By: Franco Amalfi, Director of Sustainability Initiatives and Partners– Capgemini Americas; and Alex Tepper, Global Head of Ventures and Sustainable Futures, frog, part of Capgemini Invent

Corporate environmental, sustainability, and governance (ESG) investment is at a high-stakes crossroads. On one hand, sustainable practices and innovations can enhance a brand’s reputation, mitigate climate-related risks, and generate shareholder value. One survey reported that 67% of companies have already implemented sustainable product design strategies that have reduced carbon emissions, and 84% of executives said their organization was on track to meet its emissions goals.

On the other hand, some global companies are reducing their sustainability targets by adjusting their previously stated goals downward. The incoming U.S. administration is also likely to have a chilling effect on federal sustainability initiatives, with pledges to eliminate tax credits for electric vehicle purchases, and to halt funding of Inflation Reduction Act programs.

Sustainability at an inflection point

As the impacts of climate change become more widespread and severe, the need for sustainability is becoming more urgent. The good news is that investment in climate tech is soaring. However, companies outside climate tech often have difficulty unlocking the funding to achieve their internal sustainability goals.

How do we keep driving progress on sustainability, despite the headwinds? The key is to better systematically link environmental and social initiatives to the financial metrics that drive the business forward. By better quantifying and articulating the business value of these initiatives, companies can continue to make progress on sustainability.

A shift from external to internal motives for sustainability

Because sustainability requirements came about for many organizations stemming from government regulation, sustainability is sometimes misperceived as a cost center and a compliance requirement, rather than a strategic asset. Despite this perception, sustainability funding was comparatively easy to obtain several years ago due to a combination of those compliance requirements and the desire for corporate altruism.

Now, economic uncertainty and new concerns about the future of sustainability regulations in the US amid rising anti-ESG sentiment have made funding harder to come by. As a result, some companies are feeling pressure to scale back on sustainability initiatives.

To resist this pressure to scale back, decision makers need to discover and surface the submerged value of ESG investments—secondary or follow-on benefits such as customer lifetime value gains, lower employee turnover, and more. In today’s economic and political landscape, chief sustainability officers who can quantify the value of initiatives have a better chance of winning internal and investor funds for those initiatives. Analyzing and presenting sustainability initiatives in this way represents a strategic shift away from compliance and altruism and toward financial investments.

Some major organizations already pursue such opportunities. For example, a leading ecommerce marketplace has an entire website showcasing its progress toward sustainability goals such as packaging waste reduction, renewable energy generation, and more sustainable products. This isn’t just about altruism, it’s about capturing market share, especially among younger consumers. 65% of global consumers want to make sustainable purchasing decisions.

American Gen Z and Millennial consumers, who will have the most spending power by 2030, are 27% more likely to buy a brand than older consumers if they think the brand “cares about its impact on people and the planet.” Companies that don’t meet younger consumers’ sustainability expectations are likely to lose customers to competitors who do. Doing nothing effectively deprives shareholders and other investors of potential growth and customer lifetime value.

Taking control of the sustainability narrative

The term “green hushing” has recently emerged to describe companies’ growing reluctance to publicly discuss or promote their sustainability efforts, due to fears of backlash from politicians and segments of the public. CSOs and other sustainability decision makers can flip this narrative by focusing on the positive financial value of their organizations’ sustainability practices. After all, a business that’s actively identifying and leveraging opportunities to make money for its stakeholders is doing what it’s supposed to do.

Flipping the narrative to talk about the financial benefits of sustainability may feel daunting at first, but it’s also part of value creation. One study found that 58% of US-based companies “under-promote” their ESG initiatives and are “missing out on billions of dollars of potential value by failing to properly communicate their sustainability achievements and progress.” A transparent approach that quantifies the financial value of initiatives that also benefit customers, employees, and the environment can help companies avoid accusations of greenwashing and the financial losses that result from green hushing.

Driving industry wide innovation and value creation

Sustainability is no longer just a buzzword—it’s a strategic business imperative delivering measurable returns. Companies embracing sustainable practices experience growth through enhanced revenue and market positioning, attracting eco-conscious consumers and enabling premium pricing. Strong ESG performance improves access to capital, lowers borrowing costs, and boosts stock performance.

Sustainability fosters competitive advantage by driving innovation and strengthening stakeholder relationships. It also enhances human capital management by attracting top talent, improving employee engagement, and increasing productivity. Moreover, sustainability mitigates risks by ensuring regulatory compliance, bolstering supply chain resilience, and protecting brand reputation. Finally, operational efficiencies like energy savings and waste reduction reduce costs and improve profitability, making sustainability a clear driver of long-term business success.

Organizations that stall on sustainability also risk losing the competition for talent. The young adults making sustainable purchasing choices are applying the same lens to their careers. More than half look up prospective employers’ sustainability track records before they accept employment offers, and almost all of them want their employers to become more sustainable.

One major beauty retailer responded to its young workforce’s requests to reduce in-store waste. That response improved employee satisfaction, and reduced turnover. Those improvements, in turn, help control hiring and training costs while positioning the brand as an employer of choice—all of which enhance or create value for stakeholders.

Another consumer brand’s recent recyclable packaging initiative shows how sustainability can advance innovation across an industry to generate value and conserve resources. The brand’s toothpaste products came in containers that were not recyclable, so the company developed its own fully recyclable packaging material. With an approach like this, brands can see customer loyalty and profits per customer increase.

The brand didn’t stop there. It shared the formula for its recyclable packaging so that other manufacturers can use it, creating a wider positive impact that goes beyond its market segment. Creating value through sustainability will look different for each industry, and for individual companies.

In general, we recommend a four-step process for decision makers looking to start or expand sustainability initiatives:

1. Align with Corporate Finance: Integrate sustainability into core financial strategies and collaborate with the CFO.
2. Measure Full Value: Capture both tangible (e.g., cost savings) and intangible (e.g., brand reputation) benefits, including hidden value.
3. Effective Communication: Share impacts transparently and tailor messages to stakeholders.
4. Cross-Functional Collaboration: Foster coordination between finance, sustainability, and other teams.

Ultimately, sustainability is a strategic business imperative delivering measurable returns. Companies embracing sustainable practices experience growth, foster competitive advantage, and enhance human capital management. Sustainability also mitigates risks related to regulatory compliance, supply chain resilience, and brand reputation. Finally, operational efficiencies like energy savings and waste reduction reduce costs and improve profitability, making sustainability a clear driver of long-term business success.

 

About the authors:

Franco Amalfi is a sustainability expert and digital transformation global thought leader with more than 25 years of experience in all aspects of sustainability and digital transformation.  He is currently the director of sustainability strategic partnerships and initiatives for Capgemini. He is responsible for working with hyperscalers and climate techs to bring to market innovative sustainability solutions to customers in all industries in the Americas.

 

Alex Tepper currently has a dual role as the head of Ventures globally at frog and Capgemini Invent, as well as a leader in the Sustainable Futures division. He leads the teams focused on climate tech, sustainable products and services, new business building, and startup enablement. Prior to this role, he was a Managing Director at Emerald Technology Ventures, a climate-tech venture capital investment fund with roughly 800M € under management, where he focused on carbon accounting, decarbonization, and energy transition domains.