ADAPTED FROM RESEARCH BY MATT WATSON, UNIVERSITY OF SHEFFIELD

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TL;DR: The Illusion of ESG Target-Setting and the Reality of Human Practice

• The Accountability Deficit in Numbers: A rigorous tracking study of 1,041 firms with emissions targets ending in 2020 exposed a severe enforcement gap in current corporate sustainability frameworks:
  • 9% of companies outright failed to meet their commitments.
  • 31% simply vanished from emissions reporting entirely without revising targets or public acknowledgement.
  • Firms that failed or stopped reporting suffered zero market penalties—experiencing no significant stock movement, environmental score drops, negative media sentiment, or increased shareholder engagement.
  • Ultimately, only 14% of companies actually reduced emissions in line with their stated targets over the past five years, leaving an 86% failure rate that the current system quietly absorbed.
• The Design Flaw of “Compliance Theatre”: Current ESG frameworks reward an “architecture of ambition.” They function as a proxy for a company’s disclosure behavior rather than its actual climate risk. Many well-intentioned organizations measure top-down outputs (reported metrics and percentage targets) rather than the physical and social systems driving real-world resource demand.
• Systems Over Nudges (Practice Theory): Grounded in the research of Professor Matt Watson (University of Sheffield), the ESRC-funded Change Points program, and Lancaster University’s £5 million DEMAND Centrecollaboration, data shows that energy and resource consumption are locked in by systemic everyday practices (how buildings are used, when people eat, how transit is structured) rather than individual choices or pricing signals.
• The Shift to Real Accountability: Originally highlighted by DEFRA’s former Chief Scientific Adviser Ian Boyd at the 2017 Sustainability in Turbulent Times conference, effective policy requires understanding resource demand down to the household level. To achieve genuine impact, policymakers and investors must abandon toothless disclosure forms and evaluate whether a company has disrupted and redesigned the infrastructure, material conditions, and social norms driving its underlying resource consumption.

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Sustainability in turbulent times

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The Scene Looks Good From Up Here

On a grey March morning in 2017, roughly 350 researchers, policymakers, and sustainability advisers gathered in a repurposed building just across the Thames from Parliament — the former home of the Greater London Council, reborn as a sleek corporate conference suite. The occasion was Sustainability in Turbulent Times, the culminating event of the ESRC-funded Nexus Network, and the irony of the venue was not lost on the people in the room. Here they were, debating the failures of neoliberalism and the limits of a state hollowed out of its own governing capacity, in a room that was the perfect physical monument to both.

Among those present was Matt Watson, Professor of Geography and Director of Research and Innovation at the University of Sheffield. Watson does not talk about sustainability the way most people in that room did. His research sits at the intersection of social change, everyday life, and resource use — food, energy, mobility, waste, biodiversity. He is not primarily interested in targets. He is interested in the actual texture of how people live, and what that means for whether any policy ever bites.

At the conference, a signal moment came from Ian Boyd, then Chief Scientific Adviser at DEFRA, who told the room that understanding how to reduce demand for resources “right down to household level” was, in his view, one of the most critical fields for evidence-based policy engagement. It was not a throwaway remark. It was an acknowledgement — from inside the machinery of government — that something was missing from the top-down sustainability playbook. The frameworks existed. The targets had been set. The reporting mechanisms were in place. And yet, somehow, the gap between commitment and reality kept widening.

That gap is not a mystery. It is a structural problem. And the data we now have on corporate ESG performance makes it brutally legible.

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The Targets Were Never the Point

Here is what the sustainability establishment built over the past two decades: an architecture of ambition. Emissions targets. ESG scores. Reporting frameworks. Carbon pledges. Disclosure requirements. On paper — and, critically, in investor decks and annual reports — the picture of corporate sustainability has never looked better. More companies than ever have made commitments. More capital than ever is labelled “sustainable.” More frameworks than ever govern how firms account for their environmental impact.

And here is what happened anyway.

A recent study tracking 1,041 firms with emissions targets ending in 2020 found that 9% of those companies outright failed to meet their commitments. That figure alone might seem manageable. The more damaging number sits beside it: 31% of firms with targets simply vanished from emissions reporting altogether. They did not announce failure. They did not revise their commitments downward. They stopped reporting. In any other domain — financial reporting, product safety, clinical trials — this would trigger regulatory consequences. In ESG, it mostly went unnoticed.

What happened to the firms that failed or disappeared? The same study found no significant stock movement, no meaningful drop in their environmental scores, no measurable shift in media sentiment, and no notable increase in shareholder engagement. The market, in short, did not punish them. The accountability infrastructure that sustainability advocates had spent years building turned out to have almost no enforcement teeth. Setting a target and missing it — or quietly abandoning it — carried essentially the same consequences as meeting it.

The downstream numbers are even starker. Only 14% of companies actually reduced their emissions in line with their stated targets over the last five years. Not 14% who exceeded their targets. Not 14% who came close and fell short. Fourteen percent who did what they said they were going to do. The other 86% did not — and the system, as designed, largely absorbed that failure without consequence.

This is the inciting incident that the Sustainability in Turbulent Times conference was, in 2017, only beginning to name. The question Ian Boyd raised — about household-level understanding of resource demand — was not a soft, academic add-on to the policy toolkit. It was a signal that the entire measurement and target-setting apparatus was missing something foundational. Policies were being designed, commitments were being made, and capital was being allocated based on a model of human behaviour that bore little resemblance to how people, organisations, and systems actually function in the real world.

