Ignoring sustainability carries unpriced risks

Ignoring sustainability carries unpriced risks

The ACCA has noted that amid rising global uncertainty, any retreat from environmental, social, and governance commitments is not merely a short-term strategic choice, but risks evolving into a long-term financial liability with tangible costs.

In a world of trade tariffs, geopolitical tension and shifting regulation, some businesses have quietly stepped back from their sustainability commitments by deprioritising net-zero targets, scaling back environmental, social, and governance (ESG) programmes, and waiting for things to change. It may be the most expensive mistake they make.

That was the central message from the Association of Chartered Certified Accountants’ (ACCA) annual Sustainability Conference, held on Earth Day on April 22, a virtual event attended by finance professionals from over 100 countries.

The argument put forward was not a moral one, but a financial one: organisations that fail to embed sustainability into their core strategy are accumulating risk, and in many cases, that risk is already materialising.

Sharon Machado, head of Sustainable Business at ACCA emphasised that sustainability strategy was not something that sits on the side, it's integrated within the business, and it's about risk management.

“When businesses think about geopolitical disruption, supply chain fragility, commodity availability or the impact of extreme weather on operations, they are, whether they recognise it or not, thinking about sustainability. The language of risk management and the language of sustainable business describe the same terrain,” she said.

Sharon Machado, head of Sustainable Business at the ACCA

Meanwhile, Andrea Amaize, risk, finance and sustainability leader said, “Though the business case for sustainability remains strong today, organisations that have toned down or deprioritised their sustainability commitments are trying to balance long-term sustainability objectives against pressures for near-term results.”

“However, immediate impacts of sustainability are being felt. Climate change is already affecting the availability and cost of insurance, purchasing decisions increasingly include questions about decarbonisation strategies, access to lower cost capital is becoming tied to sustainability performance and talent follows purpose.”

A core argument of the session was that sustainability, properly understood, is not only a cost driver but also a profitability generator, unlocking new revenue streams, reducing operating costs, improving resilience, strengthening brand value and creating competitive advantage.

Amaize also noted that, in today’s environment, it was important for organisations to clearly demonstrate how sustainability drives measurable financial outcomes, an area where finance professionals can play a pivotal role in evidencing this link.

VIR