By Sarah Horn and Joanna Radeke, ESMT Berlin
For nearly two decades, Tom thrived as a leader in a multinational corporation. An engineer at heart, he drove breakthrough innovations, solved complex challenges, and earned the respect of his peers. An executive MBA helped him climb the ranks, sharpen his strategic instincts, and deliver steady business results.
Lately, Tom has noticed a shift. The challenges he once tackled – technical problems, traditional workforce management, operational hurdles – now feel secondary to bigger, systemic forces. Climate risks, geopolitical pressures, social polarization, and evolving employee expectations dominate leadership discussions. Success no longer hinges on quality and efficiency alone; it requires bold decisions, a long-term vision, and a willingness to act before the market catches up. For Tom, the question isn’t just how to lead – it’s how to lead in a way that truly lasts.
Mature man looking away contemplating at office
The world needs change
Tom isn’t the only one recognizing this shift. Leaders across industries are grappling with similar challenges. Investors now scrutinize ESG commitments, employees seek meaningful work and inclusive workplaces, and customers expect businesses to align with their values. Sticking to past strategies is no longer an option.
Accordingly, the Global Risks Report 2025, published by the World Economic Forum, highlights that environmental and social instability account for a third of all global risks, with extreme weather, deepening social divides, regulatory uncertainty, and resource scarcity reshaping business strategies.
Navigating these pressures takes more than incremental adaptation. Strong corporate leadership means balancing profit with long-term vision and responsibility for people and the planet. The question is no longer whether businesses should prioritize sustainability and inclusion, but how leaders will turn those priorities into action.
The leadership skills gap
Tom built his career solving complex challenges, but the nature of those challenges has changed. The technical expertise and strategic planning that once defined strong leadership are no longer enough on their own. As industries face environmental challenges, shifting societal expectations, and evolving workforce dynamics, leadership must evolve too. The Future of Jobs Report 2025, published by the World Economic Forum, ranks environmental stewardship, leadership, and talent management among the top skills expected to shape the workforce in the years ahead.
Yet, how can leaders mitigate global risks and meet short-term business demands while driving long-term, meaningful change? The answer lies in mastering a new set of leadership competencies – ones that integrate sustainability and inclusion into decision-making and strategic priorities.
Inclusivity and stakeholder engagement
Leadership today requires engaging and balancing the interests of a diverse range of stakeholders – including employees, customers, investors, governmental bodies, local communities, and advocates for environmental and animal rights. This means challenging long-held beliefs, addressing power imbalances, and fostering collaboration across diverse interest groups, which requires an inclusive leadership approach. Inclusive leadership starts with self-knowledge – understanding the origins of one’s own perspectives and biases improves decision-making, deepens connections, and builds trust, thereby helping organizations and their broader ecosystems to thrive.
Sustainability and environmental stewardship
Like inclusivity, ignoring sustainability is no longer a choice – leaders who delay action risk regulatory penalties, financial instability, and eroded stakeholder trust. On the other hand, those who take a proactive approach to environmental challenges are better positioned to navigate market shifts, attract top talent, and drive innovation. As industries adapt to new climate realities, the leaders who embed sustainability into strategy will be the ones thriving in the face of disruption.
Targeting sustainability
A case study in leadership
At ESMT, we are convinced that leadership today calls for more than technical expertise or operational excellence. Sustainability and inclusion are not just ideals—they are practical skills that define a company’s ability to compete and endure. But recognizing this shift is only the first step; the real challenge lies in equipping leaders with the skills to put these principles into practice.
Our collaboration with Siemens Energy demonstrates what this looks like in action. Their ESG strategy focuses on two key areas: decarbonizing their business and ensuring responsible operations, including a focus on inclusion and diversity. As part of its ambitious efforts, Siemens Energy needed a way to integrate sustainability into all operational processes and strategic decisions across functions. Together, we developed a training program that empowers employees beyond dedicated ESG roles to upskill and confidently navigate regulations, assess ESG impacts, and implement sustainability solutions. As businesses face growing regulatory and market pressures, this kind of leadership development will be essential for organizations looking to lead rather than follow.
The leadership imperative
The challenges shaping today’s business landscape – climate risk, shifting workforce expectations, and regulatory pressures – are not passing trends. They are defining forces that will determine which organizations thrive and which fall behind.
Success in this era depends on the ability to inspire, engage, and lead with purpose – creating a future that is resilient and responsible for all. Leaders of the future do not just need to be capable of managing major complexities but recognize that sustainability and inclusion are essential pillars of long-term business success.
Tom’s challenges have changed, and so has his focus on leadership development. Our future depends on leaders like him – those who are ready to step up and invest in the skills that truly matter.
