The Businesses That See Opportunity Where Others See Risk
6 minute read | Sustainability, Business Resilience and Strategic Decision-Making
The same changes that threaten one business can create opportunities for another. The difference is often not the resources they possess, but their ability to recognise what is changing and act before their competitors.
What if sustainability revealed your next business opportunity?
When business leaders hear the word sustainability, many immediately think of regulations, reporting obligations, additional costs and risks.
But what if they asked a different question?
What opportunities could we discover by understanding our impacts on the environment and society, the changes taking place around us, and the dependencies across our value chain?
Consider two businesses operating in the same industry.
Both face rising energy costs, changing customer expectations and increasing demands for sustainability information from large corporate customers.
The first sees additional costs and administrative burdens. It responds only when necessary.
The second starts asking questions. Where are resources being wasted? What will our customers need in three years? Which suppliers are becoming more reliable? Could changing expectations create demand for new products or services?
The operating environment is the same. The difference lies in how each business interprets it.
One sees obstacles. The other sees possibilities.
This is where sustainability moves beyond compliance and becomes a tool for strategic decision-making.
The opportunities may already exist across your value chain
A business does not operate in isolation.
Its success depends on suppliers, employees, logistics providers, customers, communities, infrastructure and natural resources.
Understanding these relationships can reveal both vulnerabilities and opportunities that traditional financial or operational reviews may overlook.
Consider three illustrative examples.
- A supplier turns sustainability into a competitive advantage
A manufacturer supplies components to several large international businesses.
Its customers are increasingly interested in the environmental and social impacts associated with their supply chains.
Rather than treating sustainability questionnaires as an administrative burden, the manufacturer begins measuring energy use, improving working conditions and documenting its environmental performance.
It can now provide customers with credible information and demonstrate how it is managing its impacts.
This may make it a more attractive supplier, particularly where customers are seeking dependable businesses capable of supporting their own sustainability objectives.
The opportunity: Stronger customer relationships, access to new procurement opportunities and differentiation from competitors.
- A business discovers that reducing impacts can also reduce costs
A food producer examines its operations and discovers that inefficient refrigeration, packaging waste and avoidable transport journeys contribute significantly to its environmental impacts.
Management initially considers these issues from a sustainability perspective.
However, the analysis also highlights unnecessary expenditure.
Investments in energy efficiency, improved packaging and better logistics planning could reduce environmental impacts while lowering operating costs.
The opportunity: Improved resource efficiency, stronger margins and reduced exposure to future cost increases.
- A logistics company identifies tomorrow’s market
A logistics provider recognises that some customers are increasingly interested in reducing emissions associated with deliveries.
Rather than waiting for every customer to demand lower-emission transport, it explores route optimisation, alternative vehicles and credible emissions measurement.
It can then offer customers information and services that help them understand and manage the impacts of their distribution activities.
The opportunity: New services, stronger customer relationships and a potentially advantageous market position.
None of these outcomes is guaranteed. But each demonstrates something important.
A sustainability issue does not automatically represent a business opportunity. It becomes an opportunity when management identifies a credible response that creates value.
Why looking only inside the business is not enough
Many organisations concentrate their sustainability efforts on activities they control directly.
They measure electricity consumption, employee safety, waste generation and emissions from company vehicles.
These are important starting points.
However, some of their most significant impacts, dependencies, risks and opportunities may exist elsewhere in their value chains.
For example, an e-commerce business may operate from premises powered entirely by renewable energy and use electric vehicles for its own transport.
Yet thousands of packages may be delivered through independent logistics providers.
The environmental impacts associated with these deliveries, together with the reliability and future readiness of logistics partners, could be strategically important.
The business may therefore discover opportunities to collaborate with logistics companies on emissions reduction, improve delivery efficiency or introduce lower-impact delivery options.
The key is to understand the whole value chain, rather than concentrating exclusively on activities within the organisation’s operational boundaries.
The IFRS Foundation recognises that sustainability-related risks and opportunities can arise throughout a company’s value chain and may affect its cash flows, access to finance and cost of capital (IFRS Foundation, 2023).
Enhanced double materiality: Knowing where to act, not just what to report
Identifying sustainability topics is useful. Understanding exactly where they arise, how significant they are and what management should do about them is considerably more valuable.
Traditional materiality assessments can produce a list of important sustainability issues, sometimes presented in a matrix.
But a board of directors needs more than a list.
It needs to understand:
- Which parts of the value chain are associated with the most significant impacts?
- Where could sustainability-related risks affect future business performance?
- Where do opportunities exist to improve efficiency, strengthen relationships or develop new business?
- Which issues should receive management attention and investment first?
- What practical actions would make the greatest difference?
This is where FBRH’s enhanced double materiality approach becomes particularly relevant.
The approach brings together three complementary perspectives.
- Impact materiality | GRI Standards
Identifies an organisation’s most significant actual and potential impacts on the economy, environment and people, including human rights, across its activities and business relationships.
- Financial materiality | IFRS S1 and S2
Identifies sustainability-related risks and opportunities that could reasonably be expected to affect the organisation’s financial prospects, including cash flows, access to finance and cost of capital.
- Double materiality | ESRS principles
Examines both how the organisation affects people and the environment and how sustainability matters can financially affect the organisation, including connections between the two.
These perspectives are grounded in the GRI Standards, IFRS Sustainability Disclosure Standards and the European Sustainability Reporting Standards.
FBRH’s enhancement is to translate this analysis into a more actionable view of the organisation’s value chain.
Rather than simply concluding that climate change, working conditions or resource use are material, the analysis seeks to identify where the significant issues arise, what they mean for the organisation and where decision-makers should prioritise action.
