The Illusion of Progress: Understanding Policy Resistance in Corporate Sustainability

ABSTRACT This study uses qualitative system dynamics to explore systemic resistance to environmental, social and governance (ESG) practices within Colombia's emerging regulatory framework. Through causal loop diagrams (CLDs) and archetype analysis, the study identifies key feedback structures that promote symbolic compliance—particularly ESG disclosure—over substantive action. The findings reveal three rebound mechanisms (RMs) driven by high implementation costs, reputational incentives and societal misinterpretation of reporting as evidence of progress. These RMs align with classic system archetypes such as ‘fixes that fail,’ ‘eroding goals,’ and ‘limits to growth.’ Colombia's case illustrates how well‐intentioned regulations can entrench superficial compliance, especially in contexts of weak enforcement and limited resources. Policy recommendations include linking ESG incentives to verified practices, strengthening due diligence and maintaining stakeholder pressure. The analysis demonstrates the value of systems thinking for identifying structural barriers and designing adaptive ESG policies in emerging economies.