For the past decade, environmental, social and governance (ESG) has been one of the fastest-growing parts of the corporate world. Companies raced to set up sustainability teams, hire specialists, and create new job titles that barely existed 10 years ago.
But that wave of expansion is slowing.
The era of unconstrained ESG headcount is giving way to a new reality: consolidation, integration, and in some cases, contraction. This shift isn’t hypothetical – the signals are already here.
In Australia, new climate disclosure requirements under Australian Sustainability Reporting Standards Pillar 2 (AASB S2) will move reporting squarely into the hands of chief financial officers (CFOs) and auditors.
Globally, we’ve seen companies like Unilever restructure their leadership, folding sustainability into broader external affairs portfolios, while Nike’s recent layoffs disproportionately affected staff in its sustainability unit.
These moves point to the same conclusion: ESG is becoming too important to be siloed.
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The sustainability professionals of the future will not sit in isolation – they will sit in boardrooms, finance teams, supply chains, and strategy units.
Instead of standing apart, sustainability is being pulled into finance, risk, and operations – a trend likely to play out first in progressive markets like Australia, before spreading across the region.
Why the crunch is happening
The ESG jobs crunch isn’t about waning interest in sustainability – if anything, demand for credible climate action is rising. The real driver is where responsibility now sits.
As regulations harden, disclosure is no longer a matter of glossy sustainability reports or stakeholder communications. It is becoming a financial and legal obligation.
Australia’s AASB S2 standards will require climate disclosures that are assured to the same standard as financial statements. In Europe, the Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS) already demand granular, auditable reporting. In the United States, the Securities and Exchange Commission (SEC) has finalised rules that link climate risk to investor protection.
Each of these regimes shifts ESG out of “nice-to-have” territory and into the core accountability of chief financial officers, auditors, and boards. Layer onto that the economic climate. Companies facing inflationary pressures and tighter capital markets are scrutinising headcount. Dedicated ESG roles, once seen as an expansionary investment, are now being folded into existing functions.
This makes sense in a compliance-driven world: finance and risk teams already have the skills to manage reporting, while procurement and operations are natural homes for supply chain sustainability. The stand-alone ESG department is giving way to a more distributed model – leaner in numbers, but broader in reach.
Signals of the shift, from Australia to the US
The crunch is already visible in corporate decisions across Australia and overseas: some companies are folding sustainability responsibilities into other functions, trimming specialist teams, or reassigning roles to asset and finance owners.
In Australia, mining and energy firms have been explicit about moving environmental and planning duties away from central teams and into operational lines. Mining and minerals firm BHP’s 2024 global restructure transferred planning, environment and heritage responsibilities to asset-level management as part of a wider cost and efficiency push. Oil and gas company Woodside has also pared back standalone leadership roles for low-carbon projects and reoriented priorities as it tightens its investment focus – a signal that standalone “new energy” or sustainability units can be vulnerable in a cost-constrained environment.
Globally, the pattern is similar. Consumer-goods giant Unilever recently merged its chief sustainability responsibilities into a broader external affairs remit – a senior-level consolidation that shifts sustainability closer to communications, strategy and execution.
And retail and apparel provide a stark cautionary tale: Nike lost roughly 20-30 per cent of employees who worked primarily on sustainability initiatives through layoffs, transfers and departures – a concrete example of how budget pressure can hollow out specialist teams.
Meanwhile, consultancy and policy research is explicit about the organisational consequences of tougher disclosure regimes: sustainability reporting is being designed to feed into finance, audit and investor-facing processes, which naturally pulls responsibility toward CFOs and reporting teams.
Taken together, these Australian and international signals point to the same trajectory: fewer big, standalone ESG departments and more distributed responsibility – often sitting with finance, operations and asset owners. That’s the practical change driving the “ESG jobs crunch.”
What it means for professionals
For professionals working in sustainability, the implications are immediate and personal.
The ESG boom created a generation of analysts, officers, and advisors whose roles were defined by their sustainability title alone. That model is under pressure. For junior professionals in particular, the entry-level “ESG officer” or “sustainability analyst” role is likely to become scarcer as teams consolidate and responsibilities are absorbed by finance, risk, or operations.
This doesn’t mean the pathway disappears – it means the on-ramps change.
Future entrants will need to be comfortable bringing sustainability skills into hybrid roles: as a financial analyst fluent in carbon accounting, a supply chain manager with an eye on modern slavery, or a risk officer adept at climate scenario analysis.
For mid-career specialists, the challenge is different. Those who have built their identity purely around ESG reporting or stakeholder engagement may need to broaden their remit, adding skills in financial literacy, governance, and change management. This integration is not a dilution of influence but an expansion of relevance. As sustainability becomes embedded in mainstream business functions, the most valuable professionals will be those who can act as translators – making the complex science and policy of climate change intelligible to CFOs, boards, and regulators.
Students and graduates entering the workforce face a similar recalibration. The advice of “get into ESG” is being replaced by something more nuanced: embed sustainability in whatever function you choose. Whether in law, engineering, marketing, or finance, the professionals who will thrive are those who carry sustainability literacy into their core discipline, rather than trying to remain in a silo.
What it means for companies
For companies, the ESG jobs crunch is a double-edged sword.
On the one hand, integration makes sense: moving sustainability responsibilities into finance and operations reduces duplication and positions disclosure where it belongs – alongside other material risks. It also encourages the embedding of sustainability into decision-making processes, rather than treating it as a parallel function.
On the other hand, there are risks to hollowing out dedicated expertise. If companies simply cut ESG teams without ensuring sustainability literacy across the business, they risk compliance-only responses that miss the broader strategic opportunity. Investors, regulators, and customers can spot when a business is ticking boxes instead of delivering transformation.
This means upskilling becomes crucial.
Companies must invest in building sustainability capability among non-ESG professionals: training procurement teams on ethical sourcing, finance teams on climate disclosure, and boards on climate governance.
There is also a cultural challenge.
A shrinking central ESG team can create the perception that sustainability has become less important. Leaders must counteract this by framing the shift as maturation, not retreat. The message should be clear: sustainability is no longer a side-team project – it is now everybody’s job.
The future of ESG careers
The crunch does not spell the end of ESG careers. Instead, it signals a transition to a more embedded, more demanding phase for the profession.
We are moving from growth to integration, from expansion to consolidation. That can be unsettling for those who joined the field during its boom years, but it also presents new opportunities for influence.
The sustainability professionals of the future will not sit in isolation – they will sit in boardrooms, finance teams, supply chains, and strategy units.
Their success will depend less on the size of their departments and more on their ability to make sustainability inseparable from the organisation’s core value proposition.
In that sense, the crunch is not a closing down but a levelling up.
It requires adaptability, broader skillsets, and a willingness to move beyond the comfort of dedicated ESG teams.
But for those who are ready, the opportunities are significant: shaping corporate decisions at the centre, not the margins. The ESG jobs crunch is coming. But those who prepare for integration, and those organisations that invest in upskilling, may find that sustainability’s influence grows, not shrinks.
