• Many businesses make sustainability commitments, but a large portion lack the motivation to go beyond surface-level pledges and adopt behaviors that drive real, measurable change.
• AI forecasting, feedback loops, and strategic framing can make future sustainability benefits feel more urgent and actionable, preventing short-term priorities from overshadowing long-term gains.
• Streamlining decisions through choice architecture can help businesses adopt sustainable practices, especially when green progress is stalled by complex and ambiguous options.
• Public commitments and peer partnerships can increase accountability and normalize sustainable business behaviors, keeping businesses engaged in their environmental goals.

Despite widespread adoption of net-zero targets, carbon accounting frameworks, and environmental, social, and governance (ESG) reporting initiatives, efforts to promote sustainable business behaviors are not panning out as expected. Many companies establish net-zero goals or implement sustainability frameworks focused on emissions reductions, but a large portion fail to deliver on them, with apparently minimal consequences.⁴ Climate commitments from some of the world’s largest companies have resulted in emissions that fall well short of climate goals.⁵ Corporate sustainability frameworks tend to narrowly focus on operational emissions and neglect the supply chain, which can account for up to 90% of a company’s emissions.⁶ Across the board, interventions often prioritize offsetting rather than making actual reductions, leading to impacts that can be vague and hard to measure. 

In theory, the triple bottom line framework is a solid way to ensure companies measure success in terms of their contributions to people and the planet, not just profits.⁷ But in practice, companies often struggle to balance these three priorities. Even companies that are leading the way in sustainability report a laundry list of challenges when it comes to actually implementing comprehensive improvements.² These hurdles include:

• Overwhelming sustainability metrics that are hard to define or measure.
• Government policy incentives that are weak or unclear.
• Difficulty getting employees and stakeholders on board with changes.
• Unclear standards for sustainable procurement and supply chain management.
• Concerns about communicating sustainability progress without being accused of greenwashing.

Underlying these challenges is an important motivational gap. Often, sustainability is seen more as a tool to ensure ESG compliance rather than a genuine opportunity to improve business practices. The need to comply with regulations or attract investors encourages surface-level, preformative improvements over comprehensive changes with real long-term impacts. Without immediate consequences, incentives, or measurable progress, even well-planned sustainability projects can fizzle out before they’re fully implemented. In the following sections, we’ll take a closer look at these barriers and offer several evidence-based solutions that can motivate companies to close the green gap and build new business models around sustainability, resilience, and long-term success.

One of the most glaring barriers to business sustainability is the tendency for companies to focus on the present, prioritizing short-term gains over long-term benefits. This present bias often leads to suboptimal business decisions fueled by the instant gratification of immediate rewards. Standing in stark contrast to the immediate gains reflected in short-term KPIs and quarterly earnings, sustainable changes can feel risky and costly. In fact, companies often see sustainability as a trade-off with profitability.⁸ 

The Sustainability Trade-Off Myth

Despite a wide body of evidence showing that sustainability and profitability can coexist, companies continue to see sustainability as a sacrifice. Recent neuroscience research on a diverse group of 280 senior executives found that these leaders tend to associate sustainable businesses with slowness and unreliability.⁸ Leaders tend to think that sustainability clashes with traditional business goals, fueling the misconception that companies leading the sustainability frontier often end up losing.² This perception that sustainability comes with a large up-front cost can make companies hesitant about change, especially when they are driven by short-term incentives.

The tendency for companies to favor immediate priorities over long-term goals is further reinforced by loss aversion, a bias that makes potential losses feel more impactful than equivalent gains. When sustainable behaviors involve an upfront cost, the immediate loss can feel much more significant than the potential benefits, especially when these benefits might not materialize until some time in the future.

Chasing Immediate Rewards Over Long-Term Value

Biases that favor short-term rewards contribute to organizational inertia, anchoring companies to current practices and undermining the long-term business case for sustainability—like avoiding climate-related supply chain disruptions, attracting long-term investors, or boosting brand loyalty. Short-term thinking makes sustainable efforts especially vulnerable to economic downturns when cost-cutting takes priority, even though sustainable practices can be good for business during times of crisis.⁹ 

Left unchecked, this short-sighted focus can mean businesses miss opportunities to innovate, fail to properly prepare for regulatory changes, and even end up facing climate-related disruptions that could have been sidestepped with a proactive mindset. Fortunately, behavioral science can help companies overcome the persistent misconception that sustainability is a sacrifice. By reframing sustainable behaviors as strategic moves, making long-term benefits feel more tangible, and using advanced forecasting to reduce the perception of risk, we can make sustainability feel more compatible with traditional business goals.

