European companies increased sustainability investment by 16%

Though concrete climate action is still hard to see, more companies are investing significantly in sustainability, particularly European countries.

European companies earmarked an average of 27% of their total investment budget into improving sustainability, according to a report from global consulting firm Horváth. Despite this increase in sustainability spending in Europe, U.S. and Canadian companies had significantly higher investments in this area than their European counterparts.

There may be a major gap between words and actions in this area, however. Despite many pledges, only 11% of companies have actually successfully cut back CO2 emissions, according to the report. In addition to that, only 3% of companies surveyed actually had a dedicated sustainability department.

Working towards improving energy efficiency was at the top of most companies’ concerns. The report found that companies were attempting to find a balance between economic and ecological concerns, concerns that often seem oppositional to business leaders, though a finding harmony is possible.

“Investments in sustainability do not pay off immediately, but customers' willingness to pay for an increase in sustainability is often underestimated – fluctuations in energy prices in particular have shown that increased costs can be passed on to a significant extent,” said Matthias Deeg, Partner and Green Transformation expert at Horváth.

Ownership of sustainability strategies was a mixed bag. Creating and managing a sustainability strategy was the sole responsibility of the CEO in 54% of companies surveyed. In other cases, it was the responsibility of other top company leadership, with different regions tending towards differences in responsibility.

The most relevant sustainability topics, according to the survey, are reducing resource consumption and emissions. While in Europe circularity and recycling were high on the list of priorities, in the U.S. ethical standards were seen as more important, perhaps pointing towards differences in political imperatives between different regions.

“The competition for sustainable procurement sources, technologies and partners has long since begun. Those who act hesitantly now will lose out later,” said Deeg.

“We expect a clear signal from the EU following the U.S. Inflation Reduction Act. This is where the Net Zero Industry Act is expected to provide the greatest leverage for the Green Deal in Germany and the EU.”