Finance & Investment New Metrics

Shining a Light on the Business Benefits of Sustainability

Linking sustainability initiatives to financial metrics will not only reveal the many ways they add value — it will also help silence detractors.

Sponsored Content | / This article is sponsored by Capgemini | By Alex Tepper and Franco Amalfi | Published 6 days ago | About a 7 minute read

Image: DC Studio

As today’s culture wars rage on, many companies are likely forgoing significant earnings by failing to promote their sustainability progress — due to an overabundance of caution from decision-makers who want to avoid offending anyone.

Wary of being criticized by the current administration on the one hand or climate activists on the other, many businesses are opting to maintain a low profile and avoid controversies in these fraught times.

But recent research suggests that transparency around environmental, social and governance (ESG) projects often improves financial performance. It behooves companies to establish a comprehensive method for tracking the connection between sustainability progress and profitability.

A communication quagmire

Achieving a truly sustainable economy was never going to be easy. Such large-scale transformations, however necessary, are bound to create significant challenges — not least of all in how they’re communicated to the public.

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Pushback from people who deny the scientific consensus on anthropogenic climate change is not surprising, but what may be are the consequences of criticism from sustainability allies of inaccurate or inflated claims — aka greenwashing.

There should be repercussions for genuine greenwashing; and more and more brands with misleading messaging are being held to account by regulators, consumers and activists.

But it rarely goes beyond reputational damage: A study in the March 2025 issue of Nature Climate Change found that 40 percent of companies that set emissions targets for 2020 missed the mark or stopped reporting on them before the deadline — and these companies faced no significant consequences for failing to meet their voluntary climate commitments.

“This does seem like an opportunity for a free lunch,” said Shawn Kim, Haas School of Business professor and study co-author. “Companies can enjoy some immediate benefits, such as positive media sentiment and environmental scores by announcing emissions targets, but it doesn’t seem like they’re paying any consequences when they miss or drop these targets.”

Overcorrection creates greenhushing

But recent evidence indicates that many companies are so worried about greenwashing accusations that they have started to downplay their sustainability efforts — a trend dubbed greenhushing.

A 2024 study found that only two percent of US companies over-promoted their ESG impact last year, whereas 58 percent under-promoted genuine progress.

Furthermore, the current US administration’s anti-climate stance has had a chilling effect on ESG discourse worldwide; many companies are just as dedicated to achieving net zero as before but are pursuing these goals quietly.

“Companies are scared to talk about ESG, and particularly scared to talk about the positive impact they’re having on the world,” Sebastian Leape, chief executive of Natcap — which helps companies measure their impacts on nature — told The Times.

Skepticism without cynicism: Providing transparency, earning trust

This predicament raises a few questions for the public at large and for companies.

How do we create a culture that discourages misleading claims about one’s environmental impacts in both directions?

We must be skeptical of environmental claims without being cynical. We must accept that some people and companies will make mistakes despite sincere efforts to do what’s right. We don’t want the public to reward apathy and inactivity while censuring companies that try to make a difference.

How can sustainability advocates better promote their initiatives within their companies and to the wider world?

They should learn how to quantify and articulate the genuine business value that their sustainability initiatives create. Executives are more likely to greenlight ESG projects when they’re seen as profit, rather than cost, centers. And the public is more likely to believe the claims of for-profit companies when it knows that these activities weren’t acts of altruism — they improve the bottom line.

The correlation between sustainability and financial success

A business is supposed to identify and capitalize on opportunities to generate returns for its stakeholders. Sustainability is one of those opportunities; it’s a strategic business imperative that delivers tangible results.

The Capgemini Research Institute’s new report, Driving business value through sustainability, found that 82 percent of global executives surveyed said they are investing in sustainability because it directly boosts sales.

Of course, it’s difficult to prove the direct cause of improvements in multivariate analyses — such as the complex inner workings of a Fortune 500 corporation. But sustainability advocates are advised to prioritize measuring the correlation between an organization’s strong ESG performance and numerous competitive advantages — including greater access to capital, lower borrowing costs, improved stock performance, stronger stakeholder relationships, enhanced branding, increased productivity, reliable employee engagement, reduced operating costs and more.

According to the report, organizations around the world are realizing concrete savings of 14 percent in supply chain costs and 14 percent in transportation costs through sustainability initiatives — with expectations to reach 25 percent and 23 percent, respectively, in the next three years. Companies across retail and aerospace are especially bullish, with more than 75 percent expecting to achieve more than 20 percent savings in supply chain costs.

From risk management to resilience strategy

Sustainability initiatives alone might not guarantee these benefits, but there are enough examples to prove that they are not mutually exclusive. When executed correctly, sustainability initiatives have been proven to save energy and reduce waste, thereby reducing costs.

Furthermore, companies are more likely to attract promising young talent if they promote their sustainability efforts. Research consistently shows that young people are choosing to work for more sustainable organizations — all else being equal — the same way they are choosing to purchase more sustainable products.

Sustainability is no longer just about reducing harm — it’s also about creating long-term business and environmental value and adapting to become more resilient, so that organizations can maintain viability during climate-related disruptions.

Putting sustainability into action

It’s important for the sustainability movement to foster a culture that discourages both greenwashing and greenhushing. Companies can strike the right balance by developing frameworks for mapping sustainability initiatives directly onto financial statements — linking them to revenue growth, cost savings and valuation.

Sustainability must be translated into financial terms that resonate with the C-suite, investors and customers. Financial disclosures and measurement frameworks — such as the Task Force on Climate-related Financial Disclosures (TCFD) and the International Sustainability Standards Board (ISSB) — play a role in ensuring that sustainability is seen as a strategic driver, not a cost.

And ignoring the issue is no longer an option: Capgemini’s research reveals that 44 percent of organizations have suffered reputational damage due to sustainability inaction, while 27 percent have encountered regulatory challenges for the same reason.

The warning is clear: Companies that fail to embrace sustainability risk losing both market share and stakeholder trust.

4 steps to uncovering the financial value of sustainability

Capgemini encourages decision-makers to take four steps to start and expand sustainability initiatives in their organizations:

Align with finance: Integrate sustainability into core financial strategies and collaborate with the Chief Financial Officer.
Measure full value: Capture both tangible (e.g., cost savings) and intangible (e.g., brand reputation) benefits, including hidden value.
Communicate effectively: Share impacts transparently and tailor messages to stakeholders.
Collaborate cross-functionally: Foster coordination between finance, sustainability and other teams.

Understanding and promoting the hidden economic benefits of sustainable business models will not only boost your bottom line — it will silence the detractors.