For example:
| Value chain activity | Material issue identified | Potential management response |
| Raw material sourcing | Water use and availability | Engage with suppliers and assess alternative sourcing |
| Manufacturing | Energy consumption and emissions | Prioritise efficiency investments |
| Employees | Skills shortages and retention | Strengthen training and workforce development |
| Distribution | Transport emissions and reliability | Collaborate with logistics partners |
| Customers and product use | Demand for lower-impact products | Explore product innovation |
| End of life | Packaging and waste impacts | Improve circularity and recovery options |
Illustrative examples. Priorities depend on the organisation’s actual materiality assessment.
By linking material issues to specific activities and business relationships, decision-makers gain a clearer picture of where action is most likely to produce meaningful results.
The result is not simply a better sustainability report.
It is a better-informed management process that helps organisations decide where to allocate attention, resources and investment.
From materiality assessment to management action
For enhanced double materiality to deliver value, the process should not end with identifying material topics.
It should inform practical decisions.
A useful progression is:
Understand the value chain
Activities, relationships and dependencies
Identify significant impacts, risks and opportunities
Applying enhanced double materiality
Pinpoint where action is needed
Specific operations, suppliers and value chain relationships
Prioritise and implement action
Responsibilities, resources, targets and timelines
Monitor, learn and improve
Measure results, report progress and refine decisions
For example, a company could identify an important water-related impact among its suppliers.
A conventional assessment might record water use as a material sustainability topic.
An enhanced assessment can help management determine which suppliers, activities or geographical locations warrant priority attention and whether water-related dependencies also create operational or financial risks.
Management can then consider appropriate actions, such as supplier engagement, improved sourcing arrangements or resource-efficiency initiatives.
Importantly, these decisions must be supported by appropriate evidence, stakeholder engagement and consideration of the severity of impacts. A commercial opportunity should never be used to justify overlooking significant harm to people or the environment.
Sustainability reporting should support better decisions
The GRI Standards establish a structured approach to understanding and reporting an organisation’s significant impacts on the economy, environment and people.
GRI 3: Material Topics 2021 requires organisations to identify and prioritise their most significant impacts, including those connected with business relationships (GRI, 2021).
However, reporting should not be regarded as an activity separate from business management.
When used effectively, the information collected for sustainability reporting can also help organisations understand their dependencies, identify weaknesses, recognise emerging opportunities and improve strategic decisions.
This is particularly valuable for small and medium-sized businesses.
They may lack the financial resources of larger competitors, but they can often act quickly when they recognise an emerging need.
A business that understands where its customers are heading may be better positioned to develop relevant products, strengthen relationships and compete for future opportunities.
The important question is no longer simply:
What sustainability information must we report?
It becomes:
What is this information telling us about the decisions we should be making today?
The businesses that succeed will be those that act
Every business faces uncertainty.
Customer expectations change. Technologies evolve. Resources become more or less available. New requirements emerge. Competitors adapt.
No business can predict every development.
But businesses can improve how they understand their operating environment and respond to change.
Those that recognise significant impacts, risks and opportunities across their value chains are better positioned to make informed decisions.
Some will identify inefficiencies that can be eliminated.
Others will discover opportunities to strengthen supplier relationships or develop new products and services.
Others may recognise emerging customer needs before competitors do.
The difference is not necessarily foresight.
It is the discipline of asking better questions, examining the evidence and acting on what matters.
Sustainability is not only about understanding what could go wrong. It is also about recognising what could go right and knowing where to act.
Turn sustainability information into better business decisions
FBRH Consultants is a GRI Certified Training Partner providing practical training in the GRI Standards and sustainability reporting.
Our GRI Certified courses incorporate enhanced double materiality, combining impact materiality, sustainability-related financial risks and opportunities, and double materiality principles with detailed value chain analysis.
Participants learn how to identify material issues, pinpoint where they arise across the value chain and develop a practical, step-by-step Plan of Action to support management decision-making and high-quality sustainability reporting.
Explore our GRI Standards Professional Certification Pathway.
Simon Pitsillides
Simon Pitsillides is a board adviser specialising in sustainability governance, corporate reporting, strategy and stakeholder value creation. He supports boards and senior executives in strengthening governance, enhancing decision-making and integrating sustainability into long-term business strategy.
Simon is a Fellow of the Chartered Institute of Marketing (FCIM), a Fellow of the Institute of Sustainability and Environmental Professionals (FISEP), a Chartered Marketer, and holds an MBA in Marketing. He is also a GRI and ISEP Certified Trainer.
As Founder of FBRH Consultants and publisher of SustainCase, Simon combines strategic, commercial and governance expertise with extensive international experience in sustainability reporting, assurance readiness and value creation. He has worked with multinational organisations, financial institutions and public sector bodies across Europe, the Middle East and beyond.
Simon is recognised for helping boards move beyond compliance by using decision-useful sustainability information to strengthen strategy, manage risk, build stakeholder confidence and create long-term value for business, stakeholders and the planet.
https://www.linkedin.com/in/simon-pitsillides
References
GRI (2021) GRI 3: Material Topics 2021. Amsterdam: Global Reporting Initiative. Available at: https://www.globalreporting.org/publications/documents/english/gri-3-material-topics-2021/
IFRS Foundation (2023) IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information. London: IFRS Foundation. Available at: https://www.ifrs.org/issued-standards/ifrs-sustainability-standards-navigator/ifrs-s1-general-requirements/
IFRS Foundation (2024) Sustainability-related risks and opportunities and the disclosure of material information. London: IFRS Foundation. Available at: https://www.ifrs.org/content/dam/ifrs/supporting-implementation/issb-standards/issb-materiality-education-material.pdf
EFRAG (2024) IG 1: Materiality Assessment Implementation Guidance. Brussels: European Financial Reporting Advisory Group. Available at: https://www.efrag.org/