While organizations recognize the need for sustainability action and most have
announced net-zero commitments, there is still a gap between long-term ambition
and short-term concrete actions — according to new a report from the Capgemini
Research Institute, A World in Balance – Why sustainability ambition is not translating to action.
The report also highlights that the business case for implementing
sustainability measures is largely underestimated or misunderstood, with only 21
percent of executives believing that it is clear.
To understand whether companies are taking the urgent mandate of environmental
sustainability sufficiently seriously and to assess their progress over the
years, the Capgemini Research Institute conducted the first edition of an annual
global research study, surveying 2,004 executives from 668 large organizations
(annual revenues over $1 billion) across 12 countries (Australia, Canada, France, Germany, India,
Italy, Japan, Netherlands, Spain, Sweden, UK, US) and key industries. 50
percent of executives were from corporate functions (e.g., strategy,
sustainability, sales and marketing, accounting and finance, IT, operations) and
the other 50 percent were from value-chain functions (e.g., innovation/R&D,
product design and development, sourcing and procurement, supply chain and
logistics, manufacturing and production). These organizations operate across industries including aerospace and defense, automotive,
consumer products and retail, energy, financial services, healthcare and life
sciences, industrial manufacturing, telecom, utilities, and the public
sector/government. The scope of the research focused on practices and
initiatives within environmental sustainability and did not include the social
aspects of sustainability.
Although the sustainability vision is being integrated into remodeled business
strategies
and nearly two-thirds (64 percent) of executives say that sustainability is on
the agenda of each of the C-suite in their organization, there is still a gap
between climate ambition and concrete
actions:
Less than half (49 percent) have a defined list of initiatives for the next
three years, and just over a third (37 percent) of respondents say their company
is redesigning its operating model. In total, the level of investment into
sustainability initiatives for companies with over $20 billion in revenue is
just 0.41 percent of total revenue on average, whereas smaller companies (firms
with revenues between $1-5 billion) are investing more (average of 2.81
percent), compared to an average 4 percent for the R&D spend by the S&P 500
companies
in 2020.
The report found that many organizations are lacking a collective vision and
coordination around sustainability efforts across their operations, and the
various teams are still working in silos. For example, only 43 percent of
respondents say that sustainability-related data is available and shared across
the entire organization, and less than half (47 percent) of businesses are
actively recruiting new talent with strong sustainability
skills.
Communicating complex, unfamiliar sustainability claims on CPG packaging
Join us as Applegate and HowGood share insights into marketing lessons, consumer response and understanding, and marketplace data on the expression and communication of new categories of sustainability claims on CPG packaging - as well as tips for avoiding consumer and industry backlash and controversy - Wed, Oct. 16, at SB'24 San Diego.
This reticence and hedging around adopting holistic sustainability action has
fueled a disbelief that enough impactful changes will be
made
and followed through with in time to avoid climate catastrophe, and reflected in
the most recent Sustainability Leaders’
Survey
— in which 70 percent of sustainability execs said they believe it is unlikely
that we will avert major damage from climate change or that major damage has
already occurred.
Regulations, employee expectations currently the main drivers for sustainability initiatives
Currently, the main drivers for sustainability initiatives are pressure from
current and future
employees
(for 60 percent of executives) and the need to pre-empt stricter future
regulation (57 percent), while 52 percent of executives say they expect it will
increase their revenue in the future. Most businesses are holding back because
they are fearful of short-term cost implications. Sustainability is frequently
seen as a cost center, rather than a value center — particularly within the
context of the global macro-economic landscape. Only one in five (21 percent)
respondents in the Capgemini study believe that the business case for
sustainability is clear, while 53 percent believe that the cost of pursuing such
initiatives outweighs the potential benefit — on the contrary, the report found
that organizations that are prioritizing sustainability are already
outperforming
organizations
that aren’t.
“Many companies understand the sustainability mandate, but organizations need
to align on a clear strategy and short-term objectives to deliver concrete
outcomes that will enable society to live within and not beyond the planetary
boundaries,”
says Cyril Garcia, CEO of Capgemini Invent and Group Executive Board
Member. “It’s now or never, if we want to limit global warming to 1.5°C. Change
needs to come from the top. We need to see companies pivot their business models
to build sustainable products and
services.
This is an investment in the future. With increasing regulation and pressure
from civil
society,
resulting in more scrutiny by consumers and investors, companies that are
lagging in acting on their sustainability ambitions run a high risk of seeing
their current business models become obsolete or inadequate in the coming years.
Who would want to run an unsustainable company?”
Get the latest insights, trends, and innovations to help position yourself at the forefront of sustainable business leadership—delivered straight to your inbox.
Sustainable Brands Staff
Published Nov 14, 2022 7am EST / 4am PST / 12pm GMT / 1pm CET