Global professional services firm EY announced the launch of its EY Sustainability Value Bridge, a new framework aimed at helping companies to understand and quantify the connection between sustainability and climate risks and opportunities and their impact on financial performance.

According to EY, the new framework is being released as sustainability is at risk of slipping as a priority on some C-suite agendas, while at the same time, the financial consequences of climate, nature, and broader sustainability disruptions are becoming more material, and falling within executive planning horizons.

In a white paper announcing the launch of the new framework, EY said:

“These issues are no longer distant concerns, and the impacts often hide in plain sight because the link to sustainability is often not fully understood, much less quantified. Many companies today are struggling to connect the interrelated, systemic impacts of nature-based and other sustainability-linked changes on their value chains.”

EY said that it EY developed the Sustainability Value Bridge to help organizations articulate the financial impacts of sustainability, with the framework enabling the translation of sustainability-related risks and opportunities into terms of business value.

According to EY, the framework designed to connect sustainability and financial performance through the basic concept that value erosion can be counteracted by two types of value realization, including value protection, or mitigating costs, and value creation, or driving new revenue. The approach of the framework is to first reveal potential downside sustainability-related costs that will affect enterprise value, identify actions that can protect value, and then assess value creation opportunities that can support future growth and create incremental business value.

Key sustainability and climate-related value erosion factors included in the framework highlighted by EY include raw material volatility, supply chain and operations risk, cost of capital increases, regulation and compliance costs increases, brand and reputation losses, and consumer, workforce and community volatility, while value realization levers include operations efficiency, supply chain resilience, capital optimization, regulatory proficiency, brand premium, product innovation, and the evaluation of new business models.

EY said:

“Ultimately, sustainability is no longer only about responsibility. It is about protecting value, creating value and securing the viability of the enterprise.”