Executives worldwide rally for sustainability, citing clear business benefits, but face hurdles in investment and reporting
In its second year, the latest Capgemini Research Institute ‘A World in Balance 2023’ report reveals a seismic shift in executives' attitudes towards sustainability, with 63 percent now affirming the unequivocal business case for ecological responsibility.
This marks a threefold increase from the mere 21 percent who concurred in the summer of 2022. Notably, those perceiving sustainability initiatives as a financial burden has dwindled by more than half, dropping from 53 percent to 22 percent.
The global surge in extreme weather events and escalating costs are significant catalysts for this perceptual transformation. The report underscores that regulatory pressures and anticipated return on investment (ROI) are pivotal factors motivating executives to embrace environmental and social sustainability strategies.
The report reveals that a staggering 74 percent aim to boost future revenue, up from 52 percent in 2022, while 64 percent emphasise compliance with current regulations, a marked increase from 51 percent the previous year.
2023 Focus: Sustainability Foundations Solidify, Yet Investment and Reporting Lag
Though organisations make strides in delineating sustainability roadmaps, areas such as investment and reporting still need to be developed. A substantial 61 percent of executives assert that their companies now possess a defined priority list for sustainability initiatives over the next three years, up from 49 percent. Moreover, 57 percent affirm ongoing efforts to redesign business models for sustainability, reflecting a noteworthy increase from 37 percent.
Despite these advances, the report urges caution, highlighting the marginal increase (0.01 percentage point) in the average annual investment in environmental sustainability initiatives compared to the previous year.
Reporting deficiencies, especially in measuring and collecting scope three emissions, persist, declining from 60 percent in 2022 to 51 percent in 2023. Sustainable product design initiatives exhibit minimal progress, while more executives resort to third-party audits of sustainability data (54 percent, up 4 points), albeit fewer doing the same for disclosure and benchmarking.
Social Sustainability Ascends Corporate Priorities
Over 56 percent of executives highlight an escalating focus on the social dimension of environmental, social, and corporate governance (ESG), with internal employees being the primary beneficiaries. However, the report underscores a need for organisations to do more to support workers in the supply chain. While 64 percent consider ESG ratings during supplier selection, only 38 percent exclusively collaborate with suppliers who provide a living wage.
Perception Gap Unveiled: Greenwashing Concerns Rise
The report exposes a perceptual gap between executives and consumers concerning greenwashing. Only 17 percent of executives believe consumers are troubled by greenwashing risks, while 33 percent of global consumers suspect organisations of greenwashing sustainability initiatives.
Consumers in India (45 percent) and Canada (43 percent) are the most sceptical, with the UK recording the slightest suspicion at 16 percent. Generation Z exhibits more significant scepticism (50 percent) than boomers (18 percent), with 49 percent of consumers expressing limited trust in environmental claims.
Generative AI: A Pillar of Sustainability Strategies
Executives are keenly interested in leveraging digital technology, particularly generative AI, to advance sustainability goals. 59 percent believe it will be pivotal in their organisation's sustainability transformation efforts. Simultaneously, 57 percent confirm their organisations have commenced measures to mitigate the environmental impact of using generative AI models.