Sustainability operating models

What are the key priorities for 2026?

1. Regulatory compliance dominates

• 80% firms cite regulatory compliance, particularly Prudential Regulation Authority (PRA) SS5/25 alignment, as their top priority. This marks a sharp increase from previous years, reflecting both heightened regulatory scrutiny and the growing maturity of firms’ sustainability activities.
• Mandatory reporting requirements continue to expand, with the most frequently referenced obligations including the gender pay gap (84%), the Modern Slavery Act (77%), PRA expectations (77%) and Taskforce for Climate-related Financial Disclosures (TCFD) (61%).
• Despite this, voluntary reporting still plays a meaningful role. 52% firms expect to maintain their existing voluntary commitments, with only 13% anticipating a reduction. The most widely adopted voluntary frameworks remain the ClimateWise Principles, CDP and MSCI ESG ratings.

2. Climate scenario analysis rises in importance

Climate scenario analysis (CSA) is now the second‑highest priority for 2026 (58%). Interest is particularly strong among US‑domiciled and smaller firms, where regulatory pressure and investor expectations are accelerating.

Compliance pressures are reshaping operating models. Sustainability must now be embedded across governance, risk, reporting and business decision making. Firms that treat compliance strategically, rather than as a minimum standard, will progress faster and avoid costly rework. Similarly, if a firm’s operating model is not equipped to absorb modelling, interpret results and act on insights, it will struggle as CSA becomes more integral to supervisory expectations.

However, many organisations still need to mature to reach this position, and scale continues to influence maturity. Larger organisations appear better positioned to invest in broader reporting enhancements. 73% of large firms (with over 1,000 employees) selected reporting improvement as a key priority, compared with only 7% of smaller firms, suggesting that resource capacity remains a critical determinant of strategic breadth. Additionally, there are differences across organisation types, with life insurers and asset managers increasing focus on climate risk appetite and nature, whereas general insurers remain heavily weighted toward regulatory compliance and CSA. Brokers are typically prioritising reporting capability, diversity and education.

How are these priorities impacting strategic direction?

Sustainability is most consistently embedded at the strategic and goal-setting levels, with 74% of respondents referencing organisational goals and 68% referencing strategy. However, adoption remains uneven, with 90% of larger firms reporting having an organisational sustainability policy compared with 70% of smaller firms. These activities were also widely adopted in the 2024 survey (67% and 64%, respectively), indicating a continuation rather than a major shift.

Without clear accountability lines, empowered decision makers, and embedded capabilities across the organisation, strategic ambition will continue to outpace practical delivery. Firms also recognise that training and education remain critical enablers of executing strategy, with the highest coverage among:

• board members (65%)
• C-suite (61%)
• senior management (52%)
• all employees (58%).

How are organisations structuring themselves? 

To achieve these priorities, firms need to structure themselves effectively. Many organisations (45%) are undertaking operating model change programmes as a result, with 85% prioritising resource requirements.

A hybrid operating model remains the most common (65%). This typically consists of a small central sustainability function supported by decentralised resources embedded across functions or business units.

Key considerations include:

• Establishing strong leadership: 65% of organisations employ a dedicated head of sustainability, although this falls to 50% in firms with less than 1000 employees. 74% of sustainability leads report to c-suite executives, reinforcing the strategic importance of the function.
• Resourcing effectively: 47% of firms report resources of two to five full-time equivalent people (FTE), while 20% still operate with no dedicated FTE. Large firms and life insurers tend to have higher levels of resourcing than other firms. Reported FTE by functions showed that capacity is concentrated in exposure management, finance and investments functions. Underwriting, procurement and corporate affairs resourcing levels were predominantly low. Variability across respondents shows a lack of standardised approaches across the market

Firms may be converging on hybrid models, but capability distribution remains inconsistent and often misaligned to risk. Stronger resourcing in exposure management, finance and investments contrasts with underdeveloped functions elsewhere, limiting cross-functional integration and slowing implementation.

What are the key challenges?

• Resource gaps (52%). 
• Management buy-in (42%).
• Coordinating cross-functional teams (29%).
• ESG data availability & quality (23%).
• Regulatory change (16%).

These aren’t challenges for sustainability, but rather present operating model problems. Each of the challenges are symptoms of misalignment across structure, process, or culture. Firms that address these root causes will build greater resilience, reduce risk, and create clearer strategic direction.

What does 2026 demand from sustainability operating models?

The 2026 sustainability landscape is defined by tightening regulations, maturing expectations, and rising operational demands. However, beneath the complexity lies a clear message that firms need operating models that are aligned, scalable, and embedded across the business. The organisations that will thrive are those that:

• build governance structures that drive accountability
• invest in cross-functional integration 
• prioritise resource allocation based on materiality of topics
• ensure sustainability insight informs business decisions, not just reporting cycles.

Now is the moment to review your sustainability operating model. A clear-sighted assessment of whether your structure, capability and processes are fit for the future is essential.

Please get in touch with your usual Crowe contact to get a more detailed analysis of our survey and key insights.