Businesses Embedding Sustainability Outperforming on Profitability, Talent Attraction: IBM Survey
Companies that embed sustainability into their operations are likely to experience significant benefits over their peers in areas including revenue growth, profitability and talent attraction, even without spending more on their sustainability efforts, according to a new global survey of senior executives released by IBM.
For the new study, IBM’s Institute for Business Value (IBV), in collaboration with Oxford Economics, surveyed 5,000 C-suite executives across 22 countries and 22 industries, examining the progress, investments, outcomes and key challenges facing organizations in their sustainability efforts.
The survey results indicated that senior executives globally anticipate deriving significant value from their sustainability initiatives, with 75% agreeing that sustainability drives better business results, and 72% saying that it can be a revenue enabler rather than a cost center. Similarly, 76% reported that sustainability is central to their business strategy, and 69% said that sustainability needs to be a higher priority in their organizations.
Despite the consensus view on the business benefits of sustainability, however, the study found that nearly half (47%) of executives surveyed reported that they struggle to fund sustainability investments, and only 30% said that they have made significant progress in executing their sustainability strategies – although this is up significantly from only 10% in a prior year survey.
One of the key insights from the study highlighting the difficulties companies are facing in their sustainability efforts and investments is a focus on compliance over strategy, with IBM’s research finding that companies’ spending on sustainability reporting exceeds spending on sustainability innovation by 43%.
Along these lines, the survey indicated that one of the greatest factors influencing the impact of sustainability on business performance was the extent to which companies embedded sustainability across their organizations. Companies identified by the study as “embedders,” meaning that sustainability had been integrated across business units in core functions and workflows rather than treating it as a functional silo or compliance requirement, were likely to see significant business value, including a 16% higher rate of revenue growth, and 75% who were more likely to attribute revenue growth to their sustainability improvements. Similarly, embedders were 52% more likely to outperform their peers on profitability, and 56% more likely to outperform on talent attraction.
Interestingly, “embedders” were more likely to demand better financial outcomes from their sustainability initiatives, with 53% of these companies reporting that business benefits are essential to justifying sustainability investments, and only 17% saying that meeting sustainability objectives alone justified investment. Similarly, these organizations were not found to be spending more on sustainability than their peers, and did not pursue larger sustainability programs, but rather benefited from the incorporation of sustainability into their core operations, according to the study.
The study also examined some of the key challenges facing businesses to embedding sustainability, with “data usability” emerging as one of the top barriers. While a large majority (82%) of respondents agreed that high-quality data and transparency are necessary to achieve sustainability outcomes, only around 40% reported that their organizations can automatically source sustainability data from core systems such as ERP, enterprise asset management, CRM, Energy Management Systems, or Facilities Management systems. According to the report, however, generative AI may be a ”game changer” for sustainability, with 64% of executives saying that generative AI will be important for their sustainability efforts, and 73% planning to increase investment in generative AI for sustainability.
Other key challenges included skill-building, with nearly 40% of executives reporting a lack of requisite skills as the top barrier to sustainability progress, and the limited integration of sustainability into core business functions, although respondents reported that they expect significant increases in the level of sustainability integration in several areas over the next few year, with the greatest improvements anticipated in areas including finance, energy management and enterprise asset management.
Oday Abbosh, Global Managing Partner, Sustainability Services, IBM Consulting, said:
“An organization’s approach to sustainability may be holding it back. There is no quick fix. Sustainability requires intentionality and a shared corporate vision. Sustainability needs to be part of the day-to-day operations, not viewed only as a compliance task or reporting exercise. By embedding sustainability across their business, organizations are more likely to drive internal innovation, attract and retain skilled talent, and be better positioned to deliver both positive environmental impact and financial outcomes.”
Click here to access the study.