When one of the largest business barriers to sustainability is short-term thinking, making outcomes immediately rewarding can play an important role in changing how businesses make decisions. With the help of digital tools, AI-driven platforms, real-time feedback, and smarter framing, sustainability can seem less like a distant, intangible goal and more like a source of immediate business value.

Motivate Action with Real-Time Feedback Loops

One way companies can visualize the immediate value of sustainable behaviors is through the use of real-time feedback loops. These continuous information-gathering systems allow organizations to monitor the direct impact of their actions, identify areas for improvement, and make data-driven decisions instead of relying on assumptions or feelings.¹⁰ With the help of sensors, data analytics dashboards, and machine learning to analyze complex (and extremely large) datasets, these tools can drive continuous improvement by tying actions to immediate results, rather than promising beneficial outcomes sometime in the distant future. The key is to use data to bring sustainability alongside other familiar financial metrics, ensuring it can still support a traditional business case focused on profits and risk management.⁸ 

Use AI Forecasting to Reduce Perceived Risk

Closely tied to feedback loops, AI-driven platforms can also be valuable for identifying trends and making predictions about the future, making it easier to forecast the environmental and financial impacts of various decisions. This can reduce fear of failure and minimize the unpredictable costs of change.

Feedback loops and AI forecasting have been successfully used across a range of industries, including areas of urban planning, agriculture, and manufacturing.¹⁰ For example, feedback systems in agricultural systems measure soil health, water usage, and crop yields to identify areas for optimization. In buildings, similar systems continuously monitor energy usage and offer opportunities to reduce consumption. Unlike annual reports or one-off audits, real-time monitoring and forecasting make it possible for companies to adjust their strategy as they go and actually see the benefits of these changes immediately reflected in data.

Framing the Business Case for Sustainability

Sustainability leaders can leverage these tools not only to improve business operations but to frame sustainability itself as a beneficial business move. Rather than presenting sustainability as a costly burden or compliance obligation, it can be presented as a strategic opportunity to hedge against risk, increase profits, attract employees, reduce production costs, build brand loyalty, and more. Harvard Business School shares several ways to frame discussions around sustainability so they align with the financial goals of decision-makers:¹¹

• Use data visualizations to highlight consumer preferences for sustainable options.
• Calculate the anticipated ROI of sustainability projects to show expected financial returns.
• Share case studies of businesses that have successfully implemented sustainability initiatives, such as Etsy, Starbucks, and Salesforce.

By using data and framing to make the outcomes of sustainable behaviors more immediate and measurable, businesses can overcome biases that favor short-term thinking and focus more on the rich rewards of adopting greener business models.

Even when companies recognize the need to implement sustainability, many remain stuck in outdated practices. Often, leaders are simply drawn to business as usual because it feels comfortable and predictable, even when current strategies or systems are no longer serving them. This is a prime example of the status quo bias, where the current way of doing things is used as a reference point against which change is evaluated. Any shift away from the norm is perceived as a risk or a loss, even if alternatives may actually be better.³ This status quo bias can mean that companies often exhibit conflicting values around sustainability, endorsing the need to change while clinging to familiar systems.

