vSustainability has become increasingly critical for organizations to remain relevant and competitive in today’s world. Much like digital transformation, driving sustainability requires organizations to transform every division of their business. Today, sustainability should be an integral part of developing corporate strategy. Sustainability for organizations plays out across three areas, in the now well-known acronym for Environment, Social, and Governance (ESG).
Sustainable corporate strategies are the future
90% of executives believe sustainability is important. The issue is a lack of implementation with only 60% of organizations having sustainability strategies. A sustainability strategy and a chief sustainability officer reporting directly to the board is, in fact, imperative.
With a sustainability strategy, organizations can make long-term investments, according to McKinsey & Co. But driving sustainability in an organization has challenges, including weak commitment from the board, little accountability, sustainability teams without authority to implement initiatives, and talent gaps.
Factors driving sustainability as a part of strategy
Investor demand - One of the most powerful factors shaping the shift towards sustainability is investor pressure. Gartner research finds that 85% of investors considered ESG factors in their investments in 2020 while 91% of banks monitor ESG performance of investments. The recent letter by the CEO of the largest asset manager in the world, BlackRock, makes it clear that the investor community is focusing on sustainability. Larry Fink writes that being sustainable is not just about doing the right thing but leads to long-term, sustainable profits.
Consumer demand - With an increasing number of millennials and Gen-Z consumers, demand for sustainable products is increasing. 73% of Gen-Z consumers say they are willing to spend more on sustainable products. A Deloitte study shows that around 60% of consumers in the UK reduced their usage of single-use plastic to adapt to a more sustainable lifestyle. Brands with strong sustainable credentials were sought out by 1/3 of UK consumers. With the level of demand for sustainability only set to increase globally, embedding sustainability into corporate strategy is essential for any company to remain relevant in the coming years. |
