Although most organisations have made net zero commitments, there is still a gap between long-term ambition and short-term sustainability 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 highlights that the business case for implementing sustainability measures is vastly underestimated or misunderstood, with only 21% of executives believing that it is clear.
The Capgemini Research Institute conducted the first edition of an annual global research study, surveying 2,004 executives from 668 large organisations (annual revenues over $1 billion) across 12 countries and key industries.
Despite nearly two-thirds (64%) of executives saying that sustainability is on the agenda in their organisation, there is still a gap between climate ambition and concrete actions: less than half (49%) have a defined list of initiatives for the next three years, and just over a third (37%) 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% of total revenue on average, whereas smaller companies (firms with revenues between $1-5 billion) are investing more (average of 2.81%), compared to an average 4% for the general R&D spend by the S&P 500 companies in 2020.
The report found that many organisations are lacking a collective vision and coordination around sustainability efforts across their operations. For example, only 43% of respondents say that sustainability-related data is available and shared across the entire organisation, and less than half (47%) of businesses are actively recruiting new talent with strong sustainability skills.
Most businesses are holding back because they are fearful of short-term cost implications. Sustainability is frequently seen as a cost centre, rather than a value centre, particularly within the context of the global macro-economic landscape. Only one in five (21%) respondents believe that the business case for sustainability is clear, while 53% believe that the cost of pursuing such initiatives outweighs the potential benefit. On the contrary, the report found that organisations that are prioritising sustainability are already outperforming organisations that aren’t.
“Many companies understand the sustainability mandate, but organisations 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?”
The report also found companies are more conscious of the environmental footprint of their technology and leverage new tools to achieve their objectives. Over half (55%) of executives say that their company knows how much carbon its technology emits – across digital tools, apps, IT systems, and data centres, and this proportion reaches 63% in industrial manufacturing, and 61% in consumer products and energy.
In order to achieve their sustainability objectives, 58% of organisations say they are already using AI and automation, in particular in the energy sector (72%), and over half (54%) of organisations globally are investing in digital technologies such as AR/VR, or collaboration tools to reduce employee travel.
In a recent study by the professor of geological sciences at the Stanford Doerr School of Sustainability, Jef Caers argued Artificial Intelligence (AI) is the key to ensuring countries hit their net zero targets.
