The past 12 months have seen companies row back on their sustainability commitments, in response to economic pressures, but could doing so harm their bottom line in the long run?
We have witnessed an undeniable backlash against sustainability this year.
Despite the news cycle being awash with coverage of the dire consequences of climate change, environmental advocates have struggled to make the case for a sustainable transition in 2024.
In some parts of the world, politicians have weaponised action on the environment, pedalling the misconception that sustainability is expensive, burdensome, and a threat to affordability and prosperity. Amidst a cost-of-living crisis and rising global energy prices, this has resonated, weakening support for a swift end to fossil fuels.
The EU’s resolve on climate policy is under pressure, too. Last month, the European Commission President Ursula von der Leyen announced that the EU would simplify three core pieces of environmental legislation, reversing changes that were made only in the last Parliament.
In this complex environment, it is not surprising that some businesses have become more hesitant to embrace sustainable alternatives and even revised their environmental, social and governance (ESG) targets, wary of the complexities of sustainability reporting, the perceived cost of implementing green solutions, and the impact on competitiveness.
However, the evidence tells a different story.
A 2014 Harvard University study comparing 90 “High Sustainability” companies with 90 “Low Sustainability” companies over 18 years (1993-2010) found that high-sustainability companies significantly outperformed their counterparts across key economic indicators, including proxies for economic growth and financial leverage.
More recently, EY’s 2023 Sustainable Value Study highlighted that delivering on sustainability initiatives has significant financial benefits, with 52% of those surveyed experiencing financial value exceeding their expectations. Additionally, 63% of respondents witnessed product and brand value improvements that were better than expected.
In the tech sector, Capgemini research shows that organisations scaling sustainable IT use cases have, for instance, achieved an average cost reduction of 12%.
All of this unfolds at a moment when the urgency of action has never been clearer, with scientists warning we’ve now breached the all-important 1.5-degree limit on global warming, with 2024 set to be the hottest year on record.
As we approach another complex year’s end, we must ask: why isn’t the message hitting home?
A new narrative for sustainable growth
To reinstate momentum behind action on climate change, it’s clear a new approach is needed. Yes, policymakers must carefully manage the impact of green initiatives on businesses and communities. Still, the key to rebuilding support might be redefining how we talk about sustainability and its impact and value.
It’s time to shift the focus from the perceived costs and complexities of sustainability to the immense opportunities and tangible advantages it presents, not just for the planet but also for businesses and the economy. Let’s reframe the climate discussion and tell a more persuasive story about the measurable wins we can achieve, like jobs, new partnerships, business growth, resilience, and innovation.
Sustainability and profitability aren’t at odds – they are powerful partners.
A mandate for business
Often at the forefront of change, the business community will be crucial to reinventing this narrative. In the past, organisations have been reactive to climate policy, pushed to respond by regulatory pressure, market demands, or reputational risk. But that is changing.
I see this in my own interactions with customers and partners – many organisations no longer believe that implementing sustainable solutions just means “doing the right thing”. They recognise the value of these initiatives as tools to achieve risk mitigation, commercial advantage, customer retention, productivity and efficiency gains, and improvements to the bottom line.
Analysts are seeing this too: Forrester has forecast that organisations will transition from a reactive approach to sustainability commitments to a proactive one, as operational efficiencies and financial benefits eclipse ESG regulation as the key drivers for change.
As Ursula von der Leyen rightly said in 2019, “It’s a strategy for growth that gives more back than it takes away”. Unlocking its full potential, though, requires businesses to rethink their mindset because true progress is rarely linear.
A circular blueprint
The circular economy – which reduces consumption by keeping resources and assets in use for as long as possible – is a perfect example of this in action.
Take technology, for example – as the digital economy grows, so do the number of devices we use and the volume of natural resources required to manufacture them. By extending the lifespan of tech assets through circular management practices, repair, refurbishment, and re-sale on secondary markets, organisations can directly lower the impact of their tech consumption.
However, while the environmental case easily stacks up, the economic story needs telling, too. At its heart, the circular economy is a financial model based on optimising resources, improving efficiency, and minimising waste – all key components of profitability. When a business implements circularity into its tech operations, it essentially says: “We are committed to deriving the greatest value from all our digital assets while reducing waste.” Now, how could the CFO argue with that?
I’ve seen that lightbulb moment time and time again because when organisations understand that implementing circularity can drive down costs, improve efficiency, and recoup value on tech investment, it’s much easier to make the case change.
All business leaders need then are practical solutions they can implement at speed and trusted partners to make it happen.
Leading from the front in 2025
The next 12 months will undoubtedly bring more global challenges and roadblocks to progress on climate change.
It will be up to savvy tech providers to keep championing the cause and clearly highlighting the full spectrum of business benefits sustainable business models can deliver—operational, financial, reputational, and beyond.
For me, next year is about making sure everyone is onboard – our people, partners, and customers – to understand just how powerful a circular economy for technology can be in helping organisations remain competitive with the latest technology while managing legacy tech in a way that recoups its value and minimises its environmental impact.
We can only foster a shared understanding of its transformative potential by engaging in open and transparent dialogue about the challenges and opportunities sustainability can create. If organisations are armed with the information, evidence, and tools to make the case for sustainable investment, positive change will certainly be on the horizon.
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