Today, every senior management team is recognizing the significance of investing in sustainability. The priorities among businesses differ across various sustainability dimensions. Some focus primarily on environmental concerns, while others prioritize social initiatives. Across industries and geographies, achieving effective governance and meeting compliance requirements is crucial. In our experience, companies invest in sustainability not only due to external compulsion but also to make a positive impact on their stakeholders.

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Consumer Sector: Navigating Sustainability in the Market

Consumer companies face one of the highest rates of value at stake compared to other industries. Rising expectations for sustainable products, low switching costs, an increasing number of green alternatives, and the existence of green premiums drive this magnitude. By 2030, the business-as-usual case from changes in market share and increased legal, regulatory, and reputational risks could represent 18% of EBITDA.On the defense side, companies must mitigate sustainability-driven market and demand declines. Consumer companies are more likely to see consumers change purchasing patterns based on sustainability factors. Many food companies are shifting to alternative ingredients. On the offense side, there are significant opportunities. One retailer is selling secondhand clothes, and several fashion companies are creating vintage businesses. Sustainability-friendly products have achieved higher growth, and resource efficiency adds to EBITDA. For example, one CPG company is on track to be carbon negative by 2030, saving millions. Employee productivity impacts are generally lower than in purpose-driven sectors, but there have been successes like a retailer's program for adult learners.

Chemical Industry: Harnessing Sustainability for Growth

Chemical companies have a significant rate of value at stake. The baseline case shows value decline, especially for chemicals in carbon-intensive products. Demand erosion and regulatory costs are expected to rise. Many corporate customers have sustainability challenges, and chemical companies need to meet their needs.On the defense side, some companies are allocating resources. SABIC uses a strategic tool to invest in programs, and another company developed a PSA methodology. Many also include climate-related risks in ERM programs. On the offense side, sustainability offers opportunities like "green chemicals," business building, and talent attraction. For example, BASF contributed to hydrogen production, and several companies have university partnerships. Chemical companies are also improving resource efficiency, realizing cost reductions.

Pharmaceutical Sector: Balancing Sustainability and Business

Sustainability is highly material for pharmaceutical companies in social and governance dimensions. There are challenges from regulator fines, reporting requirements, and attracting employees.On the defense side, many companies are strengthening community standing through various initiatives. They also self-report the revenue impact of sustainability-conscious customers. Regulatory fines erode EBITDA, and companies are looking to mitigate risks. On the offense side, they are seeking opportunities in sustainable and inclusive business building. For example, there is growth in women's healthcare and animal health. Some companies have achieved green premiums, and resource efficiency has improved. Employee productivity and retention have also improved through initiatives.There are clear common sources of value from sustainability. The value at stake varies across industries, and companies take different combinations of initiatives. The do-nothing approach is a value destroyer and fails society.