Pressure from all sides of a business’s value chain is mounting. Governments are tightening regulations, suppliers are increasing their sustainable product offerings, consumers are demanding greener products, and green investors are gaining influence. This growing importance is reflected in the fact that 70% of business leaders say climate change will impact their business strategy within the next three years (2024).

Yet, despite widespread commitment to sustainability, the data tells a different story. A recent analysis revealed that only one in six of businesses are actually on track to meet their net-zero targets.

This raises the question: With sustainability becoming imperative for businesses and many companies embedding it into their corporate strategies, what is standing in the way of real progress?

The Green Gap

Many businesses understand the advantages of incorporating sustainable practices—compliance benefits, enhanced reputation, operational efficiencies—yet they still struggle to translate their sustainability goals into real action. This leaves many falling into the Green Gap; a term that refers to the disconnect between recognising the importance of sustainability and taking tangible steps to achieve it.

However, the Green Gap is distinct from greenwashing. While greenwashing refers to misleading sustainability claims, the Green Gap highlights genuine barriers that prevent businesses from implementing sustainability initiatives effectively. Traditionally associated with consumer behaviour, this concept now reflects the challenges modern businesses face in achieving their sustainability goals.

Obstacles to Sustainability: Economic Rationalisation

Depending on your position in the value chain, you’ve likely encountered discussions around eco-premiums or eco-penalties when considering sustainable goods. The idea that “eco” products come at a higher price has been ingrained since the rise of the green movement in the 1970s. Even today, this perception persists, with tech mogul Bill Gates coining the term “Green Premium” in 2020, highlighting the need to reduce the additional costs of sustainable alternatives to drive accessibility.

While 42% of businesses rank climate change as a significant concern, commercial viability remains a top priority, with economic outlook ranking as the most significant concern at 44% (2024). Traditional infrastructure was built on cheap, exploitative production methods, allowing for mass commercialism at low costs. By contrast, sustainable products often involve different production processes, ethical sourcing, and quality improvements, leading to a reported 75-85% price increase on average for sustainable alternatives.

However, sustainability can drive long-term cost savings. Many eco-friendly products last longer, improve energy efficiency, reduce waste, and enhance brand value. They also prepare businesses for future legislative changes and supply chain disruptions. But the reality remains - for businesses lacking upfront capital, making the transition can be a challenge, particularly when compounded by economic pressures such as rising National Insurance Contributions (NIC) and inflation.

The Cost vs. Benefit Debate:

• Long-term savings: Sustainable investments often lead to lower operational costs over time.
• Regulatory compliance: Anticipating policy changes helps avoid fines and disruptions.
• Consumer demand: People are increasingly willing to pay more for sustainable products, but businesses need clear, trustworthy messaging.

Business Tips for Sustainability Without Upfront Capital:

• Optimise existing processes: Start with simple, cost-free initiatives such as reducing waste, improving energy efficiency, and optimising logistics to cut carbon emissions.
• Leverage government grants & subsidies: Many governments offer financial incentives for businesses making sustainable transitions—research available funding options.
• Adopt circular economy principles: Look at ways to reuse materials, refurbish equipment, or partner with suppliers that support closed-loop systems.
• Engage employees: Encourage sustainability initiatives within the workplace, such as reducing paper use, increasing recycling, and switching to energy-saving measures.
• Collaborate with like-minded businesses: Partnering with other businesses can help share costs and resources while advancing sustainability goals.
• Seek financing options: Green loans and sustainability-linked finance options are becoming more available for businesses looking to make eco-friendly investments.

The Greenwashing Trap

Even businesses that successfully integrate sustainability into their operations face another challenge: the risk of greenwashing. In 2021, the International Consumer Protection Enforcement Network (ICPEN) conducted a global review of nearly 500 websites marketing environmentally branded goods and services. Their findings were concerning: 40% of companies lacked evidence for their claims, used unaccredited eco-logos, or hid critical information about their sustainability practices.

This highlights the high probability of businesses unintentionally falling into the greenwashing trap, whether through vague language, misleading certifications, or exaggerated sustainability claims.

The Good News: Progress is Being Made

• Greenwashing cases are declining: Between June 2023 and June 2024, global greenwashing lawsuits decreased by 12% across all sectors.
• Legislation is tightening: Governments worldwide are cracking down on misleading environmental claims, increasing the need for transparency. The EU Anti-Greenwashing Legislation, for example, has introduced stricter guidelines on environmental claims, requiring businesses to provide verifiable proof of sustainability claims.
• Infrastructure is shifting: Since the Industrial Revolution, businesses have relied on extractive models that prioritise profit over sustainability. However, modern standards prioritise responsible sourcing, ethical labour, and circular economies, pushing businesses to rethink their long-term strategies. While investment in sustainable infrastructure must continue, many foundational changes have already been made, allowing businesses to build on existing innovations, leverage emerging technologies, and capitalise on industry-wide improvements.

Conclude

The barriers to sustainability, whether cost concerns, economic uncertainty, or the risk of greenwashing, are real and pose challenges for many businesses. But businesses are no longer asking if sustainability is worth pursuing; instead, they’re asking how to integrate it effectively.

To close the Green Gap, businesses must:

• Challenge the cost assumption: Sustainability is increasingly cost-effective, with innovations and efficiencies reducing price gaps.
• Be transparent: Avoid greenwashing by getting suppliers to back up their sustainability claims with tangible actions, verified third-party certifications, SBTIs, clear reporting and full lifecycle analysis.
• Leverage policy support: Engage with government incentives and grants to ease the financial burden of transitioning to sustainable operations.
• Shift in mindset: Although upfront costs can be daunting and deter businesses, thinking long-term is essential for resilience, growth, and sustainability success.

Sustainability shouldn’t have to cost the earth, or businesses. It’s an ongoing strategy that requires a holistic yet targeted approach. By focusing on long-term sustainability and wider support, businesses can drive both environmental and commercial success.