ESG and commercial value: where sustainability can give ROI to the business
This article supports our latest BITA Networks sustainability feature, where we look at an oft-held misconception: ESG is expensive!
Ok, so sometimes it can be expensive.
It can require new systems, new data, demand management time, better reporting and capital investment. But an organisation only focussing on this side of the discussion is very much missing the bigger picture.
The question shouldn't be: “What is sustainability costing us?”
Instead, it should be: “What value is it helping us create, protect or retain?”
That is the focus of our latest BITA Networks sustainability feature, where we looked at ESG as a growth tool rather than simply a reporting or compliance obligation. And, importantly, the value rarely arrives with a neat label saying “ESG ROI”.
It tends to show up elsewhere:
A tender you are now better placed to win, Lower energy bills, Less material waste, Better supplier relationships, Stronger customer retention, Easier conversations with lenders or insurers, Keeping hold of and attracting good people who care about the direction and credibility of the organisation they work for.
The value is very much there, it just doesn't always appear in an obvious place.
So where should a business be looking? At Carn we think there are three key places:
Revenue: Where is sustainability already showing up in tenders, frameworks, supplier onboarding or customer procurement? A strong ESG position does not guarantee more work, but a weak one can absolutely become a reason not to award a contract. Margin: If you are measuring energy, fuel, materials, travel or waste, you are also measuring cost. Environmental efficiency and financial efficiency are often much closer cousins than they first appear. Trust: Customers want confidence in suppliers. Employees want confidence in employers. Lenders want confidence in governance. Insurers want confidence in risk management. Investors want confidence in strategy. Trust reduces friction and friction matters.
So where should a business start?
A useful first step is a simple one-page ESG value map:
Growth: where could sustainability help us win, retain or grow revenue? Efficiency: where could it reduce cost, waste or operational friction? Confidence: where could it strengthen relationships with customers, employees, lenders, insurers or investors?
It doesn't need to be perfect, it doesn't need to be polished. It just needs to help identify a clearer link between sustainability and the way the business actually works.
The uncomfortable truth is that sustainability does cost. In the same way that so does quality management. So does cyber security. So does staff development.
So does good governance!
The question is not whether there is a cost. The question is whether the business is getting value in return. This is the very thing that makes the sustainability activity sustainable. The organisation will continue to invest where it continues to receive a return.
If sustainability currently feels like something your organisation pays for rather than something it benefits from, it may be worth asking whether your ESG activity is connected closely enough to commercial decision-making.
Carn Advisory helps leadership teams make that connection - identifying the risks, opportunities and practical actions that can turn sustainability from another corporate obligation into a better way of managing the business.
Read the full BITA Networks feature here, or use the links below to get in touch with Carn Advisory to discuss what emissions reporting should look like for your business.
