We are entering an age where resilience is no longer enough. The assumption that we can “bounce back” after disruption is starting to look dangerously outdated. The world that ESG systems were built for—one of relatively stable geopolitics, predictable supply chains, and linear progress toward sustainability targets—has been replaced by cascading uncertainty.
The headlines tell the story: a warming planet driving new extremes of drought and flood, geopolitical conflict reshaping trade routes, artificial intelligence disrupting job markets and ethics, democratic norms under pressure. These are not isolated crises but converging systemic risks that compound each other in unpredictable ways.
Paul Clements-Hunt, who coined the term ESG, argues that this convergence demands a new operating mindset—one that goes beyond risk avoidance and compliance. It is not enough to survive turbulence; the task now is to learn and adapt within it, even to benefit from it. Luke Heilbuth recently made the connection between this mindset and Nassim Nicholas Taleb’s concept of the antifragile: systems that grow stronger through volatility, rather than merely enduring it.
From CSR to ESG to adaptation
Over the past three decades, sustainability has matured through distinct phases:
- CSR (ESG 1.0) was moral and philanthropic, about “doing good”
- ESG 2.0 became compliance-focused, about “doing no harm”
- ESG 3.0 shifted to strategic integration, embedding sustainability within long-term value and resilience frameworks.
Each step brought progress, but also new blind spots. ESG 3.0 taught organisations to identify risks and build resilience. Yet resilience (understood as the capacity to withstand shocks and return to a previous state) assumes the world eventually stabilises. What if it doesn’t?
Enter Adaptive ESG, the next evolution of sustainability thinking. Building on Heilbuth’s antifragile framing, Adaptive ESG moves from systems that merely resist volatility to systems that get stronger because of it. It sees disruption not as a deviation from normal, but as the new normal itself.
Resilience is no longer enough
Consider three examples that illustrate this shift:
Global supply chains: The pandemic and subsequent wars exposed the fragility of “just-in-time” globalisation. Leading firms have since restructured to “just-in-case” models; ie., regionalising production, shortening logistics routes, and diversifying suppliers. The result isn’t simply reduced risk but strategic optionality: the ability to pivot and seize new opportunities as conditions change.
Climate adaptation: Where early corporate climate action focused on reducing emissions, the frontier now includes reconfiguring infrastructure and business models for volatility; ie., integrating climate analytics, scenario modelling, and early-warning systems. The companies thriving are those that treat change as data, not disaster.
AI and governance: Artificial intelligence introduces systemic uncertainty. Organisations that view AI governance not as a compliance checklist but as an ongoing learning process (iterating ethics, bias monitoring, and transparency) are building the institutional muscle to adapt faster than regulation.
In each case, resilience means withstanding disruption. Adaptiveness means benefiting from it by developing capabilities, data, and culture that improve because of stress.
From one-off assessment to continuous intelligence
This adaptive capacity doesn’t emerge from static systems. It requires constant monitoring and predictive insight across value chains. The companies at the cutting edge of ESG are transforming their once-periodic assessments into live, cross-functional systems that scan, analyse, and respond continuously.
Traditionally, a materiality assessment might be conducted every one to three years; surveying stakeholders, identifying “significant” topics, and publishing a matrix. In today’s volatile environment, that rhythm is obsolete. The materiality of an issue can shift in months or even weeks.
Adaptive organisations are embedding sustainability analytics directly into risk management and operational decision-making. They link sustainability data with finance, procurement, HR, and innovation functions. They map not only risks and opportunities but also dependencies and impacts—the full spectrum of double materiality. Understanding how a company depends on natural, human, and social systems (and how it impacts them in return) is becoming central to predicting where the next risks or opportunities will arise.
When dependencies and impacts are visible in real time, they can be managed, mitigated, and leveraged. This turns ESG from a reporting exercise into a live model of how the company interacts with the world around it.
