Sunk Costs Sink Sustainability Ambitions
Sunk costs – those capital investments where the cash cannot easily be recovered – are a real headache for sustainability ambitions as no-one wants to be seen to ‘waste’ that money, even if ripping out a relatively new piece of kit and replacing it with a more sustainable one is the economically sensible thing to do.
The answer, of course, is to get in there before the investment is made and get the most sustainable bang for your buck. But this simple action is much more difficult in practice as the most restricting decisions are often made by default before any investment appraisal takes place.
The only answer is to have a clear sustainability strategy, with appropriate stretch targets, embedded into the structure of the organisation. Trying to waylay every investment reactively as it comes over the horizon is like trying to rugby tackle charging elephants – it’s never going to end well.