Most business leaders see environmental sustainability as a costly commitment rather than an investment in the future

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Most business leaders see environmental sustainability as a costly commitment rather than an investment in the future

Leaders recognize the urgency of climate action, but limited impact is visible on the ground until nowhow they lack an overarching strategy Clarity about the business case and coordinated implementation

Paris, November 10, 2022 while orecognize organizations the sustainability requirement and most have announced net zero commitments, theThere is still a gap between long-term ambitions and short-term concrete measuresaccording to to New a Report from the Capgemini research institute, A world in balanceWhy sustainability ambitions are not translated into action. The report also points this out the business case to implement sustainability measures is largely underestimated or misunderstoodwith oOnly 21% of executives believeeng the it is clear.

To understand whether companies are taking the urgent mandate of environmental sustainability seriously enough and to assess their progress over the years, the Capgemini Research Institute conducted the first edition of an annual global research study, involving 2,004 executives from 668 large organizations ( Annual sales over $1 billion) across 12 countries and key industries.

Although the sustainability vision is being integrated into transformed business strategies and almost two-thirds (64%) of executives say that sustainability is on the agenda of every level of leadership in their organization, there is still a gap between climate ambition and concrete action: less than half (49%) ) has a defined list of initiatives for the next three years, and just over a third (37%) of respondents say their organization is redesigning their operating model. Overall, the level of investment in sustainability initiatives for companies with revenues over $20 billion averages just 0.41% of total revenues, while smaller companies (those with revenues between $1 billion and $5 billion) invest more ($2 .81%). , compared to an average of 4% for S&P 500 companies’ R&D spending in 2020.1

The report found that many organizations lack a collective vision and coordination around sustainability efforts in their operations, and that different teams still work in silos. For example, only 43% of respondents say sustainability-related data is available and shared across the organization, and less than half (47%) of organizations are actively recruiting new talent with strong sustainability competencies.

Employee expectations and regulations are currently the main drivers for sustainability initiatives
Currently, the main drivers for sustainability initiatives are pressure from current and future employees (for 60% of executives) and the need to anticipate stricter future regulations (57%), while 52% of executives say they expect this to increase sales in the future. Most companies are reluctant because they fear short-term cost implications. Sustainability is often viewed as a cost center rather than a value center, particularly in the context of the global macroeconomic landscape. Only one in five (21%) respondents believe the business case for sustainability is clear, while 53% believe the costs of pursuing such initiatives outweigh the potential benefits.2 On the contrary, the report found that organizations that prioritize sustainability are already doing better than organizations that don’t.3

Many companies understand sustainability Mandate, but Organizations must focus on a clear strategy and sachieve short-term goals concrete results that enable society to live within, rather than beyond, planetary boundaries,‘ said Cyril Garcia, CEO of Capgemini Invent and member of the Executive Committee. It’s now or never if we want to limit global warming to 1.5°C. Change has to come from above. Wwe need to see companies align their business models accordingly develop sustainable products and services. This is an investment in the future. With increasing regulation and pressure from civil society resulting Companies lagging behind in their sustainability ambitions risk having their current business models become outdated or inadequate in the years to come as they come under more scrutiny from consumers and investors. Who would want to run an unsustainable business?

Some companies are investing in technology to limit their impact on the environment
Companies are more aware of the environmental footprint of their technology and are using new tools to achieve their goals. More than half (55%) of executives say their company knows how much carbon their technology emits — across digital tools, apps, IT systems and data centers — and that proportion reaches 63% in industrial manufacturing and 61% in % in consumer goods and energy. To achieve their sustainability goals, 58% of companies say they are already using AI and automation, particularly in the energy sector (72%), and more than half (54%) of companies worldwide are investing in digital technologies such as AR /VR or Collaboration tools to reduce employee travel.

Methodology:
For this study, the Capgemini Research Institute conducted a survey of 2,004 respondents from 668 organizations with annual revenues in excess of $1 billion. Fifty percent of executives came from corporate functions (e.g., strategy, sustainability, sales and marketing, accounting and finance, IT, operations) and the other 50% from value chain functions (e.g., innovation/R&D, product design and development , Sourcing and Procurement, Supply Chain and Logistics, Manufacturing and Production). These organizations are based in 12 countries (Australia, Canada, France, Germany, India, Italy, Japan, Netherlands, Spain, Sweden, UK, USA) and operate in key industries including Aerospace & Defence, Automotive, Consumer Goods and retail. Energy, Financial Services, Healthcare & Life Sciences, Industrial Manufacturing, Telecom, Utilities, and Public Sector/Government. The scope of the research focused on practices and initiatives within environmental sustainability and did not include the social aspects of sustainability.

To access the report, click here: https://www.capgemini.com/insights/research-library/sustainability-trends

About Capgemini

Capgemini is a global leader in partnering with companies to transform and manage their business by harnessing the power of technology. The group is guided every day by its goal of unleashing human energy through technology for an inclusive and sustainable future. It is a responsible and diverse organization with over 350,000 team members in more than 50 countries. With its strong 55-year heritage and deep industry expertise, its customers trust Capgemini to meet the full breadth of their business needs, from strategy and design to operations, driven by the rapidly evolving and innovative world of cloud, data, AI, connectivity, software, digital engineering and platforms. The group reported worldwide sales of 18 billion euros in 2021.
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About the Capgemini Research Institute
The Capgemini Research Institute is Capgemini’s internal think tank for all things digital. The institute publishes research on the impact of digital technologies on large traditional companies. The team draws on Capgemini’s global network of experts and works closely with academic and technology partners. The institute has its own research centers in India, Singapore, Great Britain and the United States. It was recently ranked #1 in the world by independent analysts for the quality of its research.
Visit us at https://www.capgemini.com/researchinstitute/

1 Sather Research, “R&D Spending as a Percentage of Revenue by Industry (S&P 500)”, March 2021; National Center for Science and Engineering Statistics.

2 This perception is particularly strong in the United States (61% of executives surveyed) and retail (65%), while only 37% of healthcare and life sciences executives say the same thing.
3 From 2020 to 2021, the 11% of the most advanced companies in sustainability, or “top performers,” achieved 83% higher revenue per employee compared to average, while the 26% least advanced 13% were below average. “Leaders” also achieved a 9% higher net profit margin compared to the average over the same period. This does not show that sustainability leads directly to profitability, but underscores that it is not necessarily a financial burden and that companies can be financially ahead and sustainable at the same time. For example, “pioneers” have taken actions that benefit both financially and sustainably, such as intelligent systems to reduce energy consumption, waste reduction programs or the promotion of work from home to reduce emissions. “Leaders” are defined as companies that demonstrate the greatest maturity in 1) value chain processes including sourcing, R&D/product design/innovation, manufacturing and logistics; 2) how to get their employees to accept their sustainability vision and 3) the use of technology for sustainability.

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