The smart way to handle this if you really want to fly business class is to pay the upgrade cost difference yourself. Mark it on your expense report when you turn in the receipts.
Your sponsor then may say "no worries, we'll take care of the upgrade cost!" then you're golden. In any case they'll respect your integrity.
Your sponsor then may say "no worries, we'll take care of the upgrade cost!" then you're golden. In any case they'll respect your integrity.