Environmental sustainability reporting is now a core expectation for long-term business success. As sustainability becomes a key investment criterion, investors are increasingly scrutinising environmental claims and are wary of greenwashing practices that overstate actual performance. A PwC survey found that 9 out of 10 investors believe companies frequently report unsupported sustainability claims (PwC, 2023). This scrutiny has increased demand for credible and verifiable evidence of environmental impact rather than broad or unsubstantiated disclosures.

Sustainable investment funds continue to grow, with assets under management increasing by 11.5% to nearly USD 3.92 trillion in the first half of 2025 (Morgan Stanley, 2025). This growth reflects a rising investor preference for companies with transparent and credible environmental disclosures. Sustainability-linked financial products have followed a similar trend, with green bond issuances exceeding USD 1 trillion in 2024, a 3% increase compared to 2023 (IFC, 2025).  

As capital increasingly flows into sustainability-linked instruments, the credibility and measurability of environmental information become critical. For sectors such as construction, waste management, and carbon capture, life cycle assessments (LCAs) provide a practical response to this requirement. LCAs offer a structured and standardised method for quantifying environmental impacts across a product’s or building’s life cycle. When applied appropriately, they help identify risks, uncover efficiency opportunities, and support improved access to capital. Several LCA benefits are particularly relevant to investor decision-making.

• Provides transparency through verified information: LCAs are based on international standards, such as the ISO 14040 and 14044 standards, giving investors confidence in the accuracy of reported impacts. For example, these standards require companies to disclose assumptions, data sources, and allocation methods. This allows investors to assess the robustness of the results and reduce the risk of selective or misleading reporting (ISO, 2006b, 2006a).
• Highlighting hotspots that affect profitability: By revealing high-impact areas, LCAs guide targeted improvement that strengthens both sustainability performance and cost efficiency. For example, an LCA might show that manufacturing a product uses a lot of energy, so changing the process can reduce emissions and costs. For investors, these are signs of better margin resilience and lower long-term risk.
• Creates decision-ready disclosures and supports regulatory alignment: LCAs generate clear and standardised environmental data that can be easily used in ESG reporting, including Scope 3 disclosures and formats such as CDP and GRI (Varbanov et al., 2024). This same data preparedness also helps companies respond to emerging regulations such as the EU Carbon Adjustment Mechanism (CBAM), which requires exporters to report product-level carbon emissions. Companies that already use LCA are better prepared to calculate, document, and disclose these emissions, reducing compliance risk and signalling regulatory readiness to investors. (Read about the difference between LCA and ESG here.)
• Supports scale-up plants: LCAs show how environmental impacts change when moving from pilot to commercial scale, helping avoid costly mistakes. For example, a pilot plant making a small number of products often uses more energy per unit, while large factories can be more energy efficient. At the same time, scaling up may require sourcing materials from farther locations, increasing transport emissions. An LCA helps identify these changes early, allowing companies to design more efficient plants and supply chains before large investments are made.
• Enhances comparability across competitors: As LCAs follow certain boundaries and standards, this helps investors in making fair comparisons between companies and products in the same sector. For example, two building material suppliers can be benchmarked using their LCA-derived carbon footprint (GWP-total).
• Supports access to international markets: LCAs help startups and MSMEs, especially in the construction material sector, to enter regulated markets, especially in regions like the EU, UK, Australia, etc. For example, a startup manufacturing insulation panels must provide an LCA to sell its products in the EU market. Companies that already have verified LCAs are seen as export-ready, reducing the compliance risk and making them more attractive to foreign investors.

• International Finance Corporation. (2025, June 5). Emerging Market Green Bonds 2024. https://www.ifc.org/en/insights-reports/2025/emerging-market-green-bonds-2024
• ISO. (2006a). ISO 14040:2006 – Environmental management — Life cycle assessment — Principles and framework. ISO. https://www.iso.org/standard/37456.html
• ISO. (2006b). ISO 14044:2006 – Environmental management — Life cycle assessment — Requirements and guidelines. ISO. https://www.iso.org/standard/38498.html
• Morgan Stanley. (2025, September 8). Sustainable Investing Funds Beating Traditional Funds in 2025 | Morgan Stanley. https://www.morganstanley.com/insights/articles/sustainable-funds-outperform-traditional-first-half-2025?utm_source=chatgpt.com
• PwC. (2023, November 5). PwC 2023 Global Investor Survey | PwC. https://www.pwc.com/gx/en/news-room/press-releases/2023/pwc-2023-global-investor-survey.html?utm_source=chatgpt.com
• Subal, L., Braunschweig, A., & Hellweg, S. (2024). The relevance of life cycle assessment to decision-making in companies and public authorities. Journal of Cleaner Production, 435, 140520. https://doi.org/10.1016/J.JCLEPRO.2023.140520
• Varbanov, P. S., Zeng, M., Van Fan, Y., Wang, X., Peng Ngan, S., Lin Ngan, S., & Loong Lam, H. (2024). A Holistic Approach to Sustainability Reporting: Integrating Social and Governance Dimensions in Life Cycle Assessment. Chemical Engineering Transactions, 114, 49–54. https://doi.org/10.3303/CET24114009