Latest news with #BoundlessImpact
Forbes
12-08-2025
- Business
- Forbes
Hidden Financial Risks That Are Reshaping Corporate Valuations
Michele Demers, Founder & CEO of Boundless Impact Research & Analytics. For years, sustainability was viewed as a branding tool—something companies did to enhance reputation and meet stakeholder expectations. That's no longer the case. Investors are now scrutinizing environmental impact through a financial lens, treating sustainability risks as liabilities that can erode long-term value. The shift isn't about optics. It's about financial exposure, investment security and the data that separates leaders from liabilities. At Boundless Impact Research & Analytics, we track how environmental risks shape investment decisions across industries. Four financial risk areas stand out, each influencing corporate valuations in real time: 1. Legal And Regulatory Liability: Compliance Costs Are Rising Environmental regulations are evolving rapidly, forcing companies to disclose risks they once overlooked. The European Union's Corporate Sustainability Reporting Directive (CSRD) now requires nearly 50,000 companies to provide independently verified environmental disclosures. In the U.S., California's climate disclosure rules have introduced similar reporting obligations, increasing legal exposure for firms unable to substantiate their sustainability claims. The financial consequences are tangible. According to InfluenceMap, 58% of the world's largest companies have climate commitments that conflict with their lobbying practices, raising questions about corporate accountability. These penalties don't just hit balance sheets—they raise red flags for investors looking for long-term stability. Companies without transparent, verifiable environmental data are becoming riskier bets. 2. Insurance And Financing: Environmental Risk Is Credit Risk Lenders and insurers are embedding sustainability into their risk models. According to CDP's 2024 disclosure data, more than 22,700 companies across 2024 were scored for environmental transparency, indicating a surge in corporate and financial sector engagement. And while specific lending figures tied to fossil fuels were not reported, the sheer scale of disclosure suggests expanded scrutiny of financing practices. Meanwhile, investors are reallocating capital toward businesses that can prove their sustainability efforts with science-backed metrics. According to BloombergNEF, investment in clean energy manufacturing—including battery metals, solar modules and wind components—reached $135 billion globally in 2023, nearly triple the 2020 level. This growth reflects a prioritization of investments with measurable and verifiable sustainability frameworks, driven by increased demand for battery gigafactories and clean-tech infrastructure. Businesses relying on outdated reporting methods—or worse, vague sustainability pledges—are losing access to financing while capital flows toward companies embracing data-driven transparency. 3. Reputational Damage And Consumer Trust: The Cost Of Greenwashing Consumers are also holding brands accountable. NielsenIQ found that 78% of global consumers prefer sustainable products, but most are skeptical of unverified sustainability claims. This skepticism drives purchasing decisions and influences long-term brand equity. Recognizing this shift, investors are pulling capital from companies that can't provide credible data on their environmental impact. 4. Valuation And Market Position: A Harder Sell For Investors Corporate valuations are increasingly tied to environmental performance. While global sustainable equity and bond funds faced record net outflows of $8.6 billion in Q1 2025, Morningstar reports that sustainable fixed-income funds saw inflows of $14 billion during the same quarter. Despite this volatility, thematic investment in clean energy, circular economy and climate adaptation continues to attract selective capital. This underscores a clear investor consensus: sustainability performance matters. Investment flows reflect this reality. A 2024 MSCI survey found that 47% of asset managers believe climate risk is not fully priced into asset values, indicating growing investor focus on climate metrics. Investors are moving toward structured, science-backed approaches that ensure accountability and away from inconsistent ESG frameworks that have lost credibility. The Investment Shift As traditional ESG ratings face increased scrutiny for their lack of standardization, investors are looking for more precise ways to assess sustainability risks. More focused environmental impact measurement tools like life cycle assessment (LCA) and Scope 1, 2 and 3 greenhouse gas (GHG) emissions reporting are emerging as leading tools to account for carbon emissions and other key environmental factors. Unlike ESG scores, which aggregate varied factors into broad ratings, LCA provides a structured, science-based evaluation of a product's entire environmental footprint—from raw material extraction and supply chain emissions to product use and end-of-life disposal. Scope 1, 2 and 3 emissions reporting focuses on a company's operational carbon footprint and is guided by the GHG Protocol Corporate Standard, a corporate accounting and reporting tool that tracks all seven greenhouse gases covered by the Kyoto Protocol. Scope 1, 2 and 3 emissions are more commonly tracked and reported by larger public companies looking to adhere to regulations in states like California and jurisdictions like the European Union and Canada, which require such reporting. There is an important distinction between Scope 1, 2 and 3 data—which is a more general estimation of a company's operational footprint—and product LCA data, which more precisely measures a product's environmental or emissions footprint. LCA data enables an 'apples-to-apples' comparison of two companies in the same industry in terms of how much they contribute to or reduce global warming. This distinction is critical for investors and corporations that really want to mitigate climate risk and achieve Net Zero targets in the coming decade. Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
