The Setup: Who Actually Profits From Sustainability Paperwork

There’s an entire industry built on sustainability. It’s worth tens of billions of euros. It employs hundreds of thousands of people. It has conferences, awards, software platforms, rating agencies, and certification bodies.

Almost none of that money goes to actually making anything sustainable.

That’s not a conspiracy theory. It’s just how the incentives work.

The Everyday Version

You buy the “eco-friendly” product. It costs more. Where does the extra money go?

To the company that stuck a green label on it. To the organization that certified the label. To the marketing team that designed the packaging. To the retailer who gets a higher margin on “premium” products.

Not to the farmer. Not to the factory worker. Not to the environment.

Someone is making money off your good intentions. And it’s not the people doing the work.

This isn’t unique to sustainability. It’s how most label-based trust systems work. Organic, fair trade, carbon neutral — the label is a product. The certification is a product. The audit is a product. The thing the label claims to represent? That’s optional.

The Business Version

Your biggest customer has a new regulation to deal with. They need to report on their entire supply chain — carbon emissions, labor practices, governance, environmental impact. Thousands of suppliers across dozens of countries.

They have two options. They could build internal capacity, invest in supply chain partnerships, help their suppliers improve, and gather data through genuine collaboration.

Or they could send you a questionnaire.

Guess which one costs less?

So you get the questionnaire. Forty-seven pages. Questions about Scope 3 emissions, biodiversity impact, circular economy initiatives. You have 30 days. No help. No tools. No budget. Just a deadline and the implicit threat that if you don’t fill it out, someone else will get the contract.

Your customer writes in their annual report: “We assessed 2,000 suppliers on sustainability criteria.” That line is worth millions in reputation, investor confidence, and regulatory compliance. Cost to them? Almost nothing. They outsourced the work to you. For free.

You get: no help. No benefit. No improvement to your operations. A weekend of stress. And the risk of losing the contract if you answer wrong.

The Rating Agency Model

Now look at the rating agencies — the companies that score your sustainability performance.

Your customer pays the rating agency to assess you. Then you pay the rating agency to see your own score. Both sides pay. The agency takes no risk.

Think about that for a second. Your customer pays to get a number that says “this supplier is sustainable enough.” You pay to find out what that number is and how to improve it. The rating agency collects from both ends.

Does it matter if the rating actually makes anything more sustainable? Not to the agency. They get paid either way. Their business model doesn’t depend on outcomes. It depends on participation.

The more companies that need ratings, the more revenue they generate. The more complex the rating criteria, the more consulting services they can sell alongside the rating. The more frequently the methodology changes, the more often you need to re-engage.

There’s no incentive to simplify. There’s every incentive to complicate.

The Upside-Down Result

Here’s where it gets genuinely perverse.

A company with a polished sustainability report and terrible operations will score higher than a company with excellent operations and no report.

Read that again.

A sewing company with low waste, efficient energy use, stable local suppliers, and 30-year relationships with her workforce. A tight, well-managed operation. But no sustainability report. No dedicated ESG person. No rating agency on retainer. She can’t fill out a 47-page questionnaire because the language is designed for companies with compliance departments.

Meanwhile, a larger competitor has a beautiful 80-page sustainability report, a Chief Sustainability Officer, an EcoVadis Gold medal — and operations that haven’t meaningfully changed in a decade. But they have the report. They have the score. They win the contract.

The system rewards good reports. Not good operations.

The people who designed this system don’t suffer when it fails. They’re the rating agencies, the consulting firms, the software platforms. They get paid regardless of outcomes. The people at the bottom — every small supplier trying to run an honest business — they carry the cost.

Follow the Money

This isn’t a conspiracy. Conspiracies require coordination. This is something simpler and harder to fix: aligned incentives that produce bad outcomes.

The consulting firms benefit when sustainability is complicated. Simple sustainability doesn’t need a consultant.

The software platforms benefit when reporting requirements grow. Fewer requirements mean fewer subscriptions.

The rating agencies benefit when everyone needs a score. Universal clarity would eliminate their market.

The certification bodies benefit when standards multiply. One universal standard would put most of them out of business.

The big companies benefit when the work flows downhill. Actually supporting their supply chain would cost real money.

Nobody sat in a room and planned this. Each actor is following their own rational incentive. But the combined effect is a system that extracts money from the bottom of the supply chain, passes it to an industry of intermediaries, and produces very little actual environmental improvement.

Tens of billions of euros, flowing through a system designed to measure sustainability. Almost none of it going to actually create it.

The System Rewards Good Reports. Not Good Operations.

That’s the anchor. And once you see it, you can’t unsee it.

Every questionnaire, every rating, every certification is optimised for documentation. Can you prove it? Can you report it? Can you put it in a PDF?

Nobody asks: did anything actually change?

The forest doesn’t care about your EcoVadis score. The atmosphere doesn’t read your sustainability report. The ocean doesn’t check your CDP disclosure.

The physics from Part 1 of this series hasn’t changed. The environmental challenges are real. The question was never whether the environment matters — it does. The question is whether the system we built to address it is working.

And for the people at the bottom of the supply chain — the ones actually closest to the materials, the energy, the operations — the answer is becoming clear.

So Is Sustainability Just a Scam?

This is where the critics jump in. “See? We told you. ESG is a fraud. Sustainability is a scam. Tear it all down.”

And they’re right. Sort of. For about 18 months.

This is Part 4 of a 7-part series on modern sustainability. Next: why the critics are right about sustainability — but only if you stop thinking after the first quarter.