The Sustainable Growth Paradox: A Business Case Solution

UK public bodies face a growing challenge: while local place-based growth is a clear economic priority, securing funding for long-term, sustainability-focused projects has become harder. Tight budgets and closer scrutiny mean every investment must be rigorously justified, even as expectations for net zero, resilience and social value continue to rise. The result is a paradox: the sustainability projects most important to long-term prosperity are often the hardest to fund.

Local Growth Plans and Place-Based Business Cases are raising the bar for regional investment. By adopting a systems thinking approach that links transport, housing, skills, health, and green infrastructure outcomes in a single long-term strategy, they offer a more holistic route to delivering sustainable growth. But they also increase complexity. To secure investment and withstand central scrutiny, authorities need stronger appraisal, clearer accountability and more robust evaluation.

The 2026 Green Book offers a solution by moving beyond narrow benefit–cost ratios toward a broader view of value for money. It encourages decision-makers to weigh long-term social, environmental and economic outcomes, and to assess what combination of interventions will unlock growth. High-quality business cases are becoming a strategic necessity. They help organisations prioritise investment, demonstrate public and social value and build confidence that ambitious sustainability programmes can deliver lasting impact.

This creates new opportunities for sustainability investment, but also demands better evidence, transparent assumptions and clear plans for monitoring results over time, and in turn highlights a capability gap in the local authority workforce.

The Paradox of Sustainability Investment

For all the political emphasis on local growth, UK public bodies face many challenges in securing investment for long-term, place‑based sustainability initiatives. Today’s fiscal reality is one of tight budgets and intense scrutiny, even as expectations on net-zero, environmental resilience, and social value outcomes are growing. The result is a paradox: crucial local projects – from decarbonising infrastructure to new hospitals to regenerating town centres – must prove their worth under more stringent conditions at the very moment they have become most strategically important. The projects most important to long-term prosperity are often the hardest to fund.

Several factors explain why winning funding for sustainable, place‑based growth is getting harder, not easier. First, public finances are under pressure, so every pound of investment requires heightened justification. As one recent BearingPoint UK insight notes, decision-makers still tend to favour projects with quick, easily quantifiable returns, which “often impedes investment in sustainability initiatives” that yield benefits over longer horizons¹. In simpler cases – say, replacing streetlights with LEDs to save energy costs – the case for funding is straightforward. But complex net-zero and social value projects rarely fit neatly into traditional short-term cost–benefit templates. Their benefits are more often indirect, long-term, or “difficult to quantify” – from enhanced community health and well-being to climate resilience – and these often escape conventional ROI metrics. This leaves many councils, city-regions and infrastructure programmes struggling to translate ambitious sustainability strategies into actionable, funded programmes, a challenge seen across sectors.

Raising the Bar: Place-Based Plans and Systems Thinking

At the same time, Place-Based plans are raising both ambition and complexity. The UK’s Modern Industrial Strategy and “levelling-up” agenda have spurred a new generation of Local Growth Plans (LGPs) – strategic frameworks for long-term regional investment that will be mandatory for mayoral authorities from 2026². These high-level plans articulate a 10–15-year vision for local prosperity, integrating interventions across transport, housing, skills, green infrastructure and more in a single coherent agenda. They are typically linked to business cases for investment in a defined geographical area, enabling major growth projects to be managed cohesively as a programme over a decade or more³. A Place‑Based Business Case (PBBC) underpinned by a Systems Thinking approach should be the core mechanism within this framework: a comprehensive business case (following HM Treasury’s Five Case Model) that prioritises a portfolio of local initiatives and aligns them with both local needs and national policy objectives like net-zero and industrial strategy, to deliver holistic local outcomes⁴.

Early adopters of the place‑based approach illustrate this. For example, the West Yorkshire Local Growth Plan aims to create “corridors of opportunity” linking transport and housing investments with job creation – including a new mass transit system, bringing buses back under public control, and a Green Jobs Taskforce to create 1,000 new jobs, with an investment zone expected to unlock £220 million and 2,500 further jobs⁵. In Greater Manchester’s Good Growth Plan, a £1 billion development fund supports “good growth” initiatives from thousands of new homes to advanced manufacturing zones, all geared toward reindustrialisation and decarbonisation⁶. These plans demonstrate the huge potential of integrated, place-specific portfolios to deliver economic renewal alongside environmental and social benefits. However, they also underscore the need for rigorous appraisal and coordination. It remains unclear how consistent accountability for delivering such plans will be achieved nationally – raising the stakes for authorities to develop robust business cases and evaluation mechanisms that can stand up to central scrutiny.