Cognitive Dissonance Among Business Leaders

Research shows that business leaders are finding it increasingly difficult to deliver value by following business as usual, especially as they consider the viability of their businesses over the long term.⁸ However, many still struggle to reconcile the need for change with the draw of the status quo. Although 70% of business executives feel that it’s important to adopt new sustainable models, 67% feel that traditional decision-making norms—that prioritize strong quarterly returns and minimize costs—still remain critical.⁸ 

This mismatch between the draw of current practices and the need to change reveals a sense of cognitive dissonance: an uncomfortable psychological state that arises when our beliefs, attitudes, or behaviors are inconsistent. When change seems too difficult, leaders may be driven to resolve this internal conflict by justifying their lack of action. Statements like “It’s not that relevant to us” and “There are more urgent priorities to handle right now” serve as rationalizations that protect the status quo.¹²

The Friction of Shifting Away from Familiar Systems

While business as usual feels easy and safe, change often feels difficult or confusing. Businesses are facing an ever-increasing set of sustainability metrics to track and report, and a lack of clarity around what to aim for can cause endless confusion.¹³ For example, companies often receive mixed signals from rating agencies on which sustainability actions are valued by the market and expected by stakeholders and consumers.¹⁴ As a business leader, do you focus on reducing direct emissions, producing recyclable packaging, or finding green suppliers? Will consumers accuse your company of greenwashing if you focus on the wrong things? When businesses don’t fully grasp what sustainability means, where to direct their sustainability efforts, or how to implement change, progress stagnates. This is a kind of information overload that results in analysis paralysis, where leaders faced with too much information and too many decisions resort to doing nothing.

The Sunk Cost Trap of Staying the Course

Sunk cost fallacy intensifies the draw of the status quo. In behavioral economics, this fallacy describes our tendency to continue the same course of action even if it’s apparently leading to negative outcomes.³ To make things worse, our commitment to past ideas often escalates with the amount of time, money, or effort invested. If companies have already spent significant resources on established supply chains, infrastructure, and other business practices, these sunk costs can make them resistant to change, even if leaders acknowledge that their current path is not the best one.

Reducing friction in the decision-making environment is key to encouraging businesses to shift away from the status quo and adopt sustainable practices. Choice architecture is one way to make these changes feel easier. Choice architecture is a behavioral science concept that involves intentionally designing choice environments to influence people’s decisions in a predictable way, which often means making the desired direction the path of least resistance.

Provide Decision-Makers with Clear Goals

One effective way to apply choice architecture is to simplify complex goals into simple, actionable steps. Checklists, for example, have been proven effective at prompting action in complex decision situations.³ Paired with clear, standardized goals that are easy to understand, checklists can make it easier for businesses to follow through on their intentions. Aligned with this concept, the Science Based Targets initiative (SBTi) is one organization that’s working to provide businesses with standards, tools, and guidance to reduce their emissions based on a scientific understanding of net-zero, essentially clarifying sustainability plans with clear and consistent targets.

Make Sustainability the New Default

Defaults can also be incredibly effective at shaping behavior. Defaults are pre-set options that require no effort on the part of the decision-maker to select, unlike opt-in options that require an active choice. Defaults can motivate people to become organ donors, vote for environmental protection policies, and recycle food waste.³ In business settings, defaults could encourage decision-makers to choose sustainable options over established practices. This might involve setting sustainable suppliers as the default option in procurement software or automatically enrolling businesses in emissions reporting commitments, requiring that they actively opt out if they don’t want to participate.

Encouraging companies to commit to sustainable actions in the future could be another way to leverage the power of inertia, especially for businesses that are hesitant about upfront costs. Similar to the Save More Tomorrow program, which encourages employees to commit a portion of their future salary increases toward retirement savings, companies could set sustainability commitments that escalate gradually over time or with increases in profit. This commit now, act later approach establishes future defaults while reducing the sting of loss aversion by aligning costs with future gains. As companies get the ball rolling with incremental sustainability upgrades or automated carbon offset programs, these pre-established commitments would shift the status quo slowly, motivating companies to stick with the new normal and reducing the likelihood that they opt out when the time comes to make a change.

Simplify Decisions with Bundling

Policy bundling is another form of choice architecture intended to reduce information overload for decision-makers. Grouping several sustainability initiatives into a single policy choice shrinks the decision-making process into a single yes or no, reducing the risk that leaders will feel overwhelmed by their options and default to inaction.

Research shows that bundling can also help combat loss aversion by combining policies that offset each other’s costs.¹⁵ For example, pairing a carbon tax with direct rebates for businesses that implement eco-friendly technology reduces the perceived financial loss of the tax. Similarly, bundling sustainability initiatives together can help take the attention off sunk costs, making change overall feel like a comprehensive upgrade rather than a rejection of the current way of doing things. 

