Explore the foundations: Where is the business value in climate action?.
Climate action can create enterprise value through improved productivity, new products and services, stronger customer relationships and greater resilience. The next strategic question is where these changes could strengthen your competitive position.
Businesses in the same industry often begin with different strengths and make different choices about climate transition. Their commitments can reveal how they expect markets, technologies and customer needs to change, and where they are preparing to compete.
Understanding these differences can help leaders recognise emerging advantages, identify vulnerabilities in their current position and discover opportunities that competitors may have overlooked.
Where is your business positioned today, and what could make it more competitive as transition unfolds?
Why do companies in the same industry create different value?
Every business has its own combination of capabilities, resources and relationships. These influence how it earns revenue, sustains margins, attracts investment and responds to changing conditions.
One company may compete through productive assets and operational efficiency. Another may have stronger customer relationships, specialist expertise or access to capital. A third may have developed partnerships or technologies that enable it to enter new markets.
Climate transition can change the value of these strengths. New technologies can improve productivity or make existing equipment less competitive. Customer requirements can create demand for new services. Physical climate impacts can affect operating costs, asset performance and supply reliability.
Competitive advantage emerges from how businesses combine their strengths, recognise opportunities and make decisions about where to invest.
Companies facing similar conditions may therefore develop different pathways to future value.
What does your climate stance reveal about your future?
Companies are making different commitments to decarbonisation, adaptation, innovation and investment. These offer useful indications of how leaders see the future of their businesses.
Some are developing new products and services. Others are investing in operational efficiency, supply-chain resilience or workforce capability. Some are concentrating on meeting customer and regulatory requirements while maintaining financial flexibility.
The commercial significance of these commitments depends on the company's starting position and its ability to deliver.
A climate target indicates intended direction. Investment plans, organisational capability, customer demand and demonstrated performance provide a stronger basis for judging whether that direction could strengthen the business.
Comparing these factors across companies can reveal different expectations about future markets, different approaches to protecting existing value and opportunities that may remain unexplored.
What can you see that your competitors have missed?
Consider two fictional Australian civil construction businesses competing for infrastructure projects. Their different strengths and climate commitments create different possibilities for future competitive advantage.
Connected Ground Civil
This fictional Australian civil construction business depends on disciplined estimating, productive equipment, skilled teams and reliable project delivery.
Emma Davis — Co-founder and Managing Director
Emma sees opportunities emerging as infrastructure customers introduce new specifications for lower-emissions construction and more resilient assets.
Consider a second fictional contractor, Regional Civil Works, which competes for similar projects. It has longstanding customer relationships, established contracts and a reputation for dependable delivery.
Both businesses have credible commercial strengths. Their climate commitments suggest different approaches to maintaining and developing their competitive positions.
On narrow screens, scroll this table sideways to see all columns. Keyboard users can focus the table and use the arrow keys.
| Competitive consideration | Connected Ground Civil | Regional Civil Works |
|---|---|---|
| Strengths today | Equipment productivity, estimating discipline and skilled project teams | Established customer relationships, contracts and dependable delivery |
| Climate stance | Exploring opportunities to improve operations and compete for new work | Meeting emerging requirements while protecting current performance |
| Existing commitments | Investigating lower-emissions equipment, workforce development and changing tender requirements | Customer reporting and equipment replacement through existing renewal cycles |
| Potential advantage | New delivery capabilities and access to emerging infrastructure opportunities | Cost discipline, financial flexibility and trusted customer relationships |
| Question to investigate | Will customers reward new capabilities sufficiently to justify investment? | Could changing specifications weaken competitiveness before planned renewal? |
Both companies and their commitments are fictional. The comparison illustrates questions for investigation, rather than assessed performance or predicted outcomes.
Looking beyond the commitments
At first glance, Connected appears more ambitious in its approach to climate transition. Regional Civil Works appears more cautious.
A closer examination of enterprise value could reveal a different picture.
Connected's existing equipment productivity and estimating capability may allow it to introduce lower-emissions construction methods while maintaining competitive project costs. Its advantage could come from combining these capabilities to deliver a more attractive whole-of-project proposition.
Regional Civil Works may benefit from established customer relationships and financial flexibility. If customer demand changes slowly, its investment discipline could sustain margins and allow it to adopt proven technologies at a later stage.
The comparison raises questions about the value of existing strengths, the timing of change and the commercial opportunities available to each company.
The decision for Emma Davis
Emma is considering whether Connected should accelerate investment in lower-emissions equipment and specialist workforce capability.
She wants to understand whether emerging tender requirements will create demand that Connected can serve profitably, and whether its existing strengths could provide an advantage over competitors.
Three questions shape her investigation:
- Market opportunity: Which customers are changing their requirements, and what value will they place on lower-emissions construction, efficient delivery and climate resilience?
- Competitive capability: How could Connected combine its equipment productivity, estimating expertise and workforce skills to deliver a service competitors would find difficult to reproduce?
- Investment and timing: What capital, partnerships and organisational capabilities would be required, and when would the expected commercial benefits justify investment?
The investigation may reveal opportunities beyond equipment replacement. Connected could develop new delivery methods, strengthen relationships with infrastructure customers or build capabilities that improve performance across several types of project.
It could also find that customers are unwilling to pay for some proposed changes, or that investment should follow a different timetable.
For Emma, understanding the company's relative competitive position provides a stronger foundation for choosing where to act.
What could a Climate Value Framework comparison reveal?
At Sightlines Advisory, we use the Climate Value Framework to understand how companies create enterprise value today and how climate transition may change their competitive position.
We begin with the strengths, capabilities and relationships through which each business creates value. We examine its current climate stance, existing commitments and the capabilities and investment required to deliver them.
We then consider how changing markets, technologies, physical conditions and competitors' responses could influence future performance.
This provides a basis for comparing companies with different strengths and transition pathways. The analysis can reveal where an organisation may be building competitive advantage, where existing value could weaken and where opportunities remain unexplored.
The findings are developed through questions, evidence and perspectives from across the enterprise. Customer and supplier insights, operational experience, financial analysis and plausible future scenarios help leaders test the opportunities identified.
For Connected Ground Civil, such an investigation could reveal that its greatest opportunity lies in combining capabilities it already possesses, supported by selective new investment. It could also reveal advantages held by competitors that Connected needs to understand.
A comparison of enterprise value and climate commitments can reveal strategic choices that are difficult to recognise from emissions performance, climate targets or transition plans alone.
These insights help leaders decide which opportunities warrant further investigation, where investment could strengthen competitive position and how their choices may influence future enterprise value.
How well do you know your competitive position?
Consider three questions for your next strategic discussion:
- Which of our current competitive strengths are likely to become more valuable as climate transition continues?
- What do our competitors' existing climate commitments suggest about the markets, capabilities and opportunities they are pursuing?
- Where might we have an advantage that is not yet reflected in our strategy or investment plans?
The answers may reveal opportunities to build from existing strengths, reconsider investment timing or develop capabilities that will matter in future markets.
At Sightlines Advisory, we bring enterprise value analysis and climate transition together to help leaders investigate these questions, compare alternative positions and recognise opportunities for value creation.
Source note: The two company profiles and their commitments are fictional illustrations. Climate Value Framework principles draw on Sightlines Advisory's Climate Enterprise Value Framework, Part 1 v8. Verify any additional external claims and links before publication.