Business and finance must both work together to build a pathway to a successful sustainable transition

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19 January, 2022


WBCSD insights



Vania Farid, Yale School of the Environment, Joss Tantram, Director, Redefining Value, WBCSD, Yi Sun, Associate, Redefining Value, WBCSD


  • Impact on nature and biodiversity
  • Resource utilization and the adoption of circular economy principles
  • Need to demonstrate their contribution to greater social equity and cohesion

Not only do companies need to focus and communicate around these areas, but investors also need to respond to ensure that these transitions are supported and rewarded by capital markets.

What does transition look like in practice? How can companies develop transition strategies and plans that meet requirements for both driving sustainability performance and gaining credibility and reward from capital market actors and other stakeholders? This opinion piece presents a brief insight to these questions based upon a small number of interviews with WBCSD members and investment professionals. It is intended to be a contribution to a wider subsequent set of insights and activities on the topic of sustainable transition in practice.

What is sustainable transition?

Developing a common agenda for sustainable transition

As we need systemic transformations to successfully disrupt business-as-usual and shift towards the generation of long-term value and future success, business and finance must work together to achieve sustainable transformation in their sectors.  

They also need to understand each other’s expectations through:

  • Mutual recognition of the common characteristics of Future-Proof companies
  • Better understanding of signals that are meaningful and reliable to predict successful transitions
  • Identification of best practices that companies employ to articulate their intentions and plans for sustainable transition

Exploring and valuing sustainable transition in practice

The emerging characteristics of sustainable transition

There is further to travel in order to develop a clear picture of the characteristics that constitute and predict successful sustainable transition. However, from our research so far, we have identified some fundamental elements, summarized below.

Communicating and engaging on sustainable transition

Today, companies are increasingly active in the mode and method by which they communicate to investors their current sustainability performance and how sustainability is shaping their strategic intentions. This has shifted how companies communicate with investors, as both sides are learning to integrate sustainability in existing communication channels such as earnings calls, annual general meetings and their wider investor relations activities. Some companies hold dedicated sustainability investor days to communicate their approaches, performance and intentions to investors. In turn, as investors seek deeper levels of engagement with companies, we can see that ESG aspects are featured more consistently in communications between them.

Sustainable transition – not just a numbers game

However, there is a mismatch between what and how companies communicate on their sustainability transition, and the information that investors require.

For many investors, their assessment of a company’s transition intentions combine a mix of quantitative assessment of performance and projections, with the qualitative assessment of the company’s judgement calls, strategic choices, governance and the competency of the leadership team in delivering successful strategic change.

For companies, sustainability transition is a complex, nuanced and sometimes messy process. We find that companies are likely to be better at engaging with investors on sustainable transition if they can:

  • Demonstrate how their sustainability transition will improve investors’ portfolio performance, communicating how sustainability directly influences their financial indicators and how their transition intentions will affect those indicators over time
  • Identify the contribution of sustainability to the way that they recognize, account for and communicate business value
  • Identify and disclose the positive correlations between company value (e.g., capital cost & performance, equity risk, intangible value) and their sustainability strategy and performance
  • Explain their strategic choices for transition and demonstrate governance capacity and competence to deliver against those intentions

Sustainability transition is a journey, rather than a destination. As the pressures of the climate, nature and inequality crises continue to manifest and grow, both companies and investors will significantly evolve their understanding and practice of what constitutes successful transition, how it is framed and communicated by companies, and valued and rewarded by investors.