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Corporates responding to Capgemini survey reveal 'marked improvements' in circularity, sustainable design, measurement, water stewardship, biodiversity, and green skills
Regulation and technology are continuing to play a crucial role in shaping corporate sustainability initiatives, despite geopolitical challenges leading to a slowdown in green investment.
That is the headline finding from a survey of more than 2,000 sustainability executives employed at over 700 organisations, each boasting more than $1bn in annual revenue, which was undertaken by the Capgemini Research Institute.
The report - titled A world in balance 2024:Accelerating sustainability amidst geopolitical challenges - revealed many corporates are making encouraging progress towards their environmental goals.
More than four-in-five execs polled by Capgemini said their organisation is on target to meet its carbon emissions goals, with fewer than one-in-10 saying they are behind with their decarbonisation efforts.
This comes despite executives claiming their firms have not increased average annual investment in sustainability initiatives and practices, despite setting out plans to do so this year. Green investment currently stands at 0.82 per cent of total revenue on average for the companies analysed, down from 0.92 per cent in 2023, Capgemini said.
The fall is partly a function of increased geopolitical tensions between the US and China, wars in Ukraine and the Middle East, and the European energy crisis, all of which have disrupted supply chains and business operations, and led to higher costs.
Almost two thirds of executives claimed geopolitics were an increasing consideration in sustainability investments, while 69 per cent claimed they are concerned about the impact of the uncertainty surrounding to US election.
However, lower levels of green investment could also be partly down to reduced clean tech costs and the growing maturity of sustainability initiatives, which are leading to economies of scale and 'learning by doing' at many organisations.
The third edition of the study reported marked improvements in circularity, sustainable design, environmental measurement, water stewardship, biodiversity, and sustainability skills.
For example, almost three quarters of respondents said recycling products is now a core aspect of their manufacturing strategy, rising from 53 per cent in 2022, while over two thirds said they were redesigning products to remove fossil fuel feedstock sources, up from less than half in previous surveys. In addition, three-quarters of executives have implemented a water-stewardship program, up from 55 per cent last year.
However, executives also acknowledged on-going challenges in tackling Scope 3 emissions and addressing consumer scepticism around corporate sustainability initiatives.
"This year's report shows sustainability projects continuing to build momentum in 2024 despite current headwinds," said Cyril Garcia, Capgemini's head of global sustainability services and corporate responsibility and group executive board member. "Business leaders have the power and the responsibility to steer us towards a more sustainable economy."
Executives also pointed to climate-related regulation as a key driver of sustainability projects, with three-quarters believing such measures are necessary to achieve global climate goals, and nearly two thirds agreeing that without regulation their organisation would not have launched many environmental sustainability initiatives.
Globally, 73 per cent of execs quizzed agreed the EU's Corporate Sustainability Reporting Directive (CSRD) is refining sustainability measurement and tracking capabilities, for example. However, Capgemini's study also claimed that organisations continue to fall short when it comes to sustainability reporting, particularly on Scope 3 value chain emissions.
For example, just over a third of the surveyed organisations required to report under the CSRD regime in 2025 said they are prepared to report downstream emissions next year, compared to 86 per cent who are prepared to make disclosures on their Scope 1 emissions.
The increasingly demanding regulatory environment comes amid increasing demand for corporate transparency from global consumers, three quarters of whom expect corporates to play a bigger role in reducing emissions in 2024, according to the survey.
Capgemini's report claimed that even as organisations step up their sustainability initiatives, consumers are more sceptical than ever about corporate sustainability, with more than half believing organisations are "greenwashing" - up from 33 per cent in 2023.
"Executives are being very pragmatic, and CO2 reduction must now be translated into cost savings," said Garcia. "We continue to see sustainability efforts bolstered by new climate tech innovations and regulations. The best way to build trust and credibility with consumers is by demonstrating tangible outcomes and planning for a future with sustainability at its heart."
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