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Capgemini Report: Organizations Progress on Sustainability Despite Challenges
According to Capgemini Research Institute’s latest report, "A World in Balance 2024: Accelerating Sustainability Amidst Geopolitical Challenges," organizations continue to make sustainability advancements despite facing global challenges. The report, now in its third edition, tracks the progress of organizations in environmental and social sustainability over the past three years. It highlights improvements in areas such as circularity, sustainable design, measurement, water management, and biodiversity, while noting ongoing challenges in addressing Scope 3 emissions and consumer skepticism.
Role of Technology and Regulation in Sustainability
The report emphasizes the role of regulation and climate technology in supporting sustainability efforts. Two-thirds of executives surveyed agree that their organizations will not achieve sustainability goals without the integration of climate technology. This finding underscores the importance of technology and regulatory frameworks in helping companies move towards more sustainable operations.
Increased Adoption of Sustainable Practices
Organizations have made steady progress in adopting sustainable practices since 2022. The report notes that 84% of executives believe their organizations are on track to meet carbon emissions targets, with less than 10% reporting they are behind. Circularity and sustainable product design have seen notable advancements. Nearly 75% of executives say recycling is now a core aspect of their manufacturing strategy, up from 53% in 2022. Additionally, more than two-thirds of companies are redesigning products to eliminate fossil fuel feedstock, an increase from less than half in the previous year.
Water Stewardship and Sustainability Initiatives
Water management has also seen significant progress. Three-quarters of executives reported implementing water stewardship programs, a sharp increase from 55% in 2022. These programs are designed to improve the sustainable use of water resources across industries.
Investment in Sustainability Declines
Despite the progress in sustainable practices, the report indicates a decline in overall investment in sustainability initiatives. In late 2023, many executives had planned to increase investments in this area. However, the average annual investment in sustainability now stands at 0.82% of total revenue, down from 0.92% in 2023. This decrease in financial commitment highlights a potential gap between planning and execution in sustainability efforts.
“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. Water stewardship, biodiversity preservation, and circular practices are now established as key business imperatives. Executives are being very pragmatic, and CO2 reduction must now be translated into cost savings. 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.”
Consumer Skepticism on Corporate Sustainability Efforts
According to Capgemini’s latest report, consumer skepticism towards corporate sustainability initiatives is increasing. Three-quarters of consumers now expect corporations to take a larger role in reducing greenhouse gas (GHG) emissions in 2024. However, despite organizations scaling up sustainability efforts, more than half of consumers believe that companies are engaging in "greenwashing"—a significant rise from 33% in 2023. This indicates a growing disconnect between corporate actions and consumer perceptions of those efforts.
Impact of Geopolitics and Regulations on Sustainability
The report highlights the significant role of climate-related regulations in driving corporate sustainability projects. Three-quarters of executives view regulatory frameworks as essential for achieving global climate goals. Furthermore, nearly two-thirds of executives acknowledge that many of their environmental sustainability initiatives would not have been launched without regulatory pressure.
Globally, 73% of executives agree that the European Union’s Corporate Sustainability Reporting Directive (CSRD) is improving their sustainability measurement and tracking capabilities. However, many organizations are not yet fully prepared for the reporting requirements, particularly concerning Scope 3 emissions. Among companies that will be required to report under CSRD in 2025, only about one-third are ready to report on Scope 3 downstream emissions, while 86% are prepared to report on Scope 1 emissions.
Geopolitical Factors Affecting Sustainability Investments
Geopolitical tensions are increasingly influencing corporate sustainability decisions. Issues such as US-China relations, the ongoing conflicts in Ukraine and the Middle East, and the European energy crisis are disrupting supply chains and business operations. Nearly two-thirds of executives have cited geopolitics as a growing consideration in their sustainability investments. Additionally, 69% of executives express concerns about the impact of political uncertainty in the US, with Swedish executives expressing the highest level of concern (75%), followed by 71% of US executives and 59% of Indian executives.
Conclusion
The Capgemini report underscores the complex factors affecting corporate sustainability initiatives. While regulatory frameworks are helping to drive progress, consumer skepticism and geopolitical challenges present significant obstacles. Organizations must address these issues to build trust and continue advancing their sustainability goals.