From Cost–Benefit Ratios to Broader Value

A pivotal change reshaping investment decisions is the updated HM Treasury  guidance on investment appraisal, which offers a solution to the paradox. The 2026 Green Book marks a definitive shift away from narrow benefit–cost ratios as the sole arbiter of a project’s worth and toward a broader understanding of “value for money.” It explicitly rejects using BCR thresholds as a blunt cut-off for funding decisions, recognising that an excellent BCR alone is no guarantee of overall value – and conversely, a BCR below 1.0 doesn’t automatically imply a poor investment if other benefits justify it. Instead, value for money is now defined as a “balanced judgement about the optimal use of public resources”, weighing multiple factors beyond monetised costs and benefits. Critically, this means equal emphasis on non‑monetisable outcomes – including hard-to-quantify social, environmental and well-being impacts – as well as explicit consideration of distributional effects (who benefits) and risks/uncertainties in each business case. In practice, climate and net-zero impacts, biodiversity gains, public health improvements, and community social value are given prominence alongside financial returns when appraising projects⁷.

In a fictional illustrative example, imagine a local council – Greenway Council - faced with a stark choice: improve a congested road junction in town (by widening the road) or invest in a new bus lane and cycle route with green spaces. This fictional project, “Greenway Transit Scheme”, aims to reduce traffic bottlenecks and improve community wellbeing. The fictional example highlights how including sustainability and social value factors leads to different decisions and different outcomes.

In this example, using a BCR-focused approach, Option A has a cost of £10m and monetisable benefits of £25m, so a Benefit-Cost ratio of 2.5; Option B has a cost of £12m and monetisable benefits of £15m, so a BCR of 1.25. Option A wins. However, taking into account strategic alignment, wider Social Value, distributional analysis, health impacts, climate impacts, and longer-term outcomes in a Green Book 2026 approach to evaluation, Option B is the stronger overall choice despite its lower BCR.

BCR-only appraisal might overlook what truly matters to communities – such as environmental quality, equity, and well-being – because these often don’t show up in a strict cost–benefit ratio. The HM Treasury Green Book (2026) method consciously elevates those wider factors. Our fictional case illustrated that under a BCR-only test, a road project won out, but with the Green Book’s balanced framework, a greener, fairer solution prevailed.

This difference matters: in real life, the Green Book’s approach helps ensure investment decisions prioritise long-term sustainability and social value, not just short-run economic efficiency. The result is better outcomes for society and the environment, aligning public investments with strategic goals like net-zero, wellbeing, and “levelling up” across communities – a vital shift for more resilient and inclusive growth in the UK.

This new guidance aligns with recommendations from the 2025 Green Book Review to better reflect place-based and long-term outcomes. It encourages place-based analysis, asking not just “What’s the best way to do this project?” but rather “What’s the right set of projects to unlock growth in this place?”. The aim is to ensure business cases capture local priorities and variations, and support the ‘levelling up’ agenda rather than applying one-size-fits-all metrics that can favor already prosperous areas such as the South East of England. It also directly addresses the challenge of “transformational” interventions – like major decarbonisation or regeneration programmes that may take decades to fully realise benefits – by linking local cases to national outcomes and encouraging integrated projects spanning transport, housing, skills and climate objectives. The shift is timely: climate change and social inequalities are pressing issues that demand long-term thinking, yet such whole system benefits often felt undervalued in past appraisals. The 2026 Green Book effectively urges decision-makers to broaden their lens and consider wider public value over the long run, and legitimises long-term social, environmental, and place-based benefits as part of a more holistic approach to Value for Money.

