IBM Study: Sustainability Remains a Business Imperative, But Current Approaches are Falling Short

Rhea-AI Summary

A global study by IBM's Institute for Business Value reveals that while most organizations recognize sustainability as crucial, many C-suite leaders struggle to fund sustainability investments. Embedding sustainability drives financial benefits, but only 31% incorporate sustainability data into operations extensively.

Positive

• Organizations recognizing sustainability's importance struggle to fund investments
• Embedding sustainability leads to better financial outcomes
• Only 31% of executives integrate sustainability data into operational improvements extensively

Negative

• 47% of executives face challenges in funding sustainability investments
• Organizations prioritize reporting over innovation, spending 43% more on reporting
• Many organizations lack deep integration of sustainability into operations

• Three-quarters (76%) of surveyed executives agree that sustainability is central to their business, but nearly half (47%) say they struggle to fund sustainability investments
• Organizations that embed sustainability throughout the business are more likely to see financial benefits, yet only 31% of respondents report they incorporate sustainability data and insights into operational improvements to a great extent

ARMONK, N.Y., Feb. 28, 2024 /PRNewswire/ -- A new global study by the IBM (NYSE: IBM) Institute for Business Value found that while a majority of organizations recognize sustainability as important to their business strategy, many C-suite leaders are struggling to fund their sustainability investments. Data collected from 5,000 global C-suite executives highlighted that organizations that embed sustainability within their operations see better sustainability and financial outcomes, while spending less money than their peers.

The study*, "Beyond checking the box – how to create business value with embedded sustainability," revealed that almost one-third (30%) of executives surveyed say they have made significant progress in executing their sustainability strategy – up from 10% a year ago – but turning ambitions into impact remains a challenge. Almost half (47%) of executives surveyed struggle to fund sustainability investments; six in 10 say they have to make trade-offs between financial and sustainability outcomes.

Organizations that embed sustainability more deeply into their operations show a marked difference in outcomes from enterprises with a singular focus on areas, such as regulatory reporting or sustainability as a corporate project. Organizations that embed sustainability are 75% more likely to attribute greater improvement in revenue from their sustainability efforts, and are 52% more likely to outperform their peers on profitability.

The findings indicate that many organizations are focused on managing complex, varied reporting requirements rather than real business value and results. The study found that spending on sustainability reporting exceeds spending on sustainability innovation by 43%. Only 31% of executives surveyed report they are incorporating sustainability data and insights into operational improvements to a great extent, while 14% say they do so with innovation initiatives.

"An organization's approach to sustainability may be holding it back. There is no quick fix. Sustainability requires intentionality and a shared corporate vision," said Oday Abbosh, Global Managing Partner, Sustainability Services, IBM Consulting. "Sustainability needs to be part of the day-to-day operations, not viewed only as a compliance task or reporting exercise. By embedding sustainability across their business, organizations are more likely to drive internal innovation, attract and retain skilled talent, and be better positioned to deliver both positive environmental impact and financial outcomes."

Other key study findings include:

Organizations continue to pursue sustainability, but funding, skilling and operationalizing actions remain a challenge

• Seventy-five percent (75%) of executives surveyed agree that sustainability drives better business results, and 76% agree that sustainability is central to their business strategy.
• At the same time, 69% of executives surveyed say that sustainability needs to be a higher priority in their organization.
• While 82% of executive respondents agree that high-quality data and transparency are necessary to achieve sustainability outcomes, only about 4 in 10 organizations can automatically source sustainability data from any of the following core systems: ERP (finance, HR, supply chain), Enterprise Asset Management, CRM, Energy Management Systems, Facilities Management systems.
• Thirty-nine percent (39%) of executives surveyed also cite a lack of requisite skills as the top barrier to sustainability progress.

Despite most organizations not incorporating sustainability into innovation initiatives, leaders expect generative AI to help supercharge sustainability efforts

• Sixty-four percent (64%) of executives surveyed agree that generative AI will be important for their sustainability efforts.
• Seventy-three percent (73%) say they plan to increase their investment in generative AI for sustainability.

Organizations that embed sustainability more deeply into their operations see benefits that can convert sustainability efforts into business value

Further analysis of the survey data found that:

• Organizations that embed sustainability spend slightly less on dedicated sustainability efforts as a share of their revenue compared to organizations that don't embed.
• Fifty-three percent (53%) of these organizations say that business benefits are essential for justifying sustainability investments; only 17% say meeting sustainability objectives is in itself sufficient to justify investment.
• These organizations are also 191% more likely to have aligned their data and sustainability strategies to a great extent, and 80% more likely to be using AI for sustainability to a great extent.

Beyond checking the box - how to create business value with embedded sustainability underscores the urgent need for organizations to integrate sustainability objectives within business strategy and apply technologies like AI to realize greater progress and profitability. The study also serves as a resource for business leaders, outlining actionable strategies to help enterprises with challenges around data, business integration and decision-making. 

To view the full study, visit: https://www.ibm.com/thought-leadership/institute-business-value/en-us/report/sustainability-business-value

*Study Methodology
The study draws on a survey of 5,000 C-suite executives across 22 industries and 22 countries conducted by the IBM Institute for Business Value in collaboration with Oxford Economics. In addition to descriptive analysis, the data from the respondents was analyzed to allow for a segmentation of the sample according to how embedded sustainability is in the enterprise. Based on this segmentation, analysis was conducted on differences in sustainability and business outcomes, operational practices, and approaches to enabling progress on sustainability.

The IBM Institute for Business Value, IBM's thought leadership think tank, combines global research and performance data with expertise from industry thinkers and leading academics to deliver insights that make business leaders smarter. For more world-class thought leadership, visit: www.ibm.com/ibv.

About IBM 
IBM is a leading provider of global hybrid cloud and AI, and consulting expertise. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Thousands of government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM's hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM's breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and consulting deliver open and flexible options to our clients. All of this is backed by IBM's long-standing commitment to trust, transparency, responsibility, inclusivity and service. Visit www.ibm.com for more information.

Media Contact:
Marisa Conway
IBM Communications
conwaym@us.ibm.com

View original content to download multimedia:https://www.prnewswire.com/news-releases/ibm-study-sustainability-remains-a-business-imperative-but-current-approaches-are-falling-short-302073467.html

SOURCE IBM

FAQ

How many executives struggle to fund sustainability investments?

47% of executives face challenges in funding sustainability investments.

What percentage of executives integrate sustainability data into operational improvements extensively?

Only 31% of executives integrate sustainability data into operational improvements extensively.

What is the key benefit of embedding sustainability into operations?

Embedding sustainability leads to better financial outcomes.

What is the main challenge highlighted in the study regarding sustainability investments?

Many organizations recognize sustainability's importance but struggle to fund investments.

What is the focus of organizations according to the study?

Organizations prioritize reporting over innovation, spending 43% more on reporting.

How many executives agree that sustainability drives better business results?

Seventy-five percent (75%) of executives agree that sustainability drives better business results.

What is the percentage of executives who believe sustainability is central to their business strategy?

Seventy-six percent (76%) of executives agree that sustainability is central to their business strategy.