Cost is Top Challenge to Achieving Enterprise Sustainability, ISG Study Finds
A new survey by Information Services Group (ISG) reveals that cost is the primary challenge to achieving enterprise sustainability goals. Over 200 global sustainability leaders participated in the ISG Market Lens™ Digital Sustainability Study. The study highlights that 45% of respondents cite cost as their top challenge, followed by integrating sustainability into business metrics (34%) and prioritizing sustainability investments (31%). Large enterprises spend about 0.2% of their revenues on sustainability initiatives, with half allocated to environmental programs and the rest evenly split between social and governance programs. Digital sustainability accounts for 35% of total sustainability spending, with a major focus on data and reporting solutions. Enterprises are increasingly relying on service providers to fill ESG resource gaps and meet compliance requirements. The study also found that 85% of enterprises have engaged managed services to support sustainability programs, expecting these partnerships to grow in 2024.
- Large enterprises are spending an average of 0.2% of revenues on sustainability initiatives.
- Digital sustainability constitutes 35% of total sustainability spending.
- 60% of enterprises expect to engage a service provider for ESG data and reporting.
- 85% of enterprises have engaged managed services providers to support sustainability programs.
- 39% are using providers specifically for ESG programs.
- There is a wide expectation for ESG-related partnerships to grow in 2024.
- Cost is the biggest barrier to achieving sustainability goals, cited by 45% of respondents.
- More money is being spent on reporting and compliance than on digital programs that drive actual business benefits.
- Enterprises are spending only about 0.2% of revenues on sustainability, which may be insufficient.
- 60% of respondents face challenges with the accuracy of data, particularly for scope-three emissions.
- Three-quarters of respondents lack the skills and resources to meet their ESG needs over the next two years.
- Compliance with climate-related financial disclosures is perceived as the greatest reporting risk.
Survey of global sustainability leaders finds enterprises plan to engage providers to fill ESG resource gaps
The ISG Market Lens™ Digital Sustainability Study asked more than 200 leaders worldwide to rank their organization’s top sustainability challenges. Cost is the top challenge, cited by 45 percent of respondents, followed by integrating sustainability into business metrics (34 percent), and prioritizing sustainability investments (31 percent).
Large enterprises are spending, on average, about 0.2 percent of revenues on sustainability initiatives, the study found. Half of that spending is on environmental initiatives and the remaining half is split almost equally between social and governance programs.
Digital sustainability—the use of information technology and associated services to improve the environmental and/or social sustainability of an organization—accounts for 35 percent of general enterprise sustainability spending, the study found.
Within the digital sustainability budget, 60 percent of respondents say spending on data and reporting solutions will account for the greatest proportion of their spending in 2024, followed by digital sustainability strategy services (51 percent) and industrial and operational optimization solutions (46 percent). The latter includes a broad array of digital, data-led solutions, ranging from software to sensors, that enterprises use to support informed decision-making and to prioritize sustainability investments.
“Companies plan to spend more on reporting and compliance this year than on any other area of digital sustainability,” said Michael Dornan, principal analyst and co-author of the study. “As with so many business domains, sustainability progress is limited by the ability to collect and analyze data. Enterprises need technology and business services providers to help report on their progress and benchmark their sustainability performance against others.”
The biggest reporting challenge, respondents say, is the accuracy of data, particularly for scope-three emissions (those produced by others in a company’s value chain). Compliance with climate-related financial disclosures is the greatest perceived enterprise reporting risk, the study shows.
Eighty-five percent of enterprises have engaged managed services providers to support overall sustainability programs, the study found, and 39 percent are using providers to run ESG-specific programs. The remainder are building sustainability goals into new and existing programs with providers or holding them accountable for meeting sustainability goals.
Around 60 percent of enterprises expect to engage a service provider for ESG data and reporting, and 45 percent expect to engage a provider for lower-priority initiatives such as end-user device optimization.
“There is a wide expectation that ESG-related partnerships with service providers will grow in 2024,” said Alex Bakker, ISG Distinguished Analyst and co-author of the study. “Three-quarters of our respondents say they have insufficient skills and resources to meet their ESG needs over the next two years and will rely on service providers to not only plug that gap but help them evolve ESG programs from a complex reporting exercise driven by regulation to a program that drives real value for the business."
The ISG Market Lens study was conducted globally in February 2024 and covered 232 executives with decision-making responsibility for sustainability strategy and operations covering environmental, social and governance programs.
ISG Market Lens buyer behavior studies combine findings from surveys of senior-level global executives with expert ISG research and analysis on market trends and strategic business initiatives. Recent studies explored AI, application development and maintenance , cost optimization, cybersecurity, global capability centers, network modernization, banking and the future workplace.
Contact ISG for more information on ISG Market Lens research.
About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including AI and automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in
View source version on businesswire.com: https://www.businesswire.com/news/home/20240514434945/en/
Press Contacts:
Will Thoretz, ISG
+1 203 517 3119
will.thoretz@isg-one.com
Julianna Sheridan, Matter Communications for ISG
+1 978 518 4520
isg@matternow.com
Source: Information Services Group, Inc.
FAQ
What is the biggest challenge to achieving enterprise sustainability according to ISG?
How much are large enterprises spending on sustainability initiatives?
What proportion of sustainability spending goes towards digital sustainability?
What are enterprises primarily spending on within their digital sustainability budgets?
How many enterprises are engaging service providers for ESG data and reporting?
What is the biggest reporting challenge for enterprises?
How many enterprises have engaged managed services providers for sustainability programs?
What percentage of enterprises lack the skills and resources to meet their ESG needs?
