Long-term thinking about ROI (Return on Investment)

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Following on from our earlier posts, here we look at why decarbonisation requires a longer term view and a different midset towards ROI.

Redefining how you think about ROI

We're so used to short-term thinking in the UK, that lasts not much further than the next general election. In business, projects might also, typically, be assessed based on their 1-, 2- or 3-year returns.

Environmental sustainability strategies often require longer timeframes to demonstrated their full value and to prove a financial ROI, but have immediate benefits. Top industry professionals and consultants know this from practice and effective strategy brings benefits to the organisation’s overall mission, improvements to brand reputation, employee ownership and stakeholder relations, and such like.

When it comes to ROI on technology, from energy efficiency measures to heat pumps and other green innovation, the benefits lie in finding that ‘sweet spot’ between timing and spend which delivers sustainable results, while avoiding forced, unanticipated expenditure.

Inaction and missed opportunities should also be considered

To help make this point internally - as well as looking how potential scenarios compare in terms of their effect on the organisation - the effect of inaction, intertia and “business as usual” should also be considered.

You should estimate the financial, operational and reputational effects of any potential missed opportunities, and factor this into the analysis, to help stakeholders understand the advantages and disadvantages. This will build the case for commitment to tackle your organisation's need for decarbonisation and environmental sustainability.

Of course if you don't have the resource in-house to run these scenario-based analyses, you can employ the services of a suitable consultant, who will be able to compare multiple scenarios from their experiences across industry.

If you'd like help with your decarbonisation strategy, and would like to speak to a consultant, please contact us.

Next up: 'Science Based-Targets'

Establishing the cost of inaction is just one step on the journey— but how do organisations decide what action to commit to taking?

In our next blog post in this series we'll be exploring how you can use 'Science-Based Targets' to help with your strategic planning.

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