Urgency Of Action: Here’s How Businesses Can Accelerate Their Sustainability Strategy

With global progress on climate action falling short of goals, the 28th Conference of the Parties to the UN Framework Convention on Climate Change, or COP28, held in Dubai, UAE, underscored the urgent need for businesses to ramp up their sustainability efforts.

Experts at the COP28 held recently reiterated that while the pledges made with regard to climate change and sustainability are positive steps, they may not be nearly enough to limit global warming to 1.5 degrees Celsius at the end of this century.

The 2018 report of the United Nation’s Intergovernmental Panel on Climate Change assessed that in order to keep the global temperature rise to 1.5 degrees Celsius by the turn of this century, a 45% reduction in CO2 emissions was required by 2030. By contrast, a UN report from 2022 showed that global greenhouse gas emissions had reached a new record and the world is on its way to witness a 2.5 degree Celsius temperature rise by the end of the century.

In this scenario, the business case for sustainability has become even more imperative. Businesses must—and in haste—align and accelerate their sustainability efforts with global initiatives and commitments.

Putting Sustainability On The Backburner Can Be A Mistake

Climate change poses a multifaceted threat to businesses, encompassing physical, regulatory and reputational risks. The escalating frequency and severity of extreme weather events have direct implications for business operations, supply chains and infrastructure. These events can disrupt production, transportation and distribution networks, leading to financial losses and supply chain vulnerabilities.

Furthermore, the regulatory landscape is evolving in response to sustainability targets, with governments imposing stricter environmental standards and emission targets. This regulatory shift has far-reaching implications for industries reliant on fossil fuels and high-emission processes, necessitating a proactive approach to compliance and sustainability.

The reputational risks stemming from climate change are equally significant, as consumers, investors and stakeholders increasingly scrutinise businesses' environmental performance.

In a recent consumer research by the IBM Institute for Business Value, 64% of respondents said at least half of their recent purchases were made from brands that are environmentally sustainable or socially responsible. The number of such customers was 75% in India. Nearly 50% of respondents claimed to have paid an average 59% premium for products labelled as socially or sustainably produced.

Sustainable workplaces are rising in merit too, with approximately one in three individuals who have changed employment within the past year stating they took a pay cut to work for sustainable or socially responsible companies. Not surprising then that almost half of the CEOs in the IBM research said increasing sustainability is one of the highest priorities for their organisation in the next two to three years—up from roughly a third in 2021.

Businesses Must Act Before It’s Too Late

For businesses, the objective with regard to sustainability strategies is explicit: Put the pedal to the metal before it’s too late. Here’s how organisations can do that.

Integrate Sustainability Into Business Operations

According to the research, more than 80% of CEOs expect their investments in sustainability to pay off within five years. Businesses must understand that returns from sustainability initiatives might not be immediately visible. However, embracing sustainability as a strategic imperative from the get-go can help drive not only the vision for a more sustainable future, but also its business value.

To truly accelerate sustainability, businesses must embed sustainable principles into their core operations. Whether it’s redesigning supply chains for lower emissions, implementing circular economy practices or rethinking packaging and logistics, integrating sustainability into business operations requires a holistic approach that considers the entire value chain—from sourcing to production, distribution and end-of-life disposal.

Leverage Data And Technology

Technology plays a pivotal role in enabling sustainable business practices across operational domains. From the adoption of internet of things devices for real-time monitoring of energy consumption to the implementation of artificial intelligence-driven algorithms for predictive maintenance and resource optimisation, technological solutions offer scalable and significant ways to minimise environmental impact while enhancing operational efficiency. The integration of renewable energy systems and smart infrastructure technologies can further bolster a company’s sustainability credentials.

By harnessing big data and advanced analytics, businesses can uncover patterns, trends and correlations that reveal untapped opportunities for sustainable innovation. Whether it’s identifying energy-saving measures, optimising waste management or evaluating the environmental impact of product lifecycles, data-driven insights empower organisations to make informed choices that can drive sustainable outcomes.

Modular Organisation And Shared Responsibility

McKinsey in its report suggests that a modular organisational design works better than a central organisation in supporting sustainability topics that matter most. Sustainability initiatives at the ground level are likely to be more agile, faster and effective when sustainability is a shared duty as opposed to being solely assigned to one person, such as a chief sustainability officer.

Even when the sustainability agenda is driven from the top down, it must percolate to all corners of an organisation, and process leaders must set individual goals and work towards realising them. Town halls and other meetings can serve as a platform for not only underlining the overall sustainability agenda but also sharing progress by different departments, such as production, operations, design and more.

Innovations In Sustainable Supply Chain Management

By embracing innovative supply chain management practices, such as supplier diversification, ethical sourcing and the implementation of blockchain for traceability and transparency, businesses can exert positive influence throughout their supply chains. This not only mitigates environmental and social risks but also fosters resilience and agility in the face of global sustainability challenges.

Organisations must also collaborate with suppliers to implement responsible sourcing practices, reduce waste and minimise the environmental footprint of their supply chains. This involves mapping the entire supply chain, identifying opportunities for improvement and engaging suppliers in sustainability dialogues.

Measuring And Reporting Sustainability Progress

Effective sustainability initiatives are underpinned by robust measurement and reporting mechanisms. By establishing key performance indicators and leveraging sustainability reporting frameworks such as Global Reporting Initiative or Sustainability Accounting Standards Board, companies can track their progress, demonstrate accountability and communicate their sustainability achievements transparently to stakeholders. Accurate and comprehensive reporting serves as a foundation for continuous improvement and helps build trust and credibility with customers, investors and the wider community.

Collaborating With Industry Peers For Sustainability Impact

Collaboration and knowledge sharing among industry peers are essential to drive collective progress. Through industry partnerships, joint initiatives and participation in industry-led sustainability platforms, businesses can leverage collective expertise, resources and influence to amplify their sustainability impact. This collaborative approach fosters innovation and also cultivates a culture of shared responsibility towards addressing global sustainability challenges.