Companies that incorporate sustainability into their operations are likely to realize significant benefits relative to their peers in areas including revenue growth, profitability and talent attraction, even without spending more on their sustainability efforts, according to a new global survey of senior executives released by IBM.
For the new study, IBM's Institute for Business Value (IBV), in collaboration with Oxford Economics, interviewed 5,000 C-suite executives across 22 countries and 22 industries, examining progress, investments, results and key challenges facing them. organizations face in their sustainability efforts.
Survey results indicated that senior executives globally expect to derive significant value from their sustainability initiatives, with 75% agreeing that sustainability drives better business results and 72% saying it can be a revenue enabler rather than of a cost center. Similarly, 76% reported that sustainability is fundamental to their business strategy and 69% said sustainability needs to be a higher priority in their organizations.
Despite the consensus view on the business benefits of sustainability, however, the study found that nearly half (47%) of executives surveyed reported that they have difficulty financing sustainability investments, and only 30% said they have made significant progress in executing their sustainability plans. strategies – although this number has increased significantly compared to just 10% recorded in the previous year's survey.
One of the study's key insights that highlights the difficulties companies face in their sustainability efforts and investments is the focus on compliance over strategy, with IBM's research concluding that companies' spending on sustainability reporting exceeds spending in sustainability innovation by 43%.
In this sense, the survey indicated that one of the biggest factors influencing the impact of sustainability on business performance was the extent to which companies incorporated sustainability into their organizations. Companies identified by the study as “embedded,” meaning that sustainability has been integrated across business units into core functions and workflows, rather than treating it as a functional silo or compliance requirement, would likely obtain significant commercial value, including a 16% higher rate. of revenue growth, and 75% who were more likely to attribute revenue growth to their sustainability improvements. Similarly, developers were 52% more likely to outperform their peers in terms of profitability and 56% more likely to outperform their peers in attracting talent.
Interestingly, “incorporators” were more likely to demand better financial results from their sustainability initiatives, with 53% of these companies reporting that business benefits are essential to justify investments in sustainability, and only 17% saying that meeting objectives sustainability alone justified the investment. Likewise, these organizations were found not to spend more on sustainability than their peers and not pursue broader sustainability programs, but they benefited from incorporating sustainability into their core operations, according to the study.
The study also examined some of the key challenges companies face in incorporating sustainability, with “data usability” emerging as one of the key barriers. While the vast majority (82%) of respondents agreed that high-quality data and transparency are necessary to achieve sustainability results, only about 40% reported that their organizations can automatically obtain sustainability data from critical systems such as ERP, management of business assets, CRM, Energy Management Systems or Facilities Management systems. According to the report, however, generative AI could be a “game changer” for sustainability, with 64% of executives saying that generative AI will be important to their sustainability efforts, and 73% planning to increase investment in generative AI for sustainability.
Other key challenges included skills development, with nearly 40% of executives reporting a lack of necessary skills as the main barrier to sustainability progress, and limited integration of sustainability into core business functions, although respondents reported expecting increases significant improvements in the level of sustainability integration in several areas over the next few years, with the biggest improvements expected in areas including finance, energy management and corporate asset management.
Oday Abbosh, global managing partner of sustainability services at IBM Consulting, said:
“An organization’s approach to sustainability may be holding it back. There is no quick fix. Sustainability requires intentionality and a shared corporate vision. Sustainability needs to be part of daily operations and not just seen as a compliance task or a reporting exercise. By embedding sustainability into their businesses, organizations will be more likely to drive internal innovation, attract and retain qualified talent, and be better positioned to drive positive environmental impact and financial results.”
Click here to access the study.
