The Six Ways BCG Links Sustainability and Value Creation

Critics of ESG often say that sustainability and profitability are at odds.
Research from Boston Consulting Group (BCG) challenges that notion.
“Investments in sustainability can create value and be rationally rewarded by shareholders if they increase or de-risk future cash flows,” says Alexis Colombo, Managing Director and Partner at BCG, who co-authored BCG's latest study, entitled 'Six Ways to Link Sustainability and Value Creation'.
Examining 47,000 sustainability-related announcements from the world's largest public companies, BCG found that well-structured sustainability commitments can drive shareholder returns.
While corporate leaders have long championed environmental initiatives, many investors remain sceptical about their financial viability.
The study revealed that from 2019 to 2024, the proportion of investors who felt companies effectively communicated the business rationale for sustainability grew only slightly—from 37% to 40%.
According to BCG: “To get real credit, your sustainability strategy needs to be linked, at least in part, to your value creation strategy.”
This means integrating sustainability into the core business model rather than treating it as a separate corporate responsibility exercise.
During their research, the authors of BCG's report found six key areas in which sustainability can leverage value for companies.
1. Achieving price premiums
Sustainable products can command higher prices in the market, as consumers increasingly seek environmentally friendly alternatives.
Indorama Ventures Limited, a major producer of polyethylene terephthalate (PET), saw potential in recycled PET (rPET) and committed US$1.5bn to scaling up its rPET production.
By 2030, Indorama plans to double its rPET capacity, reinforcing its position in a market where sustainable alternatives command a price premium.
According to BCG, such investments not only contribute to environmental goals but also “have substantial profit potential.”
2. Reducing the cost base
Sustainability efforts can lower operational costs by reducing energy use, minimising waste, and securing stable input costs. General Motors (GM) has focused on securing critical raw materials for producing its EVs.
Its investments in US-based lithium projects ensure a steady supply of this essential battery component, reducing exposure to price volatility.
GM’s commitment to sustainability is underscored by the fact that 45% of its sustainability-related announcements were classified as high quality, compared to an average of 17% across all sectors.
3. Accessing new profit pools
Companies investing in sustainability often unlock new revenue streams, either by expanding into greener markets or innovating within their sectors.
Schneider Electric has capitalised on this by providing energy-efficiency solutions to organisations looking to balance sustainability with growing energy demand.
As a result, its sustainability announcements have delivered twice the shareholder return uplift of their industry average.
By addressing sustainability concerns at both the supply and demand levels, Nestlé has maintained a strong market position while aligning with regulatory expectations.
4. Mitigating regulatory risk
Governments worldwide are tightening environmental regulations, and companies that proactively comply gain a competitive advantage.
In Chile, mining giant Antofagasta faced potential restrictions on water usage, which threatened production levels.
The company responded by investing over US$2bn in a desalination plant, reducing its reliance on groundwater and ensuring long-term operational stability.
Investors rewarded this strategic move, with the company’s sustainability-related announcements outperforming the sector median by 50%.
5. Mitigating customer risk
Sustainability-conscious customers expect suppliers to align with their environmental goals. Nestlé has taken significant steps to eliminate deforestation from its palm oil supply chain.
Through supplier education, satellite monitoring, and consumer engagement campaigns, the company has ensured that 100% of its crude palm oil purchases are deforestation-free.
By addressing sustainability concerns at both the supply and demand levels, Nestlé has maintained a strong market position while aligning with regulatory expectations.
6. Mitigating operational risk
Companies that reduce their reliance on finite or environmentally damaging resources enhance long-term resilience.
Heineken, as part of its EverGreen strategy, has focused on reducing its water consumption, particularly in water-stressed regions.
Through efficiency measures and local partnerships, it has significantly reduced water usage, ensuring continued operations while improving sustainability credentials.
Why companies must act decisively
The message from BCG’s research is clear.
"You must anchor every sustainability conversation in value creation," says Vinay Shandal, Senior Partner at BCG.
Businesses that integrate sustainability into their value creation strategies will reap financial rewards. However, simply paying lip service to green commitments will not suffice.
Companies must craft credible, well-structured sustainability initiatives that provide tangible financial and operational benefits.
As the report concludes, “Investors understand that not every sustainability-related investment can create value… but they expect management to take full advantage of those where the organisation’s capabilities and competitive advantage give it a right to win.”
For businesses, the challenge is not whether to embrace sustainability but how to do so in a way that enhances profitability.
Those that succeed will not only meet investor expectations but also secure long-term resilience in an increasingly resource-conscious world.
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