Why ‘good’ firms are going green
An IBM survey revealed that sustainable firms could outperform peers in innovation by 65% and projected maximum revenue growth at 151%
Sustainability and sustainability transformation are the top priorities of most organizations. The pressure for sustainability to be prioritised comes from multiple directions, from governments, customers, employees, investors, and even business partners. Companies are realizing sustainability is good for business.
According to a survey by leading technology firm IBM, 53% of organisations view sustainability as their top priority for the next few years, while for 39% it is a priority now.
Based on the survey results, IBM segmented organisations into four sustainability archetypes:
Transformation Trailblazers are firms that are not only committed to sustainability, but also, successful in executing sustainability initiatives.
Sustainability Strivers are also committed and effective but have not integrated their sustainability efforts with digital transformation.
Execution Stragglers are committed at the highest levels but lack an effective sustainability strategy.
Commitment Sideliners are firms that lack a strong commitment to sustainability at Board and Executive levels.
Too little action
Despite proof that sustainability gives companies an edge, there is still too little action taken.
According to Arun Biswas, Managing Partner for Strategic Sales & Sustainability Consulting at IBM Consulting Asia-Pacific, while most companies, 86% of them, have a sustainability strategy, only 35% have taken action.
Arun has identified six key barriers of implementing an organization’s sustainability vision - the first being dealing with uncertainties.
“57% of companies believe that unclear ROI and economic benefits are the key barriers to achieving sustainability objectives…,” Arun explained.
The second barrier is that most companies are not getting the right kind of data and insights. Firms must monitor, gather, and measure them to drive sustainability. The third barrier is regulation and policy.
“Companies deal with a huge number of standards and frameworks. Most are mandatory and a few are voluntary. This doubles if a company operates in multiple jurisdictions. Additionally, regulators in Asia are yet to create an infrastructure to support these firms,” Arun said.
Arun affirms that most technologies are not mature yet, making technology the fourth barrier. The fifth barrier is culture as organizations require to work on both short and long-term priorities, while working on prioritising beyond the organisation boundaries.
The last barrier, which is unique to sustainability is the need for collaboration.
“Companies have to look at their end-to-end value chain, to collaborate with their customers, suppliers, and stakeholders to drive many of these changes,” Arun said.
Starting at the top
The perception that environmental and social agendas require sacrificing business outcomes is changing. 80% of CEOs expect sustainability investments to produce improved business results within five years.
However, to achieve this, CEOs must also undergo a transformation. Arun said that out of 3,000 CEOs they surveyed across 20 industries, fewer than half indicated they are willing to change existing business practices to improve sustainability.
Transformational CEOs view sustainability investments as an opportunity to evolve an organization. They embrace it as a personal responsibility, open to innovation, and engage their ecosystem of partners to advance their sustainability efforts.
“These CEOs use sustainability as a catalyst for end-to-end business transformation. They start by redefining their purpose and their culture. They look at the business and operational model before processing the changes they need to make,” Arun said.
Stepping towards transformation
There are five steps CEOs can take to initiate sustainability transformation journey. The first, align business strategy with sustainability strategy with clear and defined KPIs. Second, CEOs must develop a data and technology foundation for sustainability initiatives.
CEOs and firms must also drive changes to business processes with data and insights and prioritise processes which increase efficiency impact and reduce emissions. Next, CEOs must establish a clear governance and accountability structure to achieve the desired net zero target.
The final step, companies must look at their entire value chain and engage external and internal stakeholders to develop decarbonization roadmaps
The sustainability journey requires conviction, a strong technology and data foundation, and open innovation with ecosystem partners.
Sustainability experts like IBM can equip firms who are determined to begin their sustainability journey the right way.