In the past 12 months, concerns have grown that sustainability investments might slow amid economic uncertainty. However, a study by Kearney and We Don’t Have Time suggests that companies are actually forging ahead, not pulling back.

The survey of over 500 CFOs across the UK, US, UAE, and India, titled ‘Staying the Course: Chief Financial Officers and the Green Transition’, found that 92% plan to increase their sustainability investments, with more than half expecting a significant boost. These figures underscore how seriously businesses are taking sustainability, even as many grapple with balancing the pursuit of long-term value with short-term financial pressures.

Where CFOs are investing

CFOs are channeling funds into areas they believe will yield near-term, tangible results. The research identifies key focus areas include the increasing use of sustainable materials, driving sustainable innovation and partnerships, managing energy consumption, reducing waste, and strengthening ESG compliance.

Beyond these core areas, CFOs are also investing in decarbonising supply chains, workforce education, reducing corporate travel, and offsetting emissions. The emphasis aligns with the growing pressure to take meaningful action before 2030 rather than relying on distant 2050 net-zero targets. Many of these measures don’t just reduce carbon footprints; they can also save money by curbing energy usage and streamlining operations.

Regulation: a growing cost factor

Regulation remains a major consideration for CFOs, particularly as compliance costs rise. The EU’s Corporate Sustainability Reporting Directive (CSRD) is reshaping disclosure requirements, mandating more rigorous climate impact reporting. In the UK, the upcoming Sustainability Disclosure Standards (SDS) will add further layers of financial reporting, requiring companies to refine how they measure and communicate their sustainability efforts.

As ESG reporting increasingly falls under the CFO’s remit, these regulations are shaping not only corporate disclosures but also investment decisions. Companies that fail to adapt risk both regulatory penalties and diminished investor confidence.

Sustainability investments make sense to most CFOs, at least on paper. In fact, 93% see a solid business case, while 69% believe they can deliver higher returns than traditional investments. Even so, 61% still label sustainability primarily as a cost rather than a value driver—an apparent contradiction that underscores how unclear short-term payoffs can be, especially when upfront spending is high.

This apparent contradiction highlights a critical challenge. While many CFOs recognise the potential for long-term financial gains, uncertainty remains over when and how these returns will materialise. With evolving regulations, shifting consumer expectations, and technological advancements, traditional financial models often fail to capture the full scope of sustainability-related risks and opportunities.

This uncertainty makes decision-making more complex. While sustainability investments may lower costs in areas like energy and waste reduction, other initiatives, such as transitioning to renewable energy or overhauling supply chains, require significant upfront spending without clear short-term payoffs. As a result, some CFOs remain cautious, weighing the benefits of sustainability against immediate financial pressures.

Rethinking investment models

To address these concerns, 84% of CFOs say they are modifying their business case evaluation models to better incorporate sustainability factors. Notably, 65% say they actively measure the cost of inaction, recognising the financial risks of failing to transition to sustainable practices.

Regionally, the US leads in tracking the cost of inaction, at 75%, while 67% of CFOs in the UAE and 58% in both the UK and India have adopted this approach. In effect, some finance leaders are ahead of the curve in quantifying what could happen if they fail to adapt.

Sustainability is also prominent in broader financial planning. A full 94% incorporate it into their overall investment strategies, and 71% factor it in when selecting employee retirement funds. In practical terms, this includes everything from evaluating the environmental track record of a potential acquisition to choosing pension plans that align with the company’s climate goals.

These moves reflect a growing consensus that sustainability isn’t just about regulatory box-ticking or public perception. It’s quickly becoming a core part of financial strategy.

The bottom line

Despite lingering questions around immediate ROI, CFOs are pressing on with sustainability efforts. Many still view them as an expense, but more leaders now recognise that failing to invest could lead to missed opportunities and bigger risks down the road. Regulations are tightening, investors are watching, and employees are paying close attention to climate commitments.

Ultimately, the challenge for CFOs is balancing short-term costs with the long-range advantages of sustainability. In a fast-changing market, standing still is rarely the safest bet. By refining evaluation metrics and adopting a proactive stance, financial leaders can foster both environmental and economic gains.