In recent years, the conversation around sustainability in business has shifted from aspiration to expectation. Investors, boards, executive teams, and other stakeholders are no longer satisfied with broad commitments or qualitative progress updates. Instead, they increasingly demand evidence that sustainability initiatives deliver tangible business value, such as cost savings, innovation, risk mitigation, or access to new markets.

This shift places a premium on a company’s ability to quantify sustainability in financial terms, which, for many organizations, remains a work in progress. The journey from developing the ambition of creating sustainability-related value to financially quantifiable results is neither straightforward nor uniform. Success requires new ways of thinking, robust data, and the willingness to challenge long-held assumptions about the role of sustainability in corporate strategy.

Why quantification matters

The rationale for quantifying sustainability is, at its core, pragmatic. Capital allocation decisions—whether for new products, customer acquisition campaigns, operational improvements, or strategic pivots—are made based on financial returns. If sustainability initiatives are to compete for resources, they must be evaluated with the same rigor as every other investment.

With this direction comes the recognition that, in business, CFO-grade financial metrics serve as a common denominator. Quantification offers a bridge between sustainability teams and the C-suite, enabling more informed decisions and, ideally, more impactful outcomes.

Timely departure from the status quo

Historically, the success of sustainability efforts was measured in terms of environmental or social outcomes – tons of carbon reduced, water saved, or hours volunteered – rather than dollars earned, revenue unlocked, or costs avoided.

While these metrics are important to capture, this approach has two significant shortcomings. First, it obscures the positive business case for many existing sustainability actions. Financial benefits, such as lower energy costs or reduced waste disposal fees, too often go unrecognized because they are not tracked in financial terms. Second, it limits business leaders’ ability to identify opportunities that simultaneously improve sustainability performance and create financial value.

So, from a business perspective, the opportunity for companies to demonstrate the commercial value of sustainability is a welcome and necessary development.

The business case: discipline unlocks value

Although many companies are shifting to a value-driven approach to sustainability, sustainability’s business case is often still presented in broad, unspecified terms, such as promises that sustainability efforts will magically lead to cost savings, revenue growth, and improved access to capital. While all these forms of value creation are real, capturing them requires a disciplined, bespoke approach, and outcomes vary by sector, geography, and company maturity.

For example, ERM’s experience with a global hospitality group illustrates the value-creation potential of operational efficiency. By implementing a structured sustainability strategy, the company achieved annual operational savings of USD $9.7 million and increased its corporate portfolio value by USD $121 million. These shifts were driven by improved net operating income, a 42 percent reduction in greenhouse gas emissions, and a 15 percent decrease in water intensity. These results were not the product of a single initiative, but rather the cumulative effect of targeted actions, prioritized by return on investment.

In other cases, the value realized may be less direct but no less material. For a retail services provider ERM worked with, sustainability-driven enhancements led to USD $19 million in benefits through revenue growth and operational savings in Year 1, a USD $59 million bump in enterprise value, and a USD $3 million increase in the sales pipeline, primarily through sustainability-focused sales.

In another example, ERM supported a private equity-backed food company in developing a proactive approach to address evolving customer expectations across core and emerging customer segments. With tailored sales enablement content, case studies, value propositions, and pitch decks, ERM unlocked USD $4.9 million in incremental sales.

The value chain perspective

Sustainability-related value creation is not confined to internal operations. For many companies, the most significant opportunities -- and risks -- are in the value chain. For example, partnering with suppliers to reduce Scope 3 emissions can yield substantial monetary and emissions savings.

A recent report based on data from 23,000 companies that disclose to CDP found that businesses reducing greenhouse gas emissions in their supply chains collectively saved USD $13.6 billion. Yet only 15 percent of the CDP companies have upstream sustainability initiatives, underscoring the missed value from neglecting the value chain.

For suppliers, verified sustainability results can be a source of competitive advantage, helping them remain on preferred supplier lists or break into new markets. Conversely, those that fall short risk losing business or being excluded from procurement processes.

Communication by numbers

CFO-grade financial metrics – such as internal rate of return (IRR), net present value (NPV), and payback periods – serve as a common language across functions. They overcome preconceived notions, foster collaboration and understanding, and lay the foundation for improved access to capital. Sustainability-related business cases should be treated like any other business case, with success measured in robust financial metrics. This also provides a credible narrative for investors and other stakeholders.

Still, data collection can be time-consuming, and translating environmental metrics into financial terms requires both technical expertise and organizational alignment. Most companies start with incomplete data, filling in the blanks with assumptions while working towards more robust datasets. Many project proposals use some estimates to build their business cases, whether sustainability-related or not. However, for sustainability-related projects, tolerance for mistakes is still lower, so responsible teams should go the extra mile to ensure their assumptions are well-founded.

Making the switch

Based on ERM’s experience, five steps are crucial to the successful implementation of a hands-on, value-driven approach to sustainability.

  • Catalog existing efforts: Begin by identifying ongoing sustainability actions and measuring their financial impact in corporate finance terms. Many organizations are already taking steps that deliver value, but are not capturing or communicating the results. This practice also helps identify new opportunities.
  • Engage key functions: Involve finance, operations, and commercial teams from the outset. Cross-functional collaboration supports the development of CFO-grade quantification and accelerates organizational buy-in.
  • Translate sustainability metrics into financial terms: Use cost-benefit analysis, IRR, CAC, and NPV to translate sustainability data into commercial language. For example, connect energy savings to lower utility bills, emission reductions to avoided carbon costs, and sustainability requirements of top customers to extra revenue.
  • Set up disciplined governance: Independent review, clear methodologies, and transparency about data sources and their limitations are essential to maintaining credibility.
  • Communicate early wins: Sharing tangible results with leadership and internal and external stakeholders builds momentum and supports further investment.

Conclusion

For their own profitability and long-term resilience, companies need to put value creation at the center of their sustainability efforts. Financial quantification to identify and underpin CFO-grade business cases is an indispensable tool to start merging sustainability with financial performance and engaging internal stakeholders and investors.