According to new Capgemini research, executives recognize the urgency of climate action; however, impact on the ground is limited due to a lack of overarching strategy, business case clarity and coordinated implementation.
According to a new report from the Capgemini Institute, while organizations recognize the need for sustainability action and most have announced net-zero commitments, there remains a gap between long-term ambitions and short-term concrete actions, A balanced world – why sustainability ambitions are not translated into actionThe report also highlights that the business case for implementing sustainability measures is largely underestimated or misunderstood, with only 21% of executives saying this is clear.
To understand whether companies are paying enough attention to the pressing task of environmental sustainability and to assess their progress over the years, the Capgemini Institute conducted the first edition of its annual global study, which surveyed 2,004 executives (annual revenue over $1) 12 countries (billions)Australia, Canada, France, Germany, India,
Italy, Japan, Netherlands, Spain, Sweden, U.K., us) and key industries. 50% of executives are from corporate functions (eg, strategy, sustainability, sales and marketing, accounting and finance, IT, operations) and 50% from value chain functions (eg, innovation/R&D, product design and development) , Sourcing and Procurement, Supply Chain and Logistics, Manufacturing and Production). These organizations operate in industries such as aerospace and defense, automotive, consumer goods and retail, energy, financial services, healthcare and life sciences, industrial manufacturing, telecommunications, utilities, and public sector/government. The scope of study focuses on practices and initiatives of environmental sustainability, excluding the social aspects of sustainability.
While a sustainability vision is being integrated into reinvented business strategies, nearly two-thirds (64%) of executives say sustainability is on the agenda of every executive in their organization, but climate ambitions and specific goals Gap action remains between: Less than half (49%) have a clear list of plans for the next three years, and just over a third (37%) of respondents say their company is redesigning its operating model. Overall, companies with more than $20 billion in revenue invested only 0.41% of total revenue on average in sustainability initiatives, while smaller companies (those with revenue between $1-5 billion) invested more (on average 2.81%), compared to an average of 4% for R&D spending by S&P 500 companies in 2020.
The report found that many organizations lack a collective vision and alignment around sustainability efforts in their operations, and that teams are still working in silos. For example, only 43 percent of respondents said that sustainability-related data is available and shared across the organization, and less than half (47 percent) are actively recruiting new talent with strong sustainability skills.
This reticence and hedging against taking holistic sustainability action casts doubt on the impactful changes that will be made in time to avoid climate catastrophe, and is reflected in recent Sustainability Leaders Survey
— Among them, 70% of sustainability executives said they believe it is unlikely that we will avoid significant damage from climate change or that significant damage has already occurred.
Regulations, employee expectations are the main drivers of current sustainability initiatives
Currently, the main drivers of sustainability initiatives are pressure from current and future employees (60% of executives) and tighter future regulation that requires pre-emption (57%), while 52% of executives say they expect this to increase their income in the future. Most businesses are hesitant because they fear short-term cost implications. Sustainability is often seen as a cost center rather than a value center – especially in the context of the global macroeconomic landscape. In the Capgemini study, only one in five (21%) respondents believe the business case for sustainability is clear, while 53% believe the costs of pursuing such an initiative outweigh the potential benefits – the opposite , the report finds that those organizations that prioritize sustainability have outpaced those that don’t.
“Many companies understand the mission of sustainability, but organizations need to align on clear strategies and short-term goals to deliver concrete outcomes that enable societies to live within, not beyond, the planetary boundaries,” said Cyril GarciaCEO or Capgemini Inventions and a member of the Group Executive Committee. “If we want to limit global warming to 1.5°C, it’s either now or never. Change needs to come from the top. We need to see companies adapt their business models to build sustainable products and services. This is the future Companies that lag on their sustainability ambitions face seeing their High risk of current business models becoming outdated or inadequate. Who wants to run an unsustainable company?”