get clarity before the fix by understanding what is really driving a challenge before they commit to a solution.
RECOGNISE THE PROBLEM
Best Practice Is Not a Substitute for Understanding
Good governance is often discussed in terms of structures, policies, oversight and accountability. Governance is also expressed in the quality of the questions leaders permit themselves to ask before committing resources. A board or executive team that challenges its own assumptions, seeks perspectives that complicate the preferred explanation and asks what would have to be true for a proposed solution to work is strengthening the quality of the decision before it is made. That is especially important when an organization sincerely wants to do the right thing. 