Building a business case for sustainability

While much of the transition to renewable energy has been seen as an exercise that will cost firms and the wider economy money, a growing school of thought suggests organisations are missing the chance to turn decarbonisation into business value. Sam Stark, CEO and founder of Green Project Technologies, explains the power of sustainability leaders building strong business cases to create more sustainable operations across businesses.

A core challenge for procurement and sustainability professionals is building momentum for decarbonisation across every layer of an organisation. A significant part of this challenge is creating a business case for net zero.

In a recent report, EY found that only two thirds of businesses have a climate action plan. Companies are making some progress, but Scope 3 emissions remain the most difficult and most expensive to get under control. Supply chain emissions account for around 90% of a company’s total footprint and are tricky to address due to the challenges of getting stakeholders engaged, high costs of reduction, and a lack of expertise. 

Without buy-in from the supply chain, organisations may face added challenges, including a lack of reliable climate reporting data. This in turn can lead to poor operational decisions and negatively impact a business’ overall climate adaptability and resilience.

This lack of certainty often creates hesitation amongst investors. A recent MIT report found that over half of businesses struggled to justify their emissions reduction efforts  because they were unable to show a return on investment . EY’s analysis, however, shows the consequences of delays, estimating that inaction on climate can cut annual revenue by 15%. This emphasises the need for sustainability leaders to create a strong business case for decarbonisation and to manage long term risk whilst avoiding revenue losses. 

Inaction as a risk

There are several incentives-based, or ‘carrot’, approaches which centre around value creation as opposed to risk avoidance.  As expectations for low-carbon performance rise among customers, investors, and partners, organisations that can provide evidence of tangible progress are better positioned to maintain trust and secure new business. Furthermore, these efforts can strengthen investor confidence by improving transparency and reducing future financial exposure to carbon-related costs.

Perhaps most importantly, the incentives-led approach creates momentum for building the business case for climate action. By intrinsically linking together decarbonisation to revenue, resilience, access to capital, and relevance in the new low-carbon economy, the focus moves away from ambition and into measurable value creation. Whilst it is true that incentives can motivate action, many organisations are only able to move at pace when confronted with the true costs of inaction. Running a business is, at its core, about the bottom line – this is where the stick comes in. Inaction on climate exposes companies to growing financial, legislative, and competitive risks. The impact of delaying action is felt differently across different business areas. 

For leadership teams, putting off decarbonisation increases exposure to financial, reputational, and regulatory risks, all whilst competitors move ahead. Finance teams face rising carbon costs and the burden of penalties which make inaction a costly choice – especially as tax incentives and internal carbon pricing mechanisms become more mainstream. For legal teams, the rising regulatory and compliance risks, coupled with stricter enforcement, create extra workload the longer action is delayed. Procurement teams feel the sting through weaker supplier resilience, increased risk of disruption, and reduced leverage in negotiations. Similarly, delays make it difficult for IT teams to resolve deficiencies in data quality, infrastructure, and analytical capability.

In practice, the most successful approach to decarbonisation balances push and pull forces. Whilst the carrot illustrates long-term value, the stick signifies the escalating cost of inaction. Combining these perspectives relies on there being full visibility into the overall emissions and progress across the business to enable stakeholders to identify opportunities and mitigate both short- and longer-term risks. 

Building the business case

Once the key stakeholders to get on board have been identified, you need to be selective with your arguments and tailor them to each stakeholder’s priorities and risk points. What works for IT might not cut it for procurement, and the legal team will have a slightly different perspective than the CEO. 

At this stage, it is important to have a more centralised approach to sustainability. By moving away from fragmented spreadsheet-based reporting, it becomes easier to meet reporting requirements while making sure the data is both relevant and actionable for different functions. 

IT departments can focus on enhancing the integrity of data, facilitating system integration and filling the gap in emissions reporting. In the meantime, procurement teams should focus on supplier performance, improving visibility into Scope 3 emissions and addressing emissions related challenges with suppliers. 

What’s more, decarbonisation is not just about compliance, but it also represents a revenue growth opportunity. The strongest business cases connect decarbonisation to financial value. At the macro level, what is good for the planet is good for business. To address the concerns about the costs of decarbonisation, quantifying the business benefits and cost savings helps make the business case – especially for leadership and finance teams. Measuring metrics such as carbon cost savings, revenue growth, and compliance readiness will help build a case for decarbonisation by painting a more vivid picture of the short- and long-term benefits.

Creating an action plan

A business case is not complete until it has a clear implementation plan which outlines how the decarbonisation strategy will be implemented over time. This plan should define specific targets and explain how they are going to be achieved. It needs to include the data, how it’s going to be collected, and what technology or expertise is going to be brought in for data management, collection and analysis. It also needs to outline the ways in which suppliers will be engaged and supported in reducing their emissions, as well as how internal stakeholders across business areas will be involved to make the plan a success. 

Delaying decarbonisation not only increases risk but also results in missed opportunities for value creation and competitive advantage. For this reason, businesses simply cannot afford to wait until they have ‘perfect’ data or fully mature plans before they start to take action. 

Early steps, even if small, can still deliver meaningful progress, especially in the early stages of putting into place a decarbonisation plan. Prioritising action over perfection allows companies to build momentum, strengthen their capabilities, lead in their industries, protect and grow profits, and to stay ahead of the ever-shifting regulations.