Green Pressure vs. Red Ink: Who Pays for Sustainability?

Sustainability is no longer a side issue in supply chain and logistics; it’s front and centre. Reducing emissions, electrifying fleets, and improving warehouse efficiency aren’t just good for the planet; they promise long-term operational resilience and access to new markets. Customers are increasingly conscious of the environmental footprint of the products they buy, and investors are scrutinising ESG performance as part of their risk frameworks.

But while the ambition is clear, the reality is more complex. Many businesses are in survival mode. Margins are under pressure, costs are climbing, and competition is fierce. In this climate, even the most committed operators are struggling to prioritise sustainability when the immediate focus is keeping the lights on.

 

The Rising Cost of Doing Business

Every part of the logistics chain is feeling cost escalation. Fuel, labour, insurance, and compliance are all trending upward. For many businesses, especially in the mid-tier, profit margins are being squeezed to unsustainable levels.

Layering sustainability initiatives on top of these challenges is not straightforward. Fleet electrification requires major upfront capital investment. Warehouse retrofits for energy efficiency often demand long payback periods. Even smaller changes,  such as sourcing more sustainable packaging, come with cost premiums that can be hard to justify when cashflow is already under strain.

 

The Expectation Gap

While operators face financial headwinds, the pressure for sustainability is only intensifying.

• Customers want greener delivery and product options but are often reluctant to pay more for them
• Investors are factoring ESG into funding and valuation decisions, meaning companies with weak sustainability performance risk losing capital access
• Regulators are tightening compliance, with the ACCC warning against greenwashing and international markets demanding greater supply chain transparency

The gap between what stakeholders demand and what operators can afford is widening, and it raises the critical question: who should carry the cost?

 

The Case for Sustainability as an Advantage

Despite the challenges, there are strong arguments that sustainability is not just a cost centre but a driver of competitiveness.

• Operational efficiency: Energy-efficient warehouses and optimised transport can reduce long-term costs
• Market access: Major customers increasingly require suppliers to meet sustainability standards to remain in contracts
• Brand strength: Businesses that can demonstrate credible sustainability credentials win customer trust and loyalty
• Resilience: Investing in renewable energy and alternative fuels can protect against volatility in global energy markets

In this framing, sustainability is less about expense and more about insurance… a way to future-proof operations against both regulatory and market shocks.

 

The Case for Survival Mode

 On the other side, operators argue that while long-term benefits are real, short-term pressures are impossible to ignore.

• Capital strain: Most mid-tier operators cannot finance large-scale sustainability initiatives without jeopardising day-to-day operations
• Competitive risk: Passing costs onto customers may drive them to cheaper rivals who are not yet investing in ESG
• Uneven playing field: Global competitors with greater scale or state-backed subsidies can afford sustainability measures that local businesses cannot match

From this perspective, the push for rapid decarbonisation risks forcing vulnerable operators out of the market, reducing competition and resilience in the long term.

 

Towards a Shared Solution

The answer likely lies somewhere in between. Few dispute the need for greener supply chains, but the path forward requires shared responsibility:

• Governments can accelerate adoption with targeted incentives, grants, and infrastructure investment
• Customers may need to accept that sustainability has a price – whether through delivery fees, subscription models, or product premiums
• Operators can integrate low-cost wins, such as route optimisation or energy monitoring, while phasing in larger changes over time

Collaboration will be key. No single party can carry the cost alone and delaying action risks creating bigger shocks later.

 

The Central Question Remains

It’s not about questioning the importance of sustainability. Few would argue against its necessity. It’s about recognising the reality: when businesses are stretched thin, the pathway to greener supply chains must also make financial sense.

Until that balance is found, the question of who pays will remain one of the most pressing issues shaping the future of Australia’s logistics sector. The challenge is real, but so too is the opportunity. Those who can navigate the tension between green pressure and red ink will set the standard for what comes next.