Sustainability gap: only one-fifth of execs are quantifying financial impact

New KPMG research finds a disconnect between sustainability strategy and financial decision-making, leaving value at risk.

• 72 percent of executives understand their sustainability strategies but only 19% can quantify how it will impact their future performance
• Four in five companies are unable to measure how sustainability affects profits, cash flow or valuation, leaving risks and opportunities largely unpriced
• 60 percent say they factor sustainability into financial planning but very few can translate it into EBITDA, CapEx or balance sheet impacts
• Sectors leading on the use of advanced valuation methodologies include banking and capital markets (33 percent), energy and natural resources (31 percent), and automotive (27 percent) 

Redmond, WA (July 10, 2026) – A significant gap remains between companies’ understanding of sustainability and their ability to translate it into financial value, according to a new global KPMG study.

The study, Closing the Sustainability Valuation Gap, reveals that while 72% of executives say they understand their organization’s sustainability strategy, metrics and performance, only 19% apply robust quantification approaches to measure its financial impact, highlighting a critical disconnect at the center of corporate decision-making.

Surveying over 2,000 executives across 19 countries and territories, the study finds sustainability is now firmly on the boardroom agenda, with 60% of organizations considering sustainability risks and opportunities in financial planning, and half embedding it into core strategy.

However, the report shows that few organizations have succeeded in translating sustainability into financial metrics such as EBITDA, cash flow and capital expenditure impacts, challenging whether it is considered in financial planning, and creating a disconnect between sustainability initiatives and enterprise value. As a result, companies risk overlooking both the cost of inaction and the potential value creation opportunity of sustainability investments.

“Boards increasingly understand sustainability risks and opportunities, but understanding alone is no longer enough,” said Simon Weaver, Global Head of Sustainability Advisory, KPMG International. “A real challenge is turning that insight into financial outcomes that can inform decisions. Without robust quantification, companies risk missing both the downside risks and the upside value creation opportunity.”

A ‘valuation gap’ with real consequences

The study identifies that strong awareness of sustainability in business is not matched by financial integration. It highlights that without robust quantification, sustainability initiatives may struggle to secure investment, risks may not be fully priced into decision-making, and opportunities for growth and efficiency may be missed. This could create a critical blind spot as investor scrutiny intensifies and capital shifts towards businesses that can demonstrate resilience to sustainability-related risks.

Sector leaders begin to close the gap

Some industries are moving faster than others. The report finds that 33 percent of banking and capital markets firms, 31 percent of energy and natural resources companies, and 27 percent of automotive organizations are already using advanced valuation methodologies to quantify sustainability impacts — higher than the global average of 19 percent.

These sectors are leading due to the more immediate and material impact sustainability risks have on their financial performance and capital allocation decisions.

Unlocking value: from compliance to commercial impact

The findings highlight a major opportunity for companies to move beyond treating sustainability as a compliance exercise and instead embed it as a driver of enterprise value.

A case study from KPMG in the UK shows how applying structured valuation approaches can deliver significant financial returns. It identified six sustainability initiatives capable of generating an uplift in EBITDA by as much as 35% for a food and beverage portfolio company.

It also reveals how one leading European bank recently divested from dozens of companies following risk assessments related to ESG issues. These decisions signal a clear shift: capital is being reallocated away from businesses that cannot demonstrate resilience against sustainability-related risks.

Closing the gap: quantification is the missing link

KPMG argues that the next phase of sustainability will be defined not by awareness or reporting, but by financial integration and valuation discipline. To close the gap, organizations should develop consistent methodologies to quantify sustainability impacts, embed sustainability into financial planning, capital allocation and valuation, and build stronger collaboration between sustainability and finance teams.

“While systemic change is undoubtedly on its way, it will likely be built from the bottom up as much as being mandated from the top down,” said Julie Vasadi, Global Lead, Sustainability Deals & Value, KPMG International. “Understanding the business case for action is a starting point; without that, progress may be limited. A real risk lies in doing nothing. Companies that take the initiative now will likely be better prepared to protect and create value and competitive advantage at their own organizations.”

About KPMG International

KPMG is a global organization of independent professional services firms providing Audit, Tax and Advisory services. KPMG is the brand under which the member firms of KPMG International Limited (“KPMG International”) operate and provide professional services. “KPMG” is used to refer to individual member firms within the KPMG organization or to one or more member firms collectively.

KPMG firms operate in 138 countries and territories with more than 276,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. Each KPMG member firm is responsible for its own obligations and liabilities.

KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients. For more information, visit www.kpmg.com.

Source: KPMG International

Tags: KPMG, social responsibility, sustainability