GLOBAL chief executive officers’ (CEOs) prioritization of sustainability has declined sharply, with many companies reassessing, adjusting, and, in some cases, retracting their climate commitments. At the same time, artificial intelligence (AI), growth, inflation and geopolitical uncertainty have risen to the top of their agendas.
These are among the findings of global consultancy firm Bain & Co.’s recently released report, “Visionary CEO’s Guide to Sustainability 2024.”
“What began a few years ago as boundless excitement has given way to pragmatic realism,” says Jean-Charles van den Branden, Bain’s global sustainability practice leader, of the shift. Referring to the CEOs’ commitment to sustainability, he said that “… many companies are rethinking what is achievable and on what timeline.”
Extreme weather experiences, like the flooding caused by Tropical Storm Bebinca in Rizal, Occidental Mindoro, on Sept. 15, 2024 spark
people’s concerns about climate change. AFP PHOTO / PHILIPPINE COAST GUARD (PCG)
Bain’s research does show that companies are struggling to meet their existing sustainability commitments. Of the companies disclosing their progress via CDP, 30 percent are well behind on their Scope 1 and 2 emissions reduction goals, and almost half are behind on Scope 3.
Still, van den Branden warns that “… slowing progress would be a mistake.” Bain’s research also shows that companies’ reduction of their momentum on sustainability efforts could come with a tangible cost. It estimates that a temperature increase of 2 degrees Celsius could cut $6 trillion from the value of the S&P 500, in addition to the devastating environmental and social consequences.
The report also points out that, even as CEOs deal with competing priorities, the message from consumers around the world is clear. In a Bain survey of nearly 19,000 consumers in 10 countries, 61 percent of people said their concerns about climate change have increased over the past two years, often sparked by personal experience of extreme weather. While 76 percent of global consumers believe a sustainable lifestyle is important, consumers in Brazil (90 percent), Indonesia (90 percent) and Italy (84 percent) feel an even greater sense of accountability for their own environmental footprints.
Bain’s survey of 500 B2B buyers and sellers also shows that sustainability is now one of corporate buyers’ top three purchasing criteria. About 36 percent say they would leave suppliers that don’t meet sustainability expectations. Nearly 50 percent of corporate buyers said they would pay a sustainability premium of 5 percent or more today.
The Bain report points out that the CEOs’ shift to prioritizing AI does not have to cause a reduction in sustainability efforts in their agenda. Consumers and customers who rate sustainability as an important purchase criterion often lack a clear understanding of what makes a product or service sustainable. Bain suggests AI can help close this gap by providing more effective communication approaches about sustainable products and propositions.
Van den Branden says companies can “embed AI within sustainability initiatives to fuel innovation and resilience … and lead the charge toward a greener, tech-driven future.”
Be the first to comment