Helen Sahi: My advice here is to get the right person in finance involved as they have a view of where the data sits on profit margins, cost of transportation, etc. I think that CSRD starts to give one a good template for this with the identification of IROs (Impacts, Risks & Opportunities), which can be used as a springboard toward quantifying risks and opportunities. It is not just finance, though - it is often a cross-functional group within the company that needs to discuss this together.

Daniel Aronson: Helen is exactly right about the importance of involving finance and others in the company. Building off of her comments, I'd suggest two additional points:

• A lot of risks and opportunities are “submerged,” hidden until you look for them in the right places. I recommend:
  (a) Looking at how bedrock assumptions of the business are no longer as certain. (Examples: "we can grow crops where we always have," or "we can ship via the Rhine as we've done for 100 years.")
  (b) Examining the ways that social and environmental issues affect what I call the CORE areas of the business: Customers, Operations, Risks, Employees.

• Whether you're required to comply with CSRD or not, don't think of looking for risks and opportunities as being just about compliance. It should be a business effort that creates value, not a check-the-box exercise.

Suzanne Shelton: At the risk of fearmongering, I've had more success communicating the potential for loss of share and revenue, risk of stagnation, and reputational damage. For example, "If we don't do or say X, one of our top competitors will, we'll be seen as a laggard and a lesser choice to our customers." Or, "If we don't get our house in order now, on our terms, at our pace, we might be forced into action by regulation and it will cost us more."

There are frameworks that help you quantify and communicate this, such as the CORE framework from my co-MC Daniel Aronson and NYU Stern's ROSI framework. These can give you a way to calculate the cost of inaction, as well as the real savings and revenue that can be driven by taking various actions.

Daniel Aronson: Suzanne is 100% right that it is important to quantify the cost of inaction. All too often, the cost of sustainability action is considered but the cost of inaction is not. A few tips:

• Determine the level of action for your peers and competitors. This makes it clear whether you risk falling behind.

• When the timing and severity of a risk is uncertain, it often helps to think of sustainability action as providing insurance. For example, when the likelihood of a drought is increasing but no one knows exactly when it will occur, lowering the amount of water the business needs to operate is like buying drought insurance, since you'll be better able to weather the drought when it occurs. People understand the value of insurance even in years when they don't use it. Similarly, reducing water consumption provides an insurance benefit even when a drought doesn't occur.

• A lot of risks and benefits are submerged, which means you need to surface them. Examine the ways that social and environmental issues affect what I call the CORE areas of the business: Customers, Operations, Risks, Employees.

• Finally, talk about benefits, too. When we help a company quantify the customer-related value of sustainability, we quantify both the risks of being a laggard and the benefits of being a leader. The difference between them is the value that is there for the taking.

Andrew Winston: It's a balancing act. We have to make progress within the given system and also call into question the base narratives and assumptions. That's harder to do from the outside. We have to continually get people to the table and then try to broaden the discussion.

Daniel Aronson: Andrew is exactly right about the need for progress within the current system and for changes to the system. Even within the current system, sustainability can provide business value and improve competitive success. After all, being ahead on something customers care about matters. As does being more efficient at using resources and more resilient to shocks. When companies succeed through sustainability, three good things happen:

• First, they take market share from less sustainable companies.

• Second, other companies try to imitate them.

• Third, it demonstrates that the idea that sustainability is bad for business is a lie.

Helen Sahi: I think this is true for all companies, some more than others. I would suggest that one looks at what other types of investment are not well quantified or don't have 100% good data but are still made. Using any framework or logic already in use at a company is easier for people to buy into. Another tactic I have seen is for companies to either give a longer payback period to sustainability projects or a carbon threshold has been put into place.

Daniel Aronson: Helen Sahi's advice to see how other types of investments are justified is spot-on. While it is more difficult to quantify the benefits of sustainability-oriented transformations, it can be done. The key is to examine how the transformation will affect each of four CORE areas (Customers, Operations, Risks, Employees) and quantify the benefits. Transformations must ultimately affect the CORE areas of the business to have value, and those effects can be quantified.

Andrew Winston: Perhaps, to some extent. But the benefits of a safer workplace extend beyond purely reducing lost time - there's lots of intangible benefits in employee happiness and engagement. And operationally knock-on benefits on efficiency, etc. So it's a mix of measurable and harder to measure benefits... which is actually a lot like sustainability. In the end, it feels more like an article of faith that "of course we invest in safety,"which has not extended to sustainability yet.

Daniel Aronson: Also, many people still think of sustainability as separate from the business, and practitioners as more concerned with doing good than doing well. This adds to the higher burden of proof it faces.

Helen Sahi: I think it depends. If it is a sustainability project with little sustainability impact and/or little long-term impact, should you be looking elsewhere? In the case of energy efficiency, for example, if you bundle short-term and long-term projects together and sell it as one project, you will see that the payback period goes down. If you start with only the quick paybacks, you most likely will not get to the long-term paybacks.

Andrew Winston: "Worth it" can mean many things. It's just not true that even CFOs look only at pure numbers. There are strategic choices all the time - like, as I said during the live session, for AI investment today. I saw a CFO talk about this years ago and he boiled it down to the factors of an equation for long-term value from cash flows over time. He pointed out that showing cash flow directly is one value driver, but if you can show that you can lower the risk to those cash flows, it also increases the estimated value. It was a wonky way of saying, tell a bigger story.

Daniel Aronson: Agreed. If it's helpful, I wrote about some other techniques for bringing the future forward HERE.