Another key barrier to business sustainability is the diffusion of responsibility. When responsibility for reducing global emissions is shared across departments, businesses, supply chains, and industries, no one feels personally accountable for taking action. After all, environmental problems are collective issues by nature, so it’s easy for them to feel abstract and psychologically distant. This can make it difficult to emotionally engage leaders, stakeholders, and employees, resulting in sustainability initiatives that are siloed to certain departments or passed off to external partners, allowing businesses to operate as usual under the assumption that “someone else is handling things.”

One excellent case study comes from the World Bank’s Clean Cookstove Initiative. Every year, inefficient cookstoves produce indoor air pollution that leads to an estimated 3.2 million premature deaths and $2.4 trillion in healthcare costs, lost productivity, and environmental impacts. Working with the World Bank to promote the adoption of clean cookstoves, The Decision Lab discovered that diffusion of responsibility on the supply side was limiting the reach of awareness campaigns. Manufacturers thought that suppliers were responsible for raising awareness and vice versa, resulting in a consumer base left unaware of the health risks of their traditional stoves.

Limited Accountability for Companies

Compounding the issue of diffused responsibility, companies are rarely held accountable for falling short of their sustainability obligations. Among over a thousand firms that set emissions targets in 2020, 40% either missed or abandoned their targets and faced zero consequences.⁴ Only three of the failed firms were criticised in the media. While firms were rewarded with media sentiment and improved environmental scores for setting their targets in 2020, the market largely did not react when firms failed to hit their targets.

Greenwashing and Moral Licensing Over Real Impact

Without accountability, businesses lack incentives to pursue sustainable actions beyond making bold claims or pledges. Researchers are seeing evidence that more firms are announcing targets without intentions to achieve them—simply because other companies are getting away with it.⁴ It goes without saying that normalizing this lack of accountability opens the door to greenwashing. Surface-level pledges can also lead to moral licensing, where a company feels like it’s done enough by making minor changes, justifying their lack of attention to real issues, like heavy polluters in their supply chain. Whether or not brands are driven to adopt sustainable practices, diffusion of responsibility and lack of accountability can lead to inaction. 

To generate shared ownership over sustainability efforts, companies and individual decision-makers need to be driven by more than broad sustainability goals. Tapping into social norms and encouraging businesses to make public commitments—with clear lines of accountability—can help companies turn intention into action. 

Build Social Norms Through Competition

Social norms describe how our behaviors are influenced by the actions of those around us. For example, providing consumers with home energy reports—showing how they stack up against other homes—can effectively motivate energy conservation without the use of price incentives or penalties.¹⁶ Tapping into social norms can be powerful for encouraging sustainable behaviors among individual consumers, but can be equally valuable for targeting group-level business behaviors. 

Sustainability leaders can leverage social norms to encourage employees, departments, and even entire businesses to adopt sustainable behaviors. How? One way to demonstrate social norms is through gamification.¹⁷ Gamified apps like JouleBug and Changers Fit allow employees to observe others taking action toward company sustainability goals, normalizing these behaviors while users compete for points or badges. Companies could also use basic leaderboards—similar to sales leaderboards—to encourage individual employees to take actions toward sustainability.¹⁸ 

Encourage Collective Participation Through Partnerships

Beyond gamification, entire companies could be incentivized to partner up on sustainability efforts through platforms like Loop and Food Hero. Loop, currently available in France, collaborates with brands to create a circular product ecosystem that allows companies to sell products like shampoo and sauces in reusable, returnable packaging. Similarly, Food Hero is an app that allows consumers to buy surplus food from grocery stores and other merchants that would otherwise end up in the landfill. Platforms like these offer an easy way for brands to recoup costs while collectively contributing to sustainability initiatives. As more businesses partner up through these platforms, sustainable actions become increasingly normalized as a shared opportunity rather than a burden for someone else to deal with.