There is, however, a trade-off – moving beyond neat cost–benefit metrics introduces more complexity and potential subjectivity into decision-making. It requires robust evidence, transparent assumptions, and strong justification for how investments deliver intangible benefits. These must be built in from the start: indeed, HM Treasury’s guidance stresses that planners should design proposals with their eventual monitoring and evaluation in mind (e.g. by defining clear metrics and data needs for net-zero or social outcomes up front, as part of the business case). In other words, writing a compelling business case for sustainable growth now also means designing how success will be measured five, ten or fifteen years on⁸.

The Capability Challenge

For many local authorities and public agencies, meeting these elevated standards is a daunting task. Developing a high-quality business case that integrates cross-sector impacts, distributional analysis, carbon impacts and more – and doing so at pace – is now a strategic necessity but demands skills in economics, data analysis, stakeholder engagement, and strategic planning that are often in short supply. A BearingPoint thought paper (2026) on Local Growth Plans & PBBCs observed “Local Authorities face shortages in key skills and capacity to develop these business cases to a robust standard”, particularly a lack of experienced economists, analysts and business case authors at the local level.

This gap is widely recognised; the new Green Book guidance even mandates training and accreditation in the Better Business Cases programme for all officials involved in spend proposals, implicitly acknowledging the need to level up capability across central and local government⁹. In practice, however, most local and regional authorities still depend heavily on specialist consultants and partnerships to help design and deliver these complex programme business cases. This external support – if approached as a genuine partnership for skill transfer – can be instrumental in upskilling local teams, introducing innovative analytical tools, and sharing best practices from other regions.

Why Robust Business Cases and Evaluation Matter

Ultimately, in 2026 and beyond, high-quality business cases and rigorous evaluation frameworks have become mission-critical for delivering sustainable, place-based growth – and for maintaining accountability and public trust in these efforts. As big programmes demanding “stretched” public resources get underway, local leaders must demonstrate not only that each proposal is grounded in evidence and aligned to wider objectives, but also that they can deliver and prove real outcomes for communities. Detailed strategic business cases – such as Regional SOCs that periodically re-assess project pipelines for continued value – allow for agility: for example, stalled or underperforming projects can be reprioritised or halted if they no longer promise future value for money. This disciplined approach ensures scarce funds flow to where they have the most sustainable impact, reinforcing accountability.

Moreover, by embracing holistic evaluation and “social value” metrics, authorities can show residents that projects are genuinely improving quality of life, not just hitting spending targets. Meaningful community engagement and transparency around results are essential to proving that promised benefits – from emissions reductions to local job creation – are actually being delivered. High-quality appraisals set that foundation by embedding robust evaluation plans (e.g. clear KPIs for net-zero, well-being, and inclusive growth outcomes) right from the start of the project design.

Conclusion

The stakes are high. The UK’s regional prosperity and net-zero transition will only succeed if plans on paper translate into real outcomes on the ground. That will require the right investments, in the right places, justified by rigorous evidence and managed as cohesive portfolios – a tall order under current conditions. Investing in specialist business case capability and capacity has become a strategic necessity. Equipped with proven frameworks like the Five Case Model and a commitment to broad-based value, organisations can navigate fiscal pressures, unlock funding for transformative projects, and drive sustainable growth that stands the test of time. The benefits of this robust approach are twofold: better decisions on where and how to invest, and stronger public confidence that these major initiatives will deliver genuine economic, environmental and social value for communities across the UK.

¹ BearingPoint UK Insight, Securing Sustainability Investment: Harnessing the Five Case Model (2025).

² Ministry of Housing, Communities & Local Government, Guidance for Mayoral Strategic Authorities on developing Local Growth Plans (June 2025)

³ BearingPoint (2025), Local Growth Plans and Place-Based Business Cases – Executive Summary, pp. 3–4

⁴ HM Treasury, The Green Book – UK Government Guidance on Appraisal (2026), p. 4

⁵ West Yorkshire Combined Authority, West Yorkshire Local Growth Plan (2023)

⁶ Greater Manchester Combined Authority, Integrated Pipeline & Growth Locations (2023)

⁷ HM Treasury, The Green Book (2026)

⁸ HM Treasury, The Green Book (2026)

⁹ Ibid, supra.