The diversity of sustainability's business case

13 March 2024 Consultancy.eu 4 min. read
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There is no shortage of business cases for sustainability, according to Nexio Projects. We sat down with two of the firm’s experts to discuss how sustainability is providing both the public and private sector with opportunities to future-proofing businesses while cutting back on emissions.

Many studies in recent years have shown the benefits of incorporating more diversity, equity, and inclusion into the ways that organizations function. More organizations are taking up ESG initiatives as climate change worsens and pressure from stakeholders and the public mounts.

According to research by Capgemini, when asked if they believe that the “business case for sustainability is clear,” the number of executives that replied in the positive was seen to triple since the year prior. 

Sustainability awareness grows across executives level

Source: Nexio Projects

Inversely, the percentage of those that found the cost of sustainability initiatives outweighs the benefits dropped from 54% to only 24%. “Clearly, the tide is turning,” said Nathan Cable, practice lead in sustainability strategy at Nexio Projects.

The rules are changing

In terms of changes in business attitudes towards sustainability initiatives, one of the first things to consider is that there is increasing regulatory pressure on organizations, and that pressure is certain to continue growing.

Going forward, companies will increasingly need to comply with new ESG and emissions regulations, with the EU leading the way with these news rules. For example, a new directive taking effect in 2025 will require top companies to publish data related to their sustainability efforts (known as the CSRD). Though there is more resistance in the US, similar legislation is also expected there.

“These regulations, and others which are expected to follow as part of a global regulatory push over the coming decade and beyond, will raise the bar for compliance amongst companies,” said Cable. “For example, organizations will be made to report on data points related to their sustainability strategy which will be part of their public disclosures.” 

Stakeholders are concerned

Not only are consumers shifting their mindsets towards being more environmentally conscious, other stakeholders are too. Investors are also increasingly concerned about companies’ handling of sustainability related risks and opportunities.

Among consumers, the younger generation (Gen Z) is particularly concerned with ESG. Gen Z’s preference for brands that demonstrate some sustainability went up by 23% in recent years, according to one study. Their willingness to pay more for sustainable products also increased significantly. Social issues (the ‘S’ in ESG, of course) are also a top concern, with younger people more aware of what they see as big injustices in society.

“The ever-increasing presence of sustainability within stakeholder decision-making should give companies significant motivation to capture the opportunities that will emerge from this paradigm shift,” said Cable.

Nathan Cable and Jatin Budhraja - Nexio Projects

The financial benefits are evident
Overall, the business case for more sustainability also just makes simple financial sense. Companies that have a more mature sustainability strategy will increasingly have a competitive edge.

Many large companies are cleaning up their supply chains even down to scope 3 emissions, which are those that further down the line beyond what a company directly owns or controls. Therefore, these large companies are incentivizing their procurement process and showing preference for providers that operate more sustainably. 

So, if smaller companies work harder to cut emissions, their products and services will be worth more in a more sustainability-focused market and they can look forward to more lucrative contracts. And be more of a talent magnet.

“Navigating the evolving ESG landscape requires businesses to be nimble and adaptable,” said Jatin Budhraja, sustainability advisory lead for Nexio Projects.

“It's not just about complying with new regulations; it’s about integrating ESG principles into the very fabric of your operations. By understanding the moving pieces – from changing consumer expectations to shifting investor priorities - companies can stay ahead of the curve and build a sustainable future for themselves and their stakeholders.