Study reveals tech & regulation drive sustainability goals

Organisations are making steady progress in their sustainability efforts, despite facing challenges from geopolitical tensions, according to a new report from the Capgemini Research Institute.

The report, *A World in Balance 2024: Accelerating Sustainability Amidst Geopolitical Challenges*, highlights significant advancements in areas such as circularity, sustainable design, and water stewardship. These achievements come even as businesses encounter obstacles such as political instability and disruptions to supply chains, which have slowed sustainability investments for many firms.

A growing emphasis on climate-related regulations has played a major role in driving these sustainability efforts. The report notes that 69% of executives believe that anticipating stricter regulations is now a key driver of their sustainability initiatives, up from 57% in 2023. However, nearly two-thirds of executives acknowledged that geopolitical tensions have caused a slowdown in their sustainability investments.

Capgemini's Head of Global Sustainability Services and Corporate Responsibility, Cyril Garcia, emphasised the need for pragmatism in advancing sustainability goals. "This year's report shows sustainability projects continuing to build momentum in 2024 despite current headwinds," Garcia said. "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."

The report also revealed a significant rise in public distrust of corporate sustainability claims. In Australia, 70% of executives said that they believe the public views their organisation's sustainability efforts as insincere, up from just 11% in 2023. Globally, more than half of consumers think businesses are engaged in "greenwashing," up from 33% the previous year. This has led to increased calls for transparency, with three-quarters of consumers demanding that companies play a larger role in reducing greenhouse gas emissions in 2024.

Despite these concerns, many businesses continue to invest in sustainability initiatives. The report shows that 84% of executives believe their organisation is on target to meet its carbon emissions goals. Progress has been particularly evident in areas such as product recycling and water management. Nearly three-quarters of executives stated that recycling is now a core part of their manufacturing strategy, up from 53% in 2022. Meanwhile, three-quarters of executives have introduced water-stewardship programmes, a significant increase from 55% in 2022.

However, the report also found that the average annual investment in sustainability initiatives has declined slightly, falling to 0.82% of total revenue, compared to 0.92% in 2023. This drop comes despite plans by many businesses in late 2023 to increase their sustainability investments in 2024.

Executives pointed to regulations as essential for meeting global climate goals. The report found that 73% of executives agree that the European Union's Corporate Sustainability Reporting Directive (CSRD) is enhancing organisations' ability to measure and track sustainability progress. However, challenges remain in reporting on certain aspects of sustainability, particularly Scope 3 emissions. Among businesses required to comply with the CSRD by 2025, only 36% are prepared to report on Scope 3 emissions, compared to 86% for Scope 1 emissions.

Geopolitical issues, including tensions between the US and China, the conflicts in Ukraine and the Middle East, and the European energy crisis, are also affecting corporate sustainability strategies. This year, 69% of executives expressed concerns about the uncertain US political environment, while nearly two-thirds said that geopolitical challenges were increasingly influencing their sustainability investments. 

The Capgemini report draws on data from a survey of over 2,000 executives and 3,500 consumers globally, providing insight into how businesses are navigating the complex landscape of sustainability amidst ongoing geopolitical uncertainty.