As Clements-Hunt notes, “the gap between sustainability and mainstream finance is closing, but not fast enough.” The best companies are closing that gap themselves, moving from static reporting to dynamic intelligence ecosystems.
Learning, Predicting, and Benefiting from Volatility
To become adaptive (or antifragile) requires three organisational capabilities:
- Continuous learning systems. Sustainability data must flow across functions, not sit in silos. Live dashboards and AI tools can detect early signals of emerging ESG issues; whether from regulatory changes, supplier risks, or shifting public sentiment.
- Predictive risk, dependency, and opportunity management. True adaptation depends on anticipating rather than reacting. Integrating sustainability with enterprise risk management allows companies to model how climate, geopolitical, or social variables interact. Predictive analytics can then inform capital allocation, product development, and supply chain strategy.
- Feedback and renewal loops. Adaptive ESG systems use shocks as stress tests. Each disruption (eg., an extreme weather event, a new law, a market shift) feeds back into governance and planning. The aim isn’t stability but accelerated learning.
This approach aligns closely with Clements-Hunt’s Complex Converging Systemic Risk (CCSR) framing and Heilbuth’s call for boards and executives to move beyond resilience toward systems capable of thriving in complexity.
Building on the ESG 4.0 architecture
In practice, building an Adaptive ESG framework involves four dimensions that closely mirror Clements-Hunt’s ESG 4.0 architecture (systemic, strategic, operational, and executive) but extend it further. Adaptive ESG incorporates continuous intelligence and the full double materiality perspective of risks, opportunities, dependencies, and impacts:
- Systemic: Understanding how interconnected risks, dependencies, and impacts shape the operating context: climate, biodiversity, inequality, and geopolitics as an interwoven web.
- Strategic: Integrating sustainability with corporate purpose, innovation, and competitive advantage.
- Operational: Embedding real-time sustainability risk monitoring, continuous value chain due diligence, and cross-functional accountability.
- Cultural (expanding the executive layer): Cultivating leadership and mindsets that treat uncertainty as fuel for improvement.
Each dimension reinforces the others. Systemic understanding informs strategy; strategy guides operations; operations, when transparent and data-rich, foster a culture of responsiveness and shared learning.
The journey is iterative and imperfect, but it redefines ESG as intelligence infrastructure, not simply governance scaffolding.
Implementing Adaptive ESG: Where to begin?
1. Re-examine your materiality system. Transform a static, one-off materiality matrix into a living process. Use technology to track emerging issues, stakeholder sentiment, and policy shifts in real time.
2. Integrate ESG with enterprise risk management. Break the silo between sustainability and risk. Use shared data to map not only risks and opportunities but also dependencies and impacts across the value chain.
3. Build predictive capability. Use scenario analysis, supply-chain due diligence, and forward-looking data to anticipate where volatility could unlock value; or where unseen dependencies could break resilience.
4. Empower cross-functional governance. Create structures that connect sustainability, finance, operations, and innovation. Give these teams permission to experiment, learn, and adapt from shocks.
5. Embed learning loops. Treat every disruption (regulatory, environmental, or social) as a stress test. Capture insights and feed them back into planning, product design, and stakeholder engagement.
Building capability
The logical starting point is not a new framework but a new reflex: treat ESG as a living intelligence system. Begin by asking, How do we know when the world around us changes—and how quickly can we adapt?
Adaptive ESG isn’t a destination; it’s a capability. The organisations that thrive will be those that combine curiosity with courage: continually sensing, learning, and evolving in rhythm with a world that refuses to sit still.
As Clements-Hunt might put it, the future of ESG belongs to those who can navigate complex converging systemic risks not by resisting them, but by letting them make us better.
References: Paul Clements-Hunt, “ESG 4.0 – Complex Converging Systemic Risk (CCSR) in an Autocratic World,” Blended Capital, 2025; Luke Heilbuth, “How to Revive Sustainability Amid the Pursuit of Long-Term Value and Resilience,” Australian Institute of Company Directors, 2025.
