PETALING JAYA: With most chief executives officers (CEOs) globally prioritising artificial intelligence, growth, inflation and geopolitical matters, sustainability has taken a back seat.
Companies are grappling with practical difficulties in meeting their existing commitments, according to a new study by consultancy Bain & Co (Bain).
Bain predicted that slowing momentum on sustainability could be costly as a temperature increase of two degrees Celcius could cut US$6 trillion from the value of the S&P 500, in addition to the devastating environmental and social consequences.
However, it said of the companies disclosing their progress via the Carbon Disclosure Project, 30% were well behind on their Scope 1 and 2 emissions reduction goals, while almost half are behind on Scope 3, as many companies reassessed, adjusted, and, in some cases, pulled back on their climate commitments.
“The transition to a sustainable world is following a familiar cycle,” said Jean-Charles van den Branden, Bain’s global sustainability practice leader.
“What began a few years ago as boundless excitement has given way to pragmatic realism.
“As the challenge of meeting bold commitments becomes clear, many companies are rethinking what is achievable and on what timeline,” van den Branden said.
On the other hand, he cautioned that slowing progress would be a mistake, as Bain’s research showed many sustainable technologies were likely to reach their tipping point more quickly than expected.
Van den Branden said forward-thinking companies would stay the course and lead the way as a mix of new technologies, consumer and customer behaviour and smart policy creates valuable opportunities for their industries.
Although chief executives are repositioning their climate priorities, the report said extreme weather is fuelling increasing consumer concern about climate change.
In a survey of nearly 19,000 consumers in 10 countries, 61% said their concerns about climate change had increased over the past two years, often sparked by personal experience of extreme weather.
When it came to sustainable shopping, Bain’s research revealed that brands and retailers played a big role in the consumer decision-making process.
While personal experience with extreme weather emerged as the top reason why consumers are buying sustainable products, 35% said they made the choice due to media articles and documentaries, 33% attributed it to availability and 28% credited awareness campaigns by brands and retailers.
Bain said sustainability also remained a top concern for business-to-business (B2B) buyers. Its survey of 500 B2B buyers and sellers showed sustainability was one of corporate buyers’ top-three purchasing criteria.
Likewise, Bain’s survey found nearly 50% of corporate buyers said they would pay a sustainability premium of 5% or more and expected their willingness to pay to increase in the future.
The message, however, seemed to be getting lost on suppliers.
While 85% of suppliers said they embedded some degree of sustainability in their products and services, only 27% considered themselves knowledgeable about their customers’ sustainability needs.
Bain said consumers and customers continued to rate sustainability as an important purchase criterion, but they often lacked a clear understanding of what makes a product or service sustainable.
