A groundbreaking global survey by IBM’s Institute for Business Value, in collaboration with Oxford Economics, reveals a compelling narrative: companies embedding sustainability into their core operations are not just contributing to the planet's health but are also reaping significant business benefits.
The study, which surveyed 5,000 C-suite executives across 22 countries and industries, sheds light on the profound impact of sustainability initiatives on revenue growth, profitability, and talent attraction.
A striking 75% of executives acknowledge that sustainability efforts drive better business outcomes, while 72% view these initiatives as revenue enablers rather than cost centers.
However, the journey towards sustainability is fraught with challenges. Nearly half (47%) of the executives admit struggling to fund sustainability investments. Despite this, there's a notable increase in the execution of sustainability strategies, rising from a mere 10% in previous surveys to 30%.
A critical insight from the study is the distinction between companies merely complying with sustainability standards and those fully integrating these practices into their business operations—referred to as "embedders."
Embedders enjoy a 16% higher rate of revenue growth and are 52% more likely to surpass their peers in profitability. They achieve this not by spending more on sustainability but through strategic integration into their core operations.
The report highlights the pivotal role of technology in advancing sustainability goals.
Notably, only 40% of organizations can automatically source sustainability data from core systems like ERP and CRM. Yet, there's optimism around generative AI, with 64% of executives believing in its importance for sustainability efforts, and 73% planning to increase investment in this area.
Embedders stand out by being 191% more likely to align their data and sustainability strategies effectively. They leverage hybrid cloud solutions and AI to transform data into actionable insights for sustainable innovation, reducing energy consumption, and enhancing supply chains.
The path to embedding sustainability is not without obstacles.
Key challenges include the complexities of sourcing and integrating high-quality sustainability data, the skills gap in sustainability practices, and the need for substantial investments in innovation rather than mere compliance.
Only 4 in 10 organizations can automatically source sustainability data from core systems such as ERP, enterprise asset management, CRM, energy management, and facilities management.
64% of executives agree that generative AI will be important for their sustainability efforts, while 73% say they plan to increase their investment in generative AI for sustainability.
Embedders are 191% more likely to have greatly aligned their data and sustainability strategies.
Embedders are 72% more likely to have ensured the security of sustainability data and 63% more likely to have established consistent definitions of sustainability metrics.
Organizations that embed sustainability are 59% more likely to be using hybrid cloud for sustainability to a great extent and 80% more likely to be tapping the potential of AI to convert data into actionable insights.
Embedders are 83% more likely to achieve great benefits to sustainable innovation and product/service development from their data capabilities. They are also 44% more likely to achieve great benefits to reduced energy consumption and 40% more likely to achieve great benefits to sustainable supply chains from their data capabilities.
A 51% increase in the reliability of the train fleet due to predictive maintenance.
In 2021, GPT delivered an 82% reduction in emissions on its 2005 baseline.
Spending on sustainability reporting exceeds spending on sustainability innovation by 43%.
Organizations that embed sustainability throughout their operations show better sustainability and financial outcomes, 52% more likely to outperform their peers on profitability with a 16% higher revenue growth rate.
Embedders are 75% more likely to attribute great improvement in revenue to their sustainability efforts, have a 16% higher rate of revenue growth, are 56% more likely to outperform their peers on talent attraction, are twice as likely to attribute great improvement in operating costs to their sustainability efforts, and are 52% more likely to outperform their peers on profitability.
76% of executives say that sustainability is central to their business strategy, 75% say it drives better business results, and 72% view it as a revenue enabler rather than a cost center. However, only 31% of organizations are incorporating sustainability data and insights into operational improvements to a great extent, and a mere 14% do so with innovation initiatives.
Six in ten executives have to make trade-offs between financial and sustainable outcomes.
These statistics highlight the significant impact that embedding sustainability can have on an organization's operational and financial performance, as well as the challenges and opportunities in sourcing, utilizing, and integrating sustainability data into business strategies.
The IBM study serves as a clarion call for businesses to reevaluate their approach to sustainability. Embedding sustainability is not just about achieving compliance or enhancing corporate image; it's about weaving sustainability into the fabric of business operations to unlock innovation, drive financial performance, and attract top talent.
In conclusion, the IBM report offers a robust framework for businesses that leverage sustainability as a strategic advantage. By embedding sustainability into their DNA, companies can navigate the complexities of the modern business environment, achieving not only environmental stewardship but also superior financial results and competitive differentiation.
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