Only 19% of executives quantify sustainability’s financial impact: KPMG

Most companies struggle to translate them into profits, cash flow, and valuation.

Only 19% of executives use robust methods to quantify the financial impact of sustainability, despite 72% saying they understand their organisation’s strategy, metrics, and performance, according to KPMG.

The study found that roughly four in five companies remain unable to adequately measure how sustainability affects profits, cash flow, capital expenditure, and valuation.

Although 60% of organisations consider sustainability risks and opportunities in financial planning, only half have embedded sustainability into their core strategies.

KPMG warned that the gap could leave risks and opportunities unpriced, making it harder for sustainability projects to secure investment and potentially causing businesses to miss opportunities for growth and efficiency.

Banking and capital markets firms led the use of advanced sustainability valuation methods at 33%, followed by energy and natural resources companies at 31% and automotive businesses at 27%.

KPMG said companies should develop consistent methods for measuring sustainability’s financial effects and incorporate the results into financial planning, capital allocation, and valuation.

It also called for stronger collaboration between finance and sustainability teams.

The findings were based on a survey of 2,024 C-suite and senior executives across 19 countries and territories. Respondents represented organisations with annual revenues of at least US$100m.