The time has come to turn green ambition into action

What stands in the way of environmental action?

The gap between ambition and action is clearly linked to the lack of short-term commitments among companies. But what is causing them both? Through our “A world in balance” report, we have identified several common challenges that may impact a company’s ability to make and execute solid game plans.

First, most companies might still view sustainability solely as a cost driver, rather than understanding it as a worthwhile investment. Only one in five executives say the business case for sustainable initiatives is clear, and over half (53%) believe such measures are non-viable because the costs involved in lessening environmental impact will outweigh the potential benefits.

Second, companies can fail to coordinate efforts internally. Even where plans exist, implementation often lacks broader oversight and centralized coordination, leaving existing initiatives and their impacts siloed within certain parts of the company. For instance, few HR departments prioritize recruiting workers with sustainability skills or fostering these skills among current employees. Less than half (47%) of businesses actively recruit and hire candidates with strong sustainability skills. Likewise, among most product or manufacturing teams, eco-responsible design and circularity remain as peripheral concerns, if they are raised at all.

Facts and figures guide the way

Despite hesitation or doubts among some companies, we see very clearly from the report’s data that sustainability and financial metrics can go hand in hand. By sharing these insights with our partners and clients, we hope to correct misapprehensions about the costliness or unprofitability of environmental action.

Crucially, organizations that have made more progress than their peers in implementing sustainability initiatives have also enjoyed a 9% higher net profit margin than average from 2020 to 2021. While this does not imply causation, it does show that environmental action and profitability can — and do — co-exist.

The breadth of our data also enables us to identify results from ‘sustainability frontrunners,’ the top 11% of companies most advanced in their environmental transformations in our research. Compared to the average, these organizations reported 83% higher revenue per employee from 2020 to 2021. In this same period, ‘sustainability beginners,’ companies that have dedicated the least effort to lessening their impacts, saw their revenue per employee decline by 13%. Such differences would give even a wary executive reason to reconsider.

Again and again, we see the symbiosis between financial and environmental success. Looking ahead to the coming months and years, investment in sustainability becomes ever more critical as the global economy faces a potential downturn. In a recession, companies with a strong environmental focus can expect to recover more quickly.

Even in light of these insights, beginning to invest in sustainability may feel daunting. Happily, there are many tools and partners that can help. As experts in cutting-edge fields like artificial intelligence (AI), connectivity and more, we know from firsthand experience that many companies are investing in new technologies to help lessen their environmental impacts. In the energy sector, for instance, 72% of companies in our research have invested in AI and automation to decrease emissions. And other companies’ investment in the Internet of Things (IoT), enables them to monitor and reduce their impacts by embedding machines with sensors, software, and other tools.

A true team effort is led by the C-suite

Perhaps the most important takeaway from our research is that sustainability must be a company-wide concern, top to bottom. We know that becoming a genuinely green business will require executives to combine their efforts and take initiative.

Reflecting on our partnerships with some of the world’s leading companies, we can imagine what such a proactive C-suite might look like. The CEO would, for instance, make sustainability a business priority, working it into quarterly earnings reports and company-wide presentations. Equally, the CFO would fully grasp and articulate the business case for environmental measures, ensuring that everyone throughout the organization is clear on key business (including ESG) indicators.

To avoid greenwashing the group’s environmental credentials, the CMO would implement rigorous protocols for reporting – ones that will provide an accurate and trustworthy picture of the company’s progress toward net-zero. Chief Design or Product Officers would be called upon to embed sustainability as a core tenet and driving principle of all design efforts. Meanwhile, the Chief Procurement/Supply Chain Officer would work directly with suppliers to help them decrease their impact alongside the company.

In this scenario, the CTO or CIO would need to strengthen sustainable IT initiatives, investing in and promoting the use of more eco-friendly tools and technologies. The COO would build the foundation of the greener organization, exploring all opportunities to push efforts further. Finally, and this is key, the CHRO would also shape the business by ‘staffing for sustainability,’ seeking out new skill sets and shifting to a new, eco-minded leadership model.

Acting today for a greener tomorrow

By zeroing in on the business benefits of sustainability, companies will achieve two important results: they will make clear the urgent importance of these actions and they will motivate their teams. Our data, as outlined above and explored fully in our recent report, should encourage organizations at every stage of their transformations to take the next step toward net-zero.

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_{[1] Sather Research, “R&D spending as a percentage of revenue by industry (S&P 500),” March 2021}