Climate targets die by quarterly figures

Why short-term financial logic undermines long-term sustainability – and how companies can find a way out

Many companies have set ambitious climate targets. Net zero by 2030, climate neutrality by 2040, a climate-friendly product portfolio by 2050. In conferences, sustainability reports and strategy papers, this reads impressively.

But in reality, a different picture emerges: too many of these goals remain non-binding, are postponed – or quietly disappear into drawers.

The reason is not a lack of conviction, but often a structural problem: climate goals die by quarterly figures.

The status quo: Tension between ESG and Finance

Studies: Big words, small actions?

Studies show that sustainability has long been established strategically in most companies – at least on paper.

• According to an IBM study (2024), 95% of companies consider sustainability a business-critical priority. Nevertheless, they invest 43% more in reporting than in innovation.
• An analysis by McKinsey shows: companies that consistently implement ESG achieve up to 20% higher returns in the long term. But short-term financial indicators often prevent implementation.
• According to Capgemini (2025), 69% of companies see sustainability as an accelerator of innovation, but 54% admit that they have lost market share to more sustainable competitors.

The current debate clearly highlights the gap

The studies show: sustainability is recognized, but it often fails in implementation. The reason lies in the tension between long-term climate pathways and short-term financial logic. And this is exactly where the current debate ignites.

Companies and investors know that ESG performance has measurable effects on the financial world – McKinsey shows that ESG leaders achieve up to 20% higher returns in the long term. Nevertheless, ESG measures are often blocked in the budget process because their contribution to ROI is not immediately visible. While an efficiency measure in production may only become noticeable after four years of amortization, it competes in the budget with projects that generate additional revenue as early as the next quarter.

For finance managers, metrics such as Return on Investment (ROI), Internal Rate of Return (IRR) or Earnings per Share (EPS) count in practice. Sustainability projects, on the other hand, are often presented in terms of tons of CO₂ reductions, recycling rates or energy savings – figures that carry little weight in decision-making rounds without financial translation. As long as this bridge is missing, sustainability is seen as a “cost center” rather than a value driver.

And yet the connection is obvious:

• CO₂ reduction = cost reduction: Lower energy consumption means lower energy costs, less material use reduces purchasing prices.
• Risk and penalty avoidance = safeguarding cash flow: Companies that respond early to regulation (e.g., PFAS bans in the USA) avoid billions in fines and litigation costs.
• Return on innovation = new markets: Sustainable products achieve price premiums of almost 10% on average (PwC 2024) and secure market share against competitors.

The problem is therefore not a lack of conviction, but the discrepancy between the long-term logic of climate targets and short-term financial management. Climate pathways are planned in decades, while budgets are decided quarterly. As long as CO₂ is only communicated as an emissions figure, it remains a “nice to have.” Only when sustainability is translated into the language of finance – as ROI, risk protection and growth opportunity – does it gain the status needed for real implementation.

Why quarterly figures block climate goals

Different time horizons

Sustainability targets are thought of in decades – CO₂ reduction by 2030 or 2050. The finance department thinks in quarters. If an investment in sustainability only delivers ROI in three or five years, it loses out against projects that are more profitable in the short term.
 

Reporting obligation instead of innovation incentive

Instead of investing resources in climate-friendly technologies or process optimization, much of the budget goes into meeting regulatory reporting requirements. This is necessary, but it does not trigger structural change.
 

Lack of translation into business cases

Many sustainability initiatives are argued morally or reputationally – “we must protect the climate.” CFOs, however, ask: “How much does this cost us? Which risks do we avoid? Where is the added value?” Without clear numbers, ESG projects lose their impact.
 

Separate target systems

Sustainability teams pursue CO₂ reduction pathways. Finance, sales or procurement, however, have their own, often conflicting KPIs. As long as not all departments are measured against the same objectives, climate targets die in silos.
 

Invisible risks

Regulatory penalties, supply chain disruptions or stranded assets are real financial risks. But as long as they are not factored into scenarios and budgets, investments in sustainability appear as a “cost block” instead of risk insurance.
 

5 concrete solutions: How to overcome quarterly logic

1. Translate sustainability into business cases

Do not present sustainability measures in “tons of CO₂,” but in financial terms:

• Savings from lower energy consumption (e.g., 10 GWh less = approx. €3 million less in annual energy costs)
• Payback periods of investments in energy efficiency or circular economy (ROI, IRR)
• Avoided opportunity costs, for example through early adaptation to regulation (penalties, litigation costs, market losses).

2. Link ESG KPIs with financial indicators

Integrate sustainability directly into corporate management:

• Expand existing KPI systems with ESG-related financial indicators, e.g., “CO₂ per revenue” or “energy consumption per production unit.”
• Align incentive systems so that bonuses or variable compensation are tied to common goals (e.g., EBIT margin and emissions reduction).

3. Account for climate risks as financial risks

Integrate ESG risks into existing risk management:

• Assess regulatory risks (e.g., CSRD, EU taxonomy, PFAS bans) in monetary terms.
• Carry out stress tests and scenario analyses (e.g., CO₂ price increase from €50/t to €150/t by 2030 – what does that mean for EBIT?).
• Capture “stranded assets”: assets that drastically lose value due to regulation or market change (e.g., coal power plants, combustion engine fleets).

4. Switch from reporting to active management

Use ESG data not only for external reports, but for internal decisions:

• Create ESG dashboards for management that present emissions, costs and risks side by side.
• Link ESG data with ERP and financial systems to make investment decisions based on data.
• Example: Instead of only preparing CO₂ emissions for the sustainability report, they should be discussed regularly in the budget process—just like sales or revenue developments.

5. See sustainability as a return on innovation

Emphasize not only compliance, but also market opportunities:

• Calculate “green premiums” – price markups that customers pay for sustainable products (PwC Germany study: on average +9.7%).
• Develop business cases for new business fields such as circular economy, alternative materials or CO₂-neutral services.
• Include potential market displacement by more sustainable competitors – 54% of companies, according to Capgemini, have already lost market share because they reacted too late.

Conclusion: Climate goals need more than good intentions

Climate targets do not die because of lack of will, but because of quarterly logic. Companies that want to successfully implement sustainability must translate it into indicators, business cases and financial management.

Only when CO₂ is seen not only as an emissions value but also as a cost factor, risk or growth opportunity can climate goals survive – and become a long-term competitive advantage.

Short-term quarterly figures must no longer decide over long-term stability. And this is exactly where the key lies: sustainability is not an additional task – it is part of the balance sheet.