August 26, 2022 | Written by: Lee-Han Tjioe
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Increasingly, we are witnessing climate change play a growing role in staying abreast in a competitive business market. Just late last year, the Hong Kong government announced the Hong Kong Climate Action Plan 2050, setting out the vision for achieving carbon neutrality before 2050, with an interim target to reduce carbon emissions levels by 50% before 2035 compared to 2005. With rising societal concerns about the impact of economic activity on the environment, many businesses are stepping up as leaders of sustainability and catalysts for change.
Matter fact, the latest IBM Institute for Business Value (IBV) study of 3,000 global CEOs in 43 countries found that nearly half of the respondents ranked sustainability as a top priority for their organizations, with over 80% of them believing that their company’s sustainability investments will produce improved business results in the next five years. Despite the growing focus, more than half of the CEOs surveyed also cite sustainability as one of their greatest challenges in the next two to three years, due to lack of data insights, unclear return on investment, and technology barriers as hurdles. And these challenges are intertwined. For example, the ability to extract new insights from data can help organizations better measure sustainability returns. Furthermore, digital solutions can help break down data silos, enabling new insights and operational improvements that align sustainability objectives with business goals. As CEOs juggle these challenges, they face additional pressure from board members, followed by investors, ecosystem partners, regulators, and governments to ramp up their sustainability efforts.
Here are a few tips to address and realize the full potential of sustainability in your businesses.
Proactively create a narrative for sustainability
To put it simply, sustainability is crucial for enterprises to generate long-term value by focusing on economic, social, and environmental factors. Hence, keeping an eye on the long game is a common theme among CEOs when discussing sustainability pursuits.
However, there is no one-size-fits-all approach to sustainability. As such, it is important for CEOs to be proactive in the pursuit of their organization’s own sustainability agenda in shaping their narrative to champion a compelling sustainability opportunity for their organization. To do so, organizations need to have clearly defined sustainability strategies and committed leaders, which will also make them better able to navigate changing regulations, stakeholder attitudes and expectations.
CEOs also need to anticipate challenges and stay focused on outcomes by defining and tracking measures and metrics that emphasize transparency, long-term objectives, and new sources of value. Successful companies think big, start small, and scale fast to show the value of sustainability and build buy-in from key stakeholders.
Embrace digital capabilities to shape sustainability agenda
We increasingly see digitalization play a very positive role in sustainability, whether in emission reduction, digital currency, mobile payment, or even in the contactless economy era brought on by the COVID-19 pandemic. When it comes to optimizing opportunities and delivering business value, a subset of CEOs has discovered an additional, yet critical, step. These CEOs report deliberately integrating their sustainability with digital transformation efforts. With a clearly defined sustainability strategy and the right capabilities in place, this alignment unlocks sizeable performance benefits for organizations— up to 41% higher revenue growth.
Hence, it’s important to build and maintain your technology foundation, which includes investing in open and interoperable technologies. This will enable you to employ data software and innovation at unprecedented scale and speed across your enterprise, creating the technology, data foundation and governance for orchestration, cooperation, co-creation, agility, and informed decision making.
Meanwhile, CEOs can look towards embracing hybrid cloud platforms and other exponential technologies to improve performance. Blockchain provides a trusted and secure environment that leads to greater data exchange efficiency, which reduces costs and increases the chance for more positive impact.
Partnering with different stakeholders to foster innovation
Ecosystem partnerships are another area where we see significant differentiation among sustainability CEO archetypes. Solving the world’s most vexing social and environmental problems demands strategic collaboration and innovative approaches within and across industries. CEOs that can explore collaboration by extending their capabilities and sharing their insights help foster open innovation. By joining forces, even with competitors, organizations can channel collective efforts toward innovative industry-specific sustainability solutions to their mutual benefit – and society’s. For example, IBM is a Supporting Member of The Alliance to End Plastic Waste and collaborates with the Alliance to design a new data platform hosted on IBM Cloud to help track plastic waste and recovery globally.
CEOs know achieving sustainability goals is not easy. Yet, some are making real progress – by pursuing their sustainability goals, they are positioning themselves for stronger business performance and growth. These CEOs approach the sustainability challenge with a different mindset, seeing opportunity where others see cost. From the strategies they embrace, the stakeholders they engage, to the digital capabilities they leverage, the leading CEOs approach sustainability as an opportunity that can drive growth and positively impact their business. Regardless of the nature of the business, the ability to innovate and deliver technological improvements the world needs are the key to addressing sustainability. This can create real, lasting long-term value with stakeholders, ultimately driving a company’s success.