- Non-compliance penalties and litigation
New regulations impose mandatory compliance obligations, rendering sustainability no longer option.
- Competitiveness
Regulatory advantage: Sustainable companies, products and services have a clear advantage over their peers. These advantages will accelerate over time, because, most of the world’s economies are on the same trajectory – decarbonation in line with the Paris Agreement. Accordingly, regulatory regimes prioritizing sustainable activities will be replicated and enacted the world over – thus advantages driven by regulatory change in one market will replicable.
Funding: Sustainable companies get preferential access to capital, be it in the form of sustainable investment, green loans, bonds, or grants. Likewise commercial opportunities may be reserved for sustainable such as government procurement.
Reputation: Consumers, customers, and talent have all expressed a desire to work for sustainable companies. All else being equal, sustainable products and services win out.
- Early-mover advantage
For sustainability, the first ones in will reap the best options. Preferred suppliers, coveted protected technologies, even acquiring whole companies to monopolize new sustainability advantages.
Those coming late will have a lot of catch up to do, with less desirable options available to help them get there. In the future access to markets will depend upon sustainable adaptation. This is because as countries impose stricter regulations on domestic companies to prioritize sustainability, they will impose reciprocal conditions on imported products and services. We are already seeing this with Carbon Border Adjustment Mechanisms.