Forbes
11-07-2025
- Business
- Forbes
From Hunch To Hard Science: Why Smart Clean Tech Investing Starts With Good Data
Michele Demers, Founder & CEO of Boundless Impact Research & Analytics. Clean tech investing has matured well beyond the early days of intuition-driven bets. I've seen firsthand that even the most seasoned investors can fall into the trap of relying on optimistic forecasts and surface-level emissions data. Most serious investors recognize that we've moved beyond gut instincts. But while environmental data is more available than ever, much of it is still used to support a good story instead of validating whether that story holds up to scrutiny. To separate promise from proof, venture capitalists should rely on two science-based tools: Life Cycle Assessment (LCA) and Techno-Economic Analysis (TEA). These are not nice-to-haves. They are essential if you want to understand whether a technology can actually compete in the real world. Life Cycle Assessment: More Than Just A Carbon Number Life Cycle Assessment measures the environmental footprint of a product or technology across its entire life cycle—from raw material extraction to production and delivery. It's the only method that offers a statistically rigorous, cradle-to-gate analysis of environmental performance. It evaluates emissions, toxicity, resource use and other critical indicators that self-reported data almost always overlooks. Unlike estimation-based reporting, LCA follows internationally accepted ISO standards and is widely used by federal agencies, including the Department of Energy and the Department of Agriculture. Most sophisticated investors and institutions now insist on this level of rigor. They rely on LCA to validate technology claims and reduce exposure to unproven or underperforming products. At Boundless, we work with both investors and innovators to provide third-party validation. Our process includes benchmark comparisons, expert review and comprehensive analysis of multiple environmental indicators. There are times when companies are genuinely surprised by the results—like the biopesticide company we assessed that had great toxicity performance but a poor GHG footprint because no one had thought through the logistics of their supply chain. LCA caught what conventional diligence didn't. Techno-Economic Analysis: The Business Reality Check While LCA clarifies environmental impact, TEA focuses on cost and scalability. In other words, TEA is about whether the economics make sense once you move past the pilot phase. It breaks down capital and operational expenses to a granular level. Investors often have to consider the theoretical performance of new tech. TEA helps move theory to reality. TEA is especially useful in identifying gaps or inefficiencies in production processes, energy usage or sourcing decisions. I can't tell you how many times we've seen a company with an impressive emissions reduction per unit but costs that skyrocket because they're flying materials or integrating parts of their supply chain halfway across the globe. These considerations are easy to overlook, but they can undermine a company's long-term competitiveness. Both assessments serve as reality checks. They protect investors from the reputational, regulatory and financial risks of greenwashing. They provide the level of clarity needed to guide investment decisions in a space filled with novel ideas and technical complexity. Avoiding The 'Valley Of Death' The funding gap between early seed capital and commercialization is commonly called the 'valley of death.' This stress-filled stretch of go/no-go is difficult for new companies to navigate. It used to take six weeks to raise a Series B; now it can take six months or longer. Without strong data to support claims, even promising companies can stall during this critical phase. A credible LCA helps bridge that gap by offering the robust third-party validation investors increasingly require. In my experience, the companies that invest in a serious LCA are the ones that get funding faster because investors trust the numbers. It accelerates trust, unlocks funding and prevents companies from being stranded just short of scale. For startups, investing in a quality LCA often proves less costly than the months lost chasing capital without it. What Investors Should Expect A clear view of a company's environmental footprint also sheds light on its supply chain resilience and technical feasibility. If you're looking at a battery startup, for example, you have to ask: Are they dependent on minerals sourced from regions with geopolitical risks? What happens to their margins if the price of lithium doubles overnight? If you're investing in clean tech, here are five things to look for in a reliable LCA: Quality matters. Weak or self-produced assessments can look fine on a spreadsheet but fall apart when regulators or customers start asking questions. They can mislead investors and backfire on companies when challenged. Evidence-Driven Investing Environmental data should be treated with the same rigor as financial data. Yet too often, it's still used to support narratives rather than drive decisions. If you're an investor, you have to insist on proper third-party LCAs, because shortcuts here can lead to big losses later. Investors need to educate themselves on what makes environmental analysis credible and insist on third-party assessments as a baseline for due diligence. Done right, LCA and TEA can identify risk while simultaneously revealing opportunity. Clean tech is too important—and too complex—to rely on instinct alone. If we want to scale the solutions that can truly move the needle, we have to start with good data, not just good intentions. Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