Integrate Commitment Devices into Regular Workflows

Commitment devices can also play an important role in increasing accountability among businesses. Making public commitments on platforms like Race to Zero is a way for businesses to self-impose a reputational cost for failing to follow through on their intentions. Governments often use similar commitment devices to enshrine long-term sustainability targets into legislation and safeguard these goals from future lawmakers.¹⁹ 

Among businesses, commitment devices like formalized pledges or contracts (at the team or leadership level) could help create a sense of personal responsibility for sustainability. On a larger scale, policymakers could require public commitments from businesses making sustainability pledges. Going a step further, new legislation could mandate transparency around reporting to prevent companies from making pledges and then quietly backtracking on them. California, for example, has recently enacted two climate disclosure laws requiring large companies to report their greenhouse gas emissions, including often-overlooked emissions that occur in the company’s supply chain.²⁰ Whether it’s through legislation, public commitment platforms, or media and investor attention, holding companies accountable for their individual sustainability claims is essential for making responsibility collective and visible.

While behavioral interventions can be powerful for motivating action, they cannot replace structural incentives like legislation and policy shifts. Without financial or market incentives, behavioral science strategies to encourage sustainable business behavior might only scratch the surface, targeting low-hanging fruit—like office energy conservation or employee recycling programs—while overlooking major sustainability barriers in business supply chains. 

Building off of this, not all green business barriers are rooted in cognitive biases and decision-making frictions. Often, business decisions result from strategic analysis based on economic realities, like financial and operational limitations that prevent businesses from being able to afford new eco-friendly technology or overhaul their supply chains.

Overall, motivating businesses to go green requires buy-in from all levels of the organization, from employees to leadership. Of course, customers must also be motivated to buy sustainable products, especially if adopting sustainable practices means that costs increase for the end user. Overcoming resistance to change can require significant cultural shifts that won’t happen overnight. Fortunately, the tide is turning, and more consumers, employees, investors, and business leaders are taking sustainability more seriously.²¹ As sustainability becomes less of a want and more of a need, behavioral interventions have the best shot at motivating action when they are tailored to individual businesses, markets, and decision-making environments, so they can account for the specific frictions, biases, and incentives involved.

Despite a growing need to adopt sustainable business models, many businesses struggle to engage in sustainable behaviors in the face of competing short-term priorities. Sustainable choices are perceived as costly and complex with a long-term payoff, so they’re not always worth the risk for businesses focused on short-term gains—especially when responsibility is shared by other companies. By making sustainability outcomes feel more immediate, reducing decision-making friction with behavioral nudges, and encouraging public commitments and peer partnerships, we can encourage companies to shift away from the status quo and adopt sustainable practices that have a measurable, real-world impact.

Behavioral science can give policy makers, sustainability leaders, and environmental groups a strategic advantage when it comes to supporting the global movement to address environmental issues. Many organizations around the world are already embracing these strategies. The UK’s Behavioural Insights Team (BIT), for example, has worked with governments and private companies to reduce energy consumption, improve the efficacy of net-zero communications, and boost uptake of climate policies.²² Governments are also pioneering new laws, like the recent reporting legislation enacted in California and the EU, that could set precedents for others around the world.²⁰ Similarly, the Singapore Green Plan 2030 intends to transform the city by helping businesses take advantage of sustainable opportunities and providing incentives for eco-friendly technologies, making the transition easier and more rewarding for companies.²³ 

Whether you’re working in environmental policy, government outreach, or corporate sustainability, applied behavioral science can be invaluable for motivating sustainable behaviors in businesses. Ready to get started? At The Decision Lab, we specialize in designing behavioral change interventions rooted in research and aimed at producing meaningful, measurable results. Let’s work together to bridge the green gap in business and support the intentional shift toward sustainability in companies around the globe.

Boosting Eco-Friendly Purchases with Behavioral Design

From encouraging consumers to buy eco-friendly items to motivating sustainable procurement practices on a business level, the effort to boost eco-friendly purchasing requires a look at the behavioral barriers stalling progress in both individuals and organizations alike. In this article, we explore the action-intention gap in green buying on both sides of the aisle.

Fostering Sustainable Public Procurement

Government procurement practices can also fall victim to many of the cognitive biases that prevent consumers and companies from making sustainable choices. Since governments wield significant buying power, understanding these behavioral barriers is crucial for shifting market incentives and normalizing the purchasing of sustainable goods and services.

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