Guest post by: Alexis Gazzo, EY Global Climate Change and Sustainability Services Leader
It is becoming increasingly clear across all areas of my work that sustainability is no longer viewed primarily through the lens of reporting, compliance or regulation. Across markets, we are seeing it increasingly shape how growth is pursued, how competitiveness is judged and how long‑term value is assessed.
Interestingly, this shift appears to be driven less by policy and more by market forces, with heightened awareness of its implications for risk and resilience. These pressures are often influencing capital allocation, operational priorities and what sustainable growth now looks like.
The financial incentive for sustainable transformation and growth
One of the clearest shifts I am seeing is that sustainability is often a factor in how investors, lenders and insurers assess long‑term business viability. Access to finance is increasingly influenced by whether organizations can provide robust data and demonstrate credible transition and resilience planning. It’s likely no longer enough to rely on high‑level commitments alone. As a result, sustainability is now viewed as a core component of business strategy that can inform capital allocation decisions.
We are seeing this come to the fore in lending relationships. Many companies are developing climate transition plans, not in response to reporting requirements, but because banks are asking for them as part of credit assessments. In Europe, supervisors such as the European Central Bank and the European Banking Authority are treating poor climate and nature risk management as a financial and potentially systemic risk, pushing lenders to scrutinize the assumptions, data quality and investment underpinning corporate plans.
We’re also seeing these expectations increasingly shaping commercial competitiveness. For example, a recent conversation with a CEO in France’s energy and utilities sector noted that around a quarter of supplier Request for Proposals (RFP) criteria are sustainability-related, demonstrating that environmental performance has effectively become embedded into procurement and commercial decision-making. In this context, sustainability is likely no longer a discretionary consideration: it has increasingly become a central part of how markets decide who can access capital and long‑term opportunity.
Risk and resilience as drivers of sustainable transformation and growth
I am also noticing that rising physical risks relating to climate change, volatility in resource prices and availability, and insurability pressures are often reshaping investment priorities. We have seen a shift in how businesses are framing sustainability: where it was once a long-term risk management exercise, it is now a question of operational resilience and identifying where vulnerabilities exist across the value chain.
These operational disruptions are increasingly materializing. For example, companies in parts of Europe have experienced production shutdowns during summer months due to water restrictions, while extreme heatwaves across parts of the US have disrupted operations and placed a strain on energy systems. Many organizations are only now gaining clearer visibility on water costs and dependencies, as climate and geopolitical instability increasingly expose risks to operations and revenue, sharpening the importance of investment to protect resilience and viability.
Insurance availability is also an emerging challenge. Assets exposed to flooding, heat stress or water scarcity are increasingly at risk of becoming uninsurable. At the same time, companies continue to invest in renewables through mechanisms such as long-term power purchase agreements (PPAs), driven less by regulation than by energy price volatility and security. Alongside this, nature degradation is increasingly recognized as a systemic risk, particularly in sectors such as agrifood, pharmaceuticals and energy, where dependencies on natural systems directly affect continuity and financial performance.
AI‑enabled sustainability transformation and growth
As sustainability risks become more complex, organizations are using AI to improve the accuracy, consistency and analysis of climate, nature and operational data. By strengthening data quality and reducing reliance on assumptions, AI is helping businesses to make sustainability-related decisions grounded in robust, credible information.
AI‑enabled scenario planning helps organizations assess and visualize how specific assets and operations perform under different conditions — for example, whether facilities can remain operable under flooding or heat stress. This shift from high‑level scenario modeling to asset‑level analysis can enable more informed decisions about adaptation and investment.
In practice, this type of analysis is becoming increasingly important as lenders, investors and regulators place greater scrutiny on the quality of data and assumptions underpinning sustainability strategies. At the same time, growing awareness of AI’s own energy and water footprint is pushing organizations to balance digital innovation with wider sustainability objectives.
Conclusion
The common thread across these shifts is resilience, and its critical role in defining long-term business value. Businesses that integrate sustainability into capital allocation, investment decisions and risk management can be better positioned to operate and grow through volatility and disruption.
Those that enable this integration through stronger data, clearer insight and AI‑enabled analysis likely stand to gain a more practical understanding of where risks sit and where opportunities for growth exist. In taking this approach, sustainability can move from a target to an operational discipline.
In this context, sustainability is likely no longer peripheral to business performance. It can be a core driver of competitiveness, resilience and long‑term value creation in an increasingly uncertain global environment.
Disclaimer:
The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.
