Turning Green Into Gold: 6 Ways Embracing Sustainability Reduces Enterprise Risk

The sustainability and the environmental, social and governance (ESG) regulatory landscape is rapidly changing.

A new Securities and Exchange Commission (SEC) rule to enhance and standardize climate-related disclosures by public companies demands consistent, comparable and reliable information about the financial effects of climate related risks. Enterprises across the globe are increasingly expected to meet rising sustainability standards and regulations, yet S&P Global reports that only 60% of organizations are implementing sustainability measures. The incentive for organizations to do so, however, extend beyond saving the planet.

A recent report from Arup and Oxford Economics predicts that a global green transition could add $10.3 trillion to the global economy. Andrew Winston — a globally-recognized expert on megatrends, sustainable business and how to build companies that profit by contributing to a thriving world — suggests that economies could lose 18% of GDP if we don’t solve for climate impacts.

Sustainable practices inherently help organizations reduce potential business risks. Lower risk and potential for new revenue streams translate to better business, long-term resilience and a competitive edge. Technology plays an undeniable role here. 

How exactly does embracing sustainable practices help enterprises mitigate risk? Let’s discuss six specific types of risk where sustainability makes a difference and the role technology plays.

1. Regulatory Compliance Risk

As governments and regulatory bodies worldwide impose stricter environmental regulations, organizations are compelled to understand their greenhouse gas (GHG) emissions and have a plan to get to net zero.

Such regulations include accountability around GHG emissions, energy efficiency, waste management and sustainability reporting, to name a few. The new SEC rule and other California legislations are a few examples of emerging regulations. The World Economic Forum acknowledges: “Measuring the impact companies have on society and our planet is essential if practices are to be managed and improvements are to be made.”

Companies that ignore these evolving requirements risk facing hefty fines, legal fees and even shutdowns. Your enterprise can ensure compliance and avoid costly consequences by developing sustainable frameworks and adopting sustainable practices early on. This can include conducting a sustainability assessment, setting measurable sustainability objectives for your business, providing staff training on sustainable practices and reducing waste. Working with technology experts who prioritize sustainability can help your business reduce your technology footprint and provide advisory services about how to leverage technology to aid in assessing, measuring, training and so on.

2. Reputation Risk

Your stakeholders — customers, coworkers, partners and communities — are more environmentally conscious than ever. Sustainable practices can significantly enhance your company’s reputation, attracting customers, investors, and top talent while avoiding the backlash associated with environmentally harmful operations.

A Nielsen survey found that 73% of global consumers would change their consumption habits to reduce their environmental impact. A 2024 Deloitte global survey found that climate change and protecting the environment continue to be top concerns for Millennials and Gen Z. They care deeply about sustainability. Enterprises that prioritize sustainability can enhance their reputation, increase customer loyalty, improve coworker morale and capture new business.

For instance, Ben & Jerry's has established themselves as a sustainability trail blazer by sourcing Fairtrade-certified ingredients, prioritizing non-GMO products and committing to reducing their carbon footprint. They also emphasize social justice and environmental responsibility in their business practices. This not only appeals to environmentally conscious consumers but also sets a standard in the industry, encouraging other companies to adopt sustainable practices.

3. Operational Risk

In a time of economic uncertainty, enterprises are having to do more with less. Adopting an environmentally sustainable business model just makes sense as making the most of resources is a central tenant of going green.

Technology plays a major role in accomplishing this new status quo. Updating legacy systems to account for inefficiencies and implementing resource-saving tools (such as automation) and other green practices helps enterprises reduce waste and operational costs. You can manage resources responsibly and become more resilient to variables such as resource scarcity or price volatility.

4. Market Risk

As consumer demand for more eco-friendly products and services rises, so too does the opportunity for businesses to capitalize on this market shift. By prioritizing sustainable practices such as using eco-friendly materials, reducing waste and implementing energy-efficient processes, your business can tap into a more environmentally conscious customer base. This provides you with even more incentive to develop innovations that align their products and services with these values.

Companies spend years building up their brand and reputation. A loss of stakeholder trust and confidence can negatively impact revenue, market value and stature. Embracing sustainability enhances brand reputation and keeps businesses relevant, mitigating the risk of falling behind competitors who are capitalizing on these emerging markets. 

5. Financial Risk

Investors are increasingly factoring ESG criteria into their decisions. Companies that prioritize sustainability attract more investment and potentially lower costs of capital by demonstrating long-term viability, reducing risks associated with environmental concerns, and appealing to socially conscious investors who seek to support responsible businesses.

According to a Macau University School of Business report, more and more investors are drawn to organizations operating within sustainable frameworks (as part of their ESG programs) because these companies are generally less vulnerable to litigation and demonstrate less financial loss, increasing their potential for long-term sustainability.

Environmentally responsible practices can enhance your company's reputation, attract ethical investors and lead to increased demand for stocks or bonds. As a result, you can access larger pools of capital and negotiate more favorable financing terms, reflecting your commitment to sustainable and responsible business practices. Aligning with ESG principles enhances investor confidence and contributes to greater financial stability.

6. Supply Chain Risk

A recent DispatchTrack report reveals that 72% of organizations still struggle with supply chain issues. Sustainable supply chains are more resilient and better equipped to handle external shocks. Enterprises who integrate environmental, social and financial considerations into the sourcing, production and distribution of goods and services fortify the availability and reliability of resources, according to IBM.

Technology is playing a major role in fortifying supply chain resilience. Tools such as artificial intelligence (AI), machine learning (ML), blockchain and the Internet of Things (IoT) enhance supply chain sustainability by improving visibility, traceability, energy efficiency and collaboration among stakeholders. These advancements enable better risk management, decision-making and compliance, while reducing greenhouse gas emissions. This ensures a steady supply of raw materials and mitigates risks associated with resource scarcity and fluctuating prices.

Incorporating environmental sustainability into your business strategy is about trust, credibility and transparency — and driving positive outcomes. Partnering with a trusted advisor like CDW can help you achieve your sustainability goals and objectives. It can also help you turn these practices into a strategic advantage.

CDW is committed to several sustainability initiatives, including alignment with the UN Sustainability Development Goals. We’ve also earned a Gold score with the world’s most respected sustainability ratings company, EcoVadis and maintain our ISO 14001 environmental management system certification. We are uniquely positioned within tech to provide sustainability advisory services, including GHG emission inventory, tech decarbonization plans and climate disclosure readiness assessments for accurate and auditable reporting to help you meet your sustainability targets. Your business can thrive in the face of rising sustainability expectations.