As Australia’s mandatory climate reporting regime comes into full effect, many organisations are focused on compliance.
The businesses that will thrive aren’t those simply ticking disclosure boxes. They’re the ones who built ambitious sustainability strategies years ago, embedded them into enterprise strategy, and can now tell a compelling, evidence-based story that drives growth and organisational resilience.
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Why Strategy Comes Before Compliance
With AASB S2 mandatory disclosures now in force, it’s easy to treat sustainability as a reporting exercise. But reporting without strategy is just the documentation of indecision.
A robust sustainability strategy does three critical things that reporting alone cannot:
It creates clarity on what matters. Not every environmental or social issue is material to your business. Strategy forces the hard conversations about where you can make the greatest impact and where your business faces genuine risk and opportunity.
It sets the ambition level. Incremental improvements won’t cut it in a world facing systemic challenges. Ambitious goals that make your team slightly uncomfortable are the ones that drive innovation, attract talent, and differentiate you from competitors doing the bare minimum.
It becomes the narrative thread. When your strategy is clear and embedded across the business, your reporting writes itself. You’re not scrambling to find data points; you’re sharing progress on commitments the whole organisation is already working toward.
Without Ambition, What’s the Point?
Some organisations are setting sustainability targets that are essentially business-as-usual with better PR. Commitments to reduce emissions by 10% over a decade, when the grid will green by twice that anyway. Diversity targets that barely move the needle when your industry faces a talent crisis. Circular economy initiatives that touch 2% of product lines.
This isn’t strategy, it’s risk mitigation theatre.
Ambitious targets are uncomfortable by design. They should invite hard questions about capital allocation and force exploration of technologies that don’t yet exist at scale. They should make your board nervous and the broader business excited.
Why? Because ambitious goals:
Drive real innovation. When incremental improvement won’t get you there, you’re forced to think differently. This is where breakthrough solutions emerge: new business models, novel partnerships, technological innovation that creates competitive advantage.
Signal credibility. We can spot the difference between genuine commitment and box-ticking. Ambitious targets that differentiate you from peers show us you’re serious.
Attract and retain talent. Top performers want to work on meaningful challenges. They want to join organisations bold enough to tackle big problems, not companies content with cosmetic changes.
Future-proof your business. The regulatory baseline will only increase. Ambitious goals today position you ahead of tomorrow’s requirements, ensuring revenue streams are protected and new opportunities can be seized.
Ambition Without Accountability Is Just Marketing
Let’s be blunt: ambitious goals without rigorous tracking and accountability are greenwashing, even if unintentional.
The organisations leading in this space share common characteristics: they set ambitious, time-bound targets that they openly acknowledge might not be met. They report regularly, not just annually. They tie executive compensation to sustainability performance. And they maintain consistent narratives that drive sectoral change on material priorities.
This level of accountability does two things.
Internally, it signals that these commitments are serious, driving behaviour change throughout the organisation. Externally, it builds credibility with investors, clients, and regulators who increasingly can spot the difference between intention and action.
The Enterprise Strategy Imperative
Here’s what forward-thinking boards already know: sustainability isn’t a parallel track to business strategy—it is business strategy.
Revenue growth: Clients are increasingly making procurement decisions based on suppliers’ sustainability credentials. In B2B contexts, your sustainability performance can be the deciding factor in tender processes. In consumer markets, brand purpose drives loyalty and premium positioning.
Capital access: Investors are allocating capital based on climate risk assessment and ESG performance. Companies with strong sustainability strategies are accessing cheaper capital, attracting impact investors, and maintaining stronger valuations.
Operational resilience: From supply chain disruptions linked to climate events to regulatory changes affecting operating licenses, sustainability strategy is fundamentally about building business resilience in a changing world.
Talent and culture: The competition for young professionals (I still consider myself one, for now) is increasingly focused on organisational purpose and environmental credentials. Your sustainability strategy is your talent strategy.
The Competitive Advantage of Good Strategy
We often say that sustainability is an untapped opportunity to build organisational resilience and long-term value. What does this look like in practice? It’s an ambitious sustainability strategy—backed by genuine business integration, accountability, and a consistent narrative—that creates competitive advantage.
This advantage manifests in:
- Stronger stakeholder relationships built on demonstrated commitment and transparency
- Better risk management through proactive identification and mitigation of emerging issues
- Innovation catalysts as sustainability goals drive new thinking about products, services, and operations
- Premium positioning in markets increasingly defined by values and purpose
- Regulatory preparedness as mandatory requirements continue to evolve
The businesses winning in this space aren’t those doing sustainability and business strategy. They’re doing business strategy through a sustainability lens—and their reporting reflects that integration.
Where to Start
If you’re reading this and feeling behind, here’s the path forward:
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Assess honestly where you are today: not where you want to be, but where you actually are, in terms of both performance and governance
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Be ambitious by setting goals that genuinely challenge the organisation while remaining credible and achievable
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Disclose transparently with reporting processes and consistent narratives that showcase progress, acknowledge gaps, and articulate future direction
This is – not coincidentally – the approach we take at BWD Strategic. Because whether you’re preparing for mandatory climate reporting or building long-term competitive advantage (or, ideally, both), the fundamentals remain the same: strategy first, ambition embedded, accountability maintained, business integrated. And then the fun stuff, the reporting.
The organisations that get this right won’t just comply with AASB requirements. They’ll use sustainability as the strategic lever it should be: driving growth, attracting capital, winning clients, and building businesses capable of thriving in the decades ahead.
The best time to start building a sustainability strategy was five years ago. The second-best time is now, preferably before your first mandatory sustainability report is due.
We’d love to hear your thoughts – email ian.lieblich@bwdstrategic.com or message him on LinkedIn if you’d like to continue the conversation.
About the Author
Ian Lieblich is a Senior Strategy Manager at sustainability strategy consultancy BWD Strategic, with over a decade in climate and energy policy experience.