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Sustainability ramping up despite geopolitics
Regulation, climate tech innovation vital to progress towards achieving goals
The Asset 25 Sep 2024

Despite facing geopolitical challenges, organizations continue to make progress in their sustainability initiatives, while regulation and technology are proving to be a vital part of this progress, with two-thirds of executives agreeing that their organizations will never be able to achieve their sustainability goals without climate technology innovations, according to a recent report.

Collectively, organizations are ramping up their efforts to meet their sustainability targets, and their maturity in adopting sustainable practices has increased steadily since 2022, finds the Capgemini Research Institute’s A World in Balance 2024: Accelerating Sustainability Amidst Geopolitical Challenges report, which tracks advancements in organizations’ environmental and social sustainability over the last three years.

Notably, 84% of executives say their organizations are on target to meet their carbon emissions goals; less than a tenth say they are behind.

As organizations look to minimize their impact on the environment, progress is particularly visible in terms of circularity, sustainable product design, measurement, and water management.

For instance, nearly three-quarters of executives say that recycling products is a core aspect of their manufacturing strategy, up from 53% in 2022, while over two-thirds say they are redesigning products to remove fossil fuel feedstock sources, up from less than half in 2022. In addition, three-quarters of executives have implemented a water stewardship programme, up from 55% in 2022. 

In late 2023, executives, the report points out, were planning to increase investments in sustainability this year. However, companies have not followed through: average annual investment in sustainability initiatives and practices now stands at 0.82% of total revenue, down from 0.92% in 2023.

And consumers want to see corporations going even further and demand transparency. Three-quarters of consumers, the report notes, expect corporations to play a larger role in reducing greenhouse gas emissions in 2024.

Furthermore, even as organizations ramp up sustainability initiatives, consumers are more sceptical than ever about corporate sustainability, as more than half believe that organizations are greenwashing their sustainability initiatives, up from 33% in 2023.

Regulations, geopolitics

Executives point to climate-related regulations as a key driver of sustainability projects. A full three-quarters of executives believe that sustainability regulation is necessary to achieve global climate goals, and nearly two-thirds even agree that without regulation, their organizations would not have launched many environmental sustainability initiatives.

Globally, 73% of executives agree that the EU’s Corporate Sustainability Reporting Directive (CSRD) is honing sustainability measurement and tracking capabilities. However, organizations continue to fall short in terms of reporting on sustainability initiatives, especially on Scope 3 emissions.

Among organizations required to report for CSRD in 2025, just over a third say that they are prepared to report Scope 3 downstream emissions next year, while 86% are prepared for Scope 1. 

Meanwhile, tensions, such as US-China relations, the wars in Ukraine and the Middle East and the European energy crisis, the report shares, are leading to disruptions in supply chains and business operations, and uncertainty around government funding.

Nearly two-thirds of executives point to geopolitics as an increasing consideration in sustainability investments, and 69% are concerned about the impact of the uncertain US political scene. This is felt across countries, but Swedish executives are most concerned (75%), compared with 71% of US executives and 59% of those in India.

“Sustainability projects [are] continuing to build momentum in 2024 despite current headwinds,” says Cyril Garcia, Capgemini’s head of global sustainability services and corporate responsibility. “Business leaders have the power and the responsibility to steer us towards a more sustainable economy.

“Water stewardship, biodiversity preservation and circular practices are now established as key business imperatives. Executives are being very pragmatic, and CO2 [carbon dixoide] reduction must now be translated into cost savings. We continue to see sustainability efforts bolstered by new climate tech innovations and regulations.”