Watson’s work gives that gap a name. Through the Change Points programme — a multi-stage ESRC-funded project developed with researchers from the University of Sheffield and the University of Manchester — Watson and his collaborators worked directly with policy partners to translate practice-theory research into concrete interventions for reducing household resource consumption. The central insight of practice theory is deceptively simple: behaviour is not the product of individual choices alone. It is shaped by systems — by the infrastructure that makes some actions easy and others hard, by the social norms that make certain practices feel natural, by the material conditions that constrain what is even possible. Change the system, and you change the behaviour. Nudge the individual without touching the system, and you get compliance theatre.

Watson also co-investigated the DEMAND Centre — a nine-institution research collaboration led by Lancaster University and funded with £5 million over five years — which focused specifically on how energy demand is formed and how it can be reduced. The DEMAND Centre’s core argument is that energy use is not primarily a function of technology or pricing signals. It is a function of practices: of when people eat, how they get to work, what they do with their evenings, how buildings are used, how supply chains are structured. You cannot meaningfully reduce demand without understanding those practices. And you cannot understand those practices from a boardroom or a policy committee.

This is the tension that sits at the heart of the ESG crisis. The frameworks were built by people who understood targets. They were not built by people who understood systems. And the result is a reporting architecture that is very good at measuring commitments, and very bad at measuring change.

The implications run deeper than greenwashing. Greenwashing implies deliberate deception — a company that knows its practices are unsustainable, dressing them up in the language of responsibility. That is certainly part of what is happening. But the more systemic problem is that many of the organisations setting ESG targets are acting in good faith within a framework that structurally cannot deliver what it promises. They are measuring outputs — tonnes of CO₂ reported, percentage targets set — without measuring the underlying practices that actually drive resource use. It is like measuring a city’s health by counting the number of gym memberships sold, rather than by tracking whether people are actually getting fitter.

The 350 people in that Westminster conference room in 2017 were, collectively, aware of this problem. But awareness and structural change are different things. The ESRC’s Nexus Network effort was explicitly designed to bridge research, policy, and business around sustainability under conditions of political and economic turbulence. Watson’s presence there — representing a programme built on the idea that everyday practice is the missing variable in sustainability policy — was a direct challenge to the dominant model. A challenge that, six years later, the data shows has not yet been adequately answered.

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What Accountability Actually Requires

The failure of ESG frameworks to deliver measurable emissions reductions is not, at its core, a data problem. It is a design problem. The frameworks were designed to capture commitments, not to track the practices that commitments are supposed to change. Fixing that requires a different kind of evidence — evidence grounded not in what organisations say they will do, but in what the research on human systems tells us actually drives resource use and how it can be reduced.

That is a harder ask than it sounds. Practice-based research is not easily packaged into a Bloomberg terminal or a proxy voting guideline. It does not reduce to a single score or a percentage target. It requires engaging with the messy, contextual reality of how food systems work, how energy demand is shaped by built environments, how mobility patterns are locked in by infrastructure decisions made decades ago. It requires the kind of cross-institutional, longitudinal research that the DEMAND Centre and the Change Points programme represent — slow, rigorous, and deeply engaged with the specificity of real-world systems.

But here is what that research makes possible: interventions that actually work. Not interventions designed around the assumption that people will change their behaviour if given the right information or the right price signal. Interventions designed around how practices are actually formed, maintained, and disrupted. Interventions that target the leverage points where systemic change is possible — infrastructure, norms, services, material conditions — rather than the individual choices that those systems shape.

For policymakers, this reframes the ESG question entirely. The relevant question is not “has this company set a target?” It is “has this company changed the practices that drive its resource use?” Those are not the same question. The first can be answered with a disclosure form. The second requires understanding what practices the company’s operations depend on, what conditions maintain those practices, and what interventions would credibly disrupt them. That is the level of analysis at which ESG policy can become effective — and it is the level at which most current frameworks do not operate.

For investors, the implications are equally significant. If 31% of firms with emissions targets simply stop reporting, and the market absorbs that failure without penalty, then ESG scores are not a reliable proxy for climate risk. They are a proxy for disclosure behaviour. And disclosure behaviour, as we have seen, tracks commitment-making, not emissions reduction. The 86% of companies that failed to reduce emissions in line with their targets are carrying climate risk that their ESG scores do not reflect — risk that is invisible to frameworks designed to measure what organisations say rather than what they do.

This is the insight that the Westminster conference pointed toward, and that the research Watson and his colleagues have spent years building out. The missing variable in ESG policy effectiveness is not more targets, more reporting, or more frameworks. It is a grounded understanding of the human practices and systems that targets are supposed to change. Without that understanding, even well-intentioned ESG commitments will continue to outpace actual delivery — because they are designed around a model of change that the evidence does not support.

The conversation that began across the Thames from Parliament in 2017 — about everyday life, resource systems, and what it actually takes to drive sustainable change — is the conversation the ESG industry still needs to have. The data on missed targets and vanished reporters makes the cost of not having it visible. The question is whether policymakers, investors, and sustainability leaders are ready to engage with evidence at the level of granularity that effective intervention requires.

That evidence exists. It is being built, tested, and refined. The gap between commitment and delivery in corporate sustainability is not inevitable. It is the product of frameworks that were designed without it — and it can be closed by frameworks that are designed with it.

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The ESG Policy Effectiveness Database You’ve Been Missing

Targets without practice-level data are promises without accountability. If you are a policymaker, investor, or sustainability leader trying to understand which ESG interventions are actually driving measurable change — rather than just generating disclosure — the evidence base exists. It is not in a single annual report. It is in the pattern of what works, where, and why, across policies and sectors.

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