Dive Brief:
- Only one in five of surveyed companies are able to quantify how sustainability initiatives affect profits, cash flow or valuation, with many of them also unable to trace the impact of their ESG plans on EBITDA, CapEX, or balance sheet, KPMG said Monday in a press release.
- The gap between the awareness of sustainability as an issue and its financial integration leaves a “blind spot” that needs to be closed to avoid the possibility that opportunities could be missed and risks might not be taken into account when making decisions, according to the release describing results of a survey of 2,024 C-suite and senior business leaders conducted between November 2025 and May 2026.
- “While science and target setting have moved forward, valuation tools and financial methodologies have lagged behind. Too often, sustainability is still discussed qualitatively or treated as a compliance exercise, rather than being evaluated alongside capital allocation, investment appraisal and strategic risk management,” the report states.
Dive Insight:
The new report coincides with a softening in U.S. regulation focused on promoting sustainability. Last month the Securities and Exchange Commission proposed a rule to formally rescind the climate-risk disclosure regulation adopted under former SEC Chair Gary Gensler in 2024.
KPMG’s report acknowledged that regulation plays a critical role in executives’ understanding of sustainability, with the survey noting that companies outside the U.S. appear to have focused more on ESG. For example, sustainability is a key strategic factor at 67% of companies in South Africa, 58% in Germany and just 34% in the U.S., according to the report.
The report also found different approaches to measuring the financial impact and potential return across sectors. Among all the industries surveyed, only 19% applied widely used financial valuation models such as digital twins or Monte Carlo simulations when gauging sustainability’s financial costs and potential gains.
Companies in the banking sector (33% of those surveyed) were most likely to use such methods, followed by energy and natural resources companies (31%) and automotive firms (27%).
KPMG surveyed companies with annual revenues of more than $100 million in 19 countries including the U.S., the European Union and Asia.
