Why Are Companies Changing & Dropping Their Climate Pledges?

Trellis Group has published its State of the Sustainability Profession 2026 report, and its findings may come as grim reading for those invested in the energy transition.

The report, which is based on insights from more than 500 sustainability professionals working at companies generating at least US$1bn in revenue, shows that the way companies conceive of sustainability has changed considerably in the past two years.

Rather than presenting sustainability through the lens of climate change, Trellis’ study finds that companies are increasingly couching their ESG endeavours in terms of energy security, operational resilience and cost discipline.

And while this might suggest that sustainability has taken a backseat to the bottom line across boardrooms, the data is a little more nuanced.

The surveys show that 46% of organisations have expanded sustainability budgets and headcount over the past two years.

At the same time, sustainability is being embedded more deeply into energy systems, digital infrastructure, supply chains and industrial operations as businesses seek to align decarbonisation with financial performance.

Nevertheless, these positive developments do not tell the full story.

Energy efficiency takes centre stage

Many organisations are prioritising projects that simultaneously cut emissions and reduce energy expenditure, particularly as they navigate inflationary pressures, tariffs and growing scrutiny around return on investment.

One sustainability director at a US technology company explained that while staff cuts were made to reinvest in AI, the company still needed “substantial investments in solar, building electrification and EV charging” because emissions continued to rise.

This reflects a broader trend: energy-related investments are increasingly tied to operational continuity and long-term cost stability.

According to the data, 44% of organisations report that leaders are placing greater emphasis on the business case for sustainability, while 41% are intensifying focus on climate risk, particularly where it intersects with energy supply and infrastructure.

Public communication, however, is becoming more cautious.

Several respondents noted a shift in language, with terms such as “carbon reduction” increasingly replaced by “energy savings” and “asset protection” to reduce political sensitivity while maintaining momentum.

Overall, 63% of companies reported scaling back or reframing how they communicate sustainability externally.

“As we publish the ninth biennial Trellis State of Sustainability Profession report, we find ourselves in a much-changed world,” says John Davies, President of Networks at Trellis Group, in the report.

“We are operating in a highly volatile and uncertain political and economic landscape.

“Regulatory requirements are in flux and inevitably the sustainability job is too.

“As sustainability moves to the mainstream from the margins, the rules also change.”

Among companies with established sustainability targets, 57% have maintained them, 24% have strengthened them and 16% have either weakened or withdrawn commitments.

Digital tools power energy performance

Technology is playing a growing role in sustaining energy and emissions performance as budget growth slows.

While investment remains material, expansion has moderated compared with previous years.

“Trellis Group’s State of the Profession 2026 is the oldest and most established study of its kind, with the survey attracting more than 1,000 respondents, more than 500 of whom are in qualified corporate sustainability positions at companies with revenue more than $1bn,” writes Grant Harrison, VP Sustainable Finance & ESG at Trellis Group and Executive Director of Trellis Impact, on LinkedIn.

Hiring trends reflect this shift. In 2024, 74% of companies increased sustainability staffing, but by 2026 this had fallen to 50%, with 26% reducing headcount.

To bridge the gap, organisations are investing in automation and digital platforms to manage energy data, emissions tracking and reporting requirements more efficiently.

A Vice President of sustainability at a US building supply company noted that demand for sustainability data had “increased dramatically,” prompting a focus on “productivity via automation” rather than continuous team expansion.

Compliance technology is also becoming critical as regulatory expectations evolve, particularly in relation to energy use and emissions disclosures.

“Sustainability is moving from the aspirational to the operational – less focused on bold announcements, more execution,” writes Anna Timme, Global Vice President Sustainability, Data Centre Business and Schneider Electric.

“The companies winning right now are the ones that always knew clean energy and decarbonisation weren’t trends.

“They’re infrastructure. They’re long-term bets on how the world must be built.”

More than half of companies (52%) are increasing investment in sustainability reporting, with 36% maintaining previous levels and 12% reducing spend.

Many are building advanced data systems and hiring specialists focused on assurance, governance and energy-related reporting accuracy.

Embedding energy strategy into operations

Sustainability responsibilities are increasingly decentralised, moving into operational areas such as procurement, manufacturing and logistics where energy use is most concentrated.

Only 47% of professionals now view corporate sustainability as an attractive long-term career path, reflecting this structural shift.

Larger organisations are embedding expertise directly into supply chains, where energy costs, resilience and regulatory pressures directly influence sourcing and production decisions.

“Our report this year identifies a significant decline in support from CEOs for sustainability programs,” says John in the report.

“That shouldn’t necessarily surprise anyone as tariffs, supply chain disruptions, DEI attacks and letters from attorneys general take up a lot of headspace.

“All of this can make the day-to-day work of sustainability disheartening.”

Among organisations with more than 10,000 employees, 53% have embedded sustainability roles within procurement and supply chain teams, while 38% have placed them in manufacturing, operations or facilities.

This shift highlights a broader evolution: sustainability is increasingly treated as an operational discipline centred on energy efficiency, resource management and measurable outputs.

Rather than prioritising aspirational targets, businesses are focusing on improvements across production systems and value chains, particularly where energy consumption and cost can be optimised.

One Australian travel company described the current phase as a “recalibration” to ensure sustainability programmes deliver both “impact and commercial relevance”.

Another executive noted that projects now proceed only when they achieve both environmental and financial returns, often through energy savings or efficiency gains.

Supply chains remain exposed to geopolitical and economic disruption, with tariffs, regulatory shifts and government pressure all influencing decision-making.

Even so, organisations continue to integrate sustainability into sourcing and manufacturing because of its direct link to energy efficiency, risk mitigation and long-term resilience.

Despite one-third of companies reducing sustainability budgets, 44% have increased spending, reinforcing the view that sustainability, particularly energy strategy, remains a core business function rather than a temporary priority.