Despite Emphasis, Sustainability Approaches are Falling Short

While a majority of organizations recognize sustainability as important to their business strategy, many C-suite leaders are struggling to fund their sustainability investments.

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A global study by the IBM Institute for Business Value found that while a majority of organizations recognize sustainability as important to their business strategy, many C-suite leaders are struggling to fund their sustainability investments. Data collected from 5,000 global C-suite executives highlighted that organizations that embed sustainability within their operations see better sustainability and financial outcomes, while spending less money than their peers.

The study, "Beyond checking the box – how to create business value with embedded sustainability,"" reveals that almost one-third (30%) of executives surveyed say they have made significant progress in executing their sustainability strategy – up from 10% a year ago but turning ambitions into impact remains a challenge. Almost half (47%) of executives surveyed struggle to fund sustainability investments; six in 10 say they have to make trade-offs between financial and sustainability outcomes.

Organizations that embed sustainability more deeply into their operations show a marked difference in outcomes from enterprises with a singular focus on areas, such as regulatory reporting or sustainability as a corporate project. Organizations that embed sustainability are 75% more likely to attribute greater improvement in revenue from their sustainability efforts and are 52% more likely to outperform their peers on profitability.

The findings indicate that many organizations are focused on managing complex, varied reporting requirements rather than real business value and results. The study found that spending on sustainability reporting exceeds spending on sustainability innovation by 43%. Only 31% of executives surveyed report they are incorporating sustainability data and insights into operational improvements to a great extent, while 14% say they do so with innovation initiatives.

"An organization's approach to sustainability may be holding it back. There is no quick fix. Sustainability requires intentionality and a shared corporate vision," says Oday Abbosh, global managing partner, Sustainability Services, IBM Consulting. "Sustainability needs to be part of the day-to-day operations, not viewed only as a compliance task or reporting exercise. By embedding sustainability across their business, organizations are more likely to drive internal innovation, attract and retain skilled talent, and be better positioned to deliver both positive environmental impact and financial outcomes."

Key Takeaways:

  • Seventy-five percent (75%) of executives surveyed agree that sustainability drives better business results, and 76% agree that sustainability is central to their business strategy.
  • At the same time, 69% of executives surveyed say that sustainability needs to be a higher priority in their organization.
  • While 82% of executive respondents agree that high-quality data and transparency are necessary to achieve sustainability outcomes, only about 4 in 10 organizations can automatically source sustainability data from any of the following core systems: ERP (finance, HR, supply chain), Enterprise Asset Management, CRM, Energy Management Systems, Facilities Management systems.
  • Thirty-nine percent (39%) of executives surveyed also cite a lack of requisite skills as the top barrier to sustainability progress.
  • Sixty-four percent (64%) of executives surveyed agree that generative AI will be important for their sustainability efforts.
  • Seventy-three percent (73%) say they plan to increase their investment in generative AI for sustainability.
  • Organizations that embed sustainability spend slightly less on dedicated sustainability efforts as a share of their revenue compared to organizations that don't embed.
  • Fifty-three percent (53%) of these organizations say that business benefits are essential for justifying sustainability investments; only 17% say meeting sustainability objectives is in itself sufficient to justify investment.
  • These organizations are also 191% more likely to have aligned their data and sustainability strategies to a great extent, and 80% more likely to be using AI for sustainability to a great extent.