Business sustainability ambitions are hampered by these four major barriers

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According to research, businesses need to address several gaps to meet their sustainability goals.

In a report entitled Dr Gaps in sustainable value creation, sales force presents results from sustainability research conducted in partnership with Globescan and notes the following key findings:

  • 93% of senior leaders across IT, finance and ESG say sustainability is critical to commercial success.
  • 37% of senior leaders believe sustainability is “very integrated” into their business core.
  • 23% of senior management teams allocate significant capital to provide sustainability.

The report identified four key gaps — data quality, cross-functional collaboration, capital allocation and implementation — as constraints to integrating sustainability into core business functions. The co-author of the report is Professor of Oxford University Robert Eccles and NYU Stern Professor Allison Taylorsurveyed more than 200 professionals—including 76 C-suite executives—from across North America, Europe and Asia.

Also: Technology for a Sustainable Future: Challenges and Opportunities Ahead

Here’s more detail on the four key gaps identified in the report — capital, implementation, integration and data — that stand in the way of making sustainability meaningful for corporate strategy and value creation.

Understand the four gaps

    statcard1

    Sustainability is important but integration hinders meaningful progress.

    sales force

  1. Capital Gap: Despite its high importance, capital is limited — More than 90% of survey respondents say sustainability is “very important” (67%) or “somewhat important” (26%) to business success. The research shows that nearly 50% of senior management teams say they are highly focused on sustainable risks, opportunities and impacts, yet only about half are getting the level of capital needed to mitigate risks, seize opportunities or manage their impacts.
  2. Implementing the gap: Sustainability is seen as creating value mainly through reputation, not operations Respondents believe that sustainability provides the most value in terms of marketing and PR, such as enhancing company brands and reputations, strengthening stakeholder and community relationships, and facilitating partnerships and collaborations. These areas focus on perception, are difficult to associate with financial value and are divorced from operations.
  3. Integration Gap: Low collaboration limits progress Without adequate capital or alignment between parties, sustainable integration is also likely to suffer. Despite the stated importance of sustainability to commercial success, only 37% of respondents believe that sustainability is “very integrated” into the core of their business. Less integration of sustainability into core functions such as finance and technology means people on sustainability teams have less opportunity to understand the commercial scope of the business. While these functions are seen as critical to making significant progress on sustainability within the business (86% for finance and 75% for technology), senior leaders perceive limited collaboration between these areas and sustainability functions. However, despite the low baseline, most respondents reported an increase in collaboration over the past two years (70% with finance and 63% with technology).
  4. Data Gap: Poor data quality prevents building standards on sustainable performance — Technology can help track and manage sustainability risks, opportunities and impacts, as long as there is high-quality data to analyze. About 80% of respondents said that high-quality data on sustainability performance is “very important” to realizing the full value of sustainability, and 15% said it is “somewhat important”. Yet only 8% said they currently have “very high-quality” data, with another 19% saying they have “high-quality” data. Lack of data makes it difficult to test assumptions about how businesses are creating sustainable value. Given this challenge, nearly two-thirds of respondents said they have increased funding in data collection and management solutions for sustainability in the past two years (63%) and plan to do so in the next two (65%).

A deeper look at the data gap reveals that 95% of leaders consider access to high-quality data on sustainability performance critical to unlocking the full value of sustainability. However, accessing high-quality data is a challenge, and fewer than three in ten (27%) executives say they currently have high-quality sustainability data.

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The report notes that nearly two-thirds of leaders report that they have increased funding in the past two years to help fill the data gap for data collection and management solutions, and they expect to increase this further over the next two years.

The report offers the following recommendations for businesses looking to close four key gaps:

  • capital gap: It is not enough for senior management to list sustainability as a focus area. Allocate adequate capital to sustainability initiatives and hold teams accountable for the actions they take.
  • Implementation gaps: Make a strong case for sustainability impact in key operational and commercial focus areas of innovation, cost and sales, not just relationships; Align with measurable areas that indicate capital allocation.
  • The integration gap: Provide a strong case and build buy-in by better integrating key functions, particularly finance and technology, that have the skills and tools to help measure and manage progress in line with senior management team expectations.
  • Data gapUse better data to build business cases and meet growing compliance needs and ensure that data is used as a tool to guide, challenge and validate strategic decisions, not just reporting and compliance.

To know more about the Sustainable Value Creation report, you can visit here.





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