What every CSO needs to know to unlock growth through sustainability

The past year has been decisively marked by global economic uncertainty – from trade fragmentation and supply-chain volatility to rapid technological change. Even with this backdrop, environmental risks continue to rank among the most severe threats to our economy, according to the World Economic Forum’s The Global Risks Report 2026.

At the Forum’s Annual Meeting 2026 in Davos, discussions with chief sustainability officers (CSOs), chief executive officers and chief financial officers looked at nature and climate strategy in this new geo-economic context.

No longer merely a moral imperative or a compliance obligation, instead nature and climate strategy has emerged as a critical driver of growth, competitiveness and financial performance. For CSOs, this shift marks a defining moment, from advocating for sustainability to operationalizing it as a central engine of value creation.

Leading organizations are moving beyond treating sustainability as a risk mitigation or reporting exercise. Instead, it is being embedded directly into business models, supply chain planning, capital allocation decisions and performance metrics.

For it is only when environmental drivers are integrated into the mechanisms that drive growth and profitability that sustainability becomes a source of strategic advantage, rather than a perceived trade-off.

The most effective approaches align incentives, mobilize the organization and connect impact directly to financial value, embedding long-term responsibility into how the business creates value today and in the future. When key performance indicators (KPIs) are tied to the cost of capital, incentives – rather than narratives – drive alignment far faster than policy statements ever could.

A central mechanism discussed in Davos was sustainability-linked financing, where companies that meet predefined KPIs benefit from improved financing terms, including lower interest rates. These instruments act as organizational catalysts, embedding environmental objectives into operational decision-making and proving that measurable targets, backed by financial incentives, drive alignment faster than narratives alone.

In practical terms, when emissions intensity, water efficiency or nature-positive revenue targets influence financing costs, sustainability shifts from a peripheral function to a board-level performance variable. It becomes inseparable from growth strategy.

Sustainability succeeds when it is evaluated through the same lens as any other strategic investment. Sustainability-based initiatives compete directly with growth projects, digital investments and acquisitions, so ambition alone is insufficient – initiatives must demonstrate strategic relevance, financial returns and risk-adjusted value.

This means sustainability proposals must sit within the same capital allocation framework as mergers and acquisitions, digital transformation and efficiency programmes, thereby competing for investment on equal footing.

This requires translating long-term environmental and social goals into credible milestones aligned with financial planning cycles. KPIs and financial logic are non-negotiable. Without clarity on costs, returns, risk reduction and resilience benefits, these initiatives remain vulnerable during periods of economic pressure.

Advances in artificial intelligence (AI)-enabled climate risk modelling are accelerating this shift. Rather than relying solely on historical data, companies can now deploy forward-looking models to quantify, avoid losses from adaptation investments and integrate physical climate risk directly into financial and operational decisions. Climate exposure becomes an actionable financial signal, helping unlock capital for resilience and adaptation while strengthening asset valuation and long-term competitiveness.

As a result, the role of the chief sustainability officer is evolving. Beyond setting vision and targets, CSOs are increasingly expected to act as strategic integrators, fluent in the language of finance and capable of translating systemic risks into near-term business decisions. Fluency in financial decision-making is no longer optional for CSOs; it has become a defining leadership capability.

Technology is a critical enabler of systems transformation at a time when the world faces converging climate, nature and development challenges. While planetary boundaries are increasingly under pressure, AI, Earth observation and digital infrastructure are shifting corporate nature and climate strategy from reactive risk management to proactive value creation.

AI is increasingly becoming the operating system of a nature-positive, climate-resilient economy. By integrating fragmented data, compressing decision timelines and unlocking predictive insights, digital tools are helping companies align economic growth with climate and nature goals. From digital twins and climate risk modelling to biodiversity monitoring and supply-chain coordination, technology is turning sustainability challenges into actionable financial signals.

The convergence of AI, Earth intelligence and digital twins is enabling a step-change in predictive capacity. Companies can now scenario-test climate, biodiversity and infrastructure interventions before deploying capital in the real world, reducing cost, risk and unintended consequences while improving investment outcomes.

AI-powered sensing technologies are also shifting biodiversity management from episodic reporting to continuous, real-time insight, tracking species presence, detecting environmental gains or losses and attributing impacts to specific activities. This transition from static disclosure to verifiable outcomes strengthens credibility with investors, regulators and communities alike.

For CSOs, this represents a profound opportunity. Technology is no longer just about better reporting, it is becoming central to investment decisions, resilience planning and long-term competitiveness. The challenge ahead is not technological feasibility, but ensuring that standards, governance and accountability scale alongside innovation.

What differentiates leading organizations is not the boldness of their targets, but their ability to execute. When sustainability outcomes influence performance management and investment decisions, the conversation shifts from aspiration to execution.

No organization can deliver the transition alone. Collaboration across value chains and sectors is essential, particularly to mobilize capital, scale technology and build resilient systems that support growth within planetary boundaries.

Looking ahead, a set of shared priorities is coming into focus. These include clearer definitions of sustainability-linked KPIs beyond existing taxonomies, stronger methodologies that show how these strategies both create and protect enterprise value, and more sector-specific case studies with a demonstrable return on investment.

There is also a growing need for standardized biodiversity and natural capital metrics that can underpin markets and finance, as well as deeper, systemic collaboration between finance and sustainability functions to ensure accountability sits within core business operations, rather than at the periphery.

Above all, unlocking growth through sustainability is no longer about proving the case. Markets, margins and macrotrends are already doing that. The challenge and opportunity, for CSOs now is execution: embedding these priorities into the core of how businesses make decisions, allocate capital and define success.