While it is true that initial costs can be hard to cover or pass on to the end consumers, in the long term, the cost savings and operational efficiency can far outweigh initial expenses

“We don’t have rains anymore, we have floods.” This remark by an acquaintance, following the recent storms, sums up how climate change is already reshaping our lives. Business and economy in India are not immune to climate shocks either – amidst rising temperatures and extreme weather, they need to rethink how they can stay profitable while also focusing on the planet.

Environment and Business Operations
The survival of the bulk of businesses is either directly or indirectly related to the environment. Resources such as water, wood, agricultural produce, minerals, and other natural assets form the raw materials for producing numerous goods and services. A second layer of dependency is on supply chains, which are extremely sensitive to disruptions due to extreme weather and resulting crises.

According to a World Economic Forum analysis, global economic output worth over USD 44 trillion relies significantly on natural ecosystem functions. In India, the primary and secondary sectors, which are significantly dependent on natural resources, generate approximately 45 per cent of the gross value added by different economic sectors.  These data highlight the implications of environmental loss on business and, by extension, on the economy – a connection that is sometimes not immediately apparent.

The Misleading Dichotomy of the Profit vs. Planet Approach
Businesses stand to lose massively due to climate change, but their emissions also make them a part of the problem. The production and distribution of goods and services will inevitably have environmental costs. Given the sensitivity of businesses to environmental factors, curbing these emissions is not an optional route – it is non-negotiable. However, the discourse on the subject often devolves to a planet versus profit approach. Rather than emphasising solutions and possibilities, a misleading binary becomes the crux.

Overcoming Barriers to Sustainability
The upfront cost associated with adopting green technology is quite often cited as a major barrier to profits. While it is true that initial costs can be hard to cover or pass on to the end consumers, in the long term, the cost savings and operational efficiency can far outweigh initial expenses. In many cases, it is micro, small and medium enterprises (MSMEs) that struggle with adopting green technologies because of high costs and lack of expertise. The role of large corporations in greening these smaller firms that make up their supply chains is criticalLarge corporations can play a transformative role in greening their supply chains by adopting a multi-pronged approach that extends environmental responsibility beyond their operations.

Comprehensive supplier development programmes provide smaller partners with training, resources, and technical expertise to implement sustainable practices that eliminate waste and improve efficiency. Structured assessment frameworks and regular audits can help set clear environmental standards for suppliers and facilitate feedback loops and handholding.  Additionally, larger companies can also support their smaller supply chain partners in obtaining green certifications and creating supplier clusters that encourage knowledge sharing.

A common argument is that consumers are reluctant to pay higher premiums for sustainable products. This perceived unwillingness can discourage companies from investing in sustainability. Bain & Company’s 2024 global survey reveals that fewer than 20 per cent of consumers are prepared to pay more than a 10 per cent premium for green energy, illustrating a clear gap between desire and economic realities. However, the outlook is more promising in India. PwC’s Voice of the Consumer Survey notes that 60 per cent of Indian consumers actively choosing sustainable products are willing to pay a 13 per cent higher premium, which is more than the global average of approximately 9.7 per cent.

To effectively bridge this gap between willingness and cost considerations, businesses should focus on communicating clear long-term economic benefits of sustainability. Reduced energy bills from energy-efficient appliances, health benefits of green buildings, or lower lifetime operating costs from electric vehicles must be effectively communicated to consumers. When benefits are clear, tangible, and financially justified, consumers are more open to bearing the additional costs. Case in point is green buildings in India. Green office spaces in India command 12-14 per cent higher rents, rewarding developers who build to Indian Green Building Council (IGBC) or Leadership in Energy and Environmental Design (LEED) standards. This also points to the willingness of companies and people to pay a higher premium for well-being.

How the Planet Focus Can Drive Profits
By embracing sustainability, companies stand to gain clear, practical benefits. Investments in climate-resilient infrastructure and diversified supply chains can help businesses protect against disruption caused by extreme weather events. Adopting green technologies such as solar power, LED lighting, and electric vehicles brings significant cost savings over time, helping businesses become leaner, more efficient, and ultimately more profitable.

Another major incentive is easier access to green financing. India’s rapidly expanding green finance market, including prominent issuances such as the Government of India’s inaugural Rs 16,000 crore Sovereign Green Bonds in 2023, demonstrates the growing emphasis on sustainable ventures and the willingness to create an ecosystem that rewards environmental considerations by reducing overall business costs.

On the regulatory front, businesses proactively adopting green measures often find themselves ahead of the curve, avoiding penalties and staying aligned with evolving laws. Industry platforms like he Science Based Targets initiative (SBTi) and EP100 help businesses become sustainable by offering structured guidance, credible targets, and accountability. SBTi enables companies to set greenhouse gas emission-reduction goals aligned with climate science, helping them measure progress transparently and credibly. EP100 encourages businesses to improve energy efficiency, supporting them with best practices, benchmarks, and a platform to showcase leadership. Together, these initiatives not only assist companies in meeting regulatory requirements and investor expectations but also drive cost reductions and innovation, accelerating the transition towards sustainability while boosting profitability and competitive advantage.

Turning Sustainability into Action
The path forward demands innovation, collaboration, and long-term thinking. It requires businesses to consider the true cost of environmental degradation on their future operations. Companies, policymakers and citizens alike must understand the interdependence between the planet and profits. Companies that view environmental sustainability as a cost burden rather than an investment opportunity can put their very survival at risk. Those that integrate climate considerations into their core business strategy are better positioned to thrive. In a world where floods have replaced rains and climate volatility has become the new constant, the choice is no longer between profit and planet – it is between short-term thinking and long-term survival.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the publication.