Journey beyond Net Zero: Here’s how to progress forward
- Posted on April 12, 2021
- Estimated reading time 5 minutes
The C-suite gets it: Our clients tell us all the time that they have ambitious sustainability goals, that, for example, they want to reach net zero carbon emissions between 2040 and 2050. That’s reflected in national numbers; for example, the percentage of S&P companies publishing sustainability reports soared from 20% to 90% between 2011 and 2019.
But many clients also tell us they’re stuck, unable to achieve their sustainability goals—and it’s costing them more and more all the time. Here’s a look at why companies need to get this right—and what might be standing in their way.
Virtually every large company understands that sustainability will be a key to its future performance; 99% of CEOs from billion-dollar-and-up companies agree with that, according to Accenture. And it’s not just a matter of using carbon less and recycling more.
Meaningful climate-positive action includes, for example, supply-chain logistics and management that reduce the chances of chemical explosions and petroleum spills and mitigate the environmental impact of events that do occur. The United Nations has adopted 17 sustainable development goals, including aims as diverse as affordable/clean energy, sustainable cities and communities, and life on land and below water. Major corporations are adopting some of them in their own sustainability programs.
They have to.
In part, that’s because their customers and employees are demanding higher standards of sustainability. Customers increasingly want products and services from brands that have a positive impact on their local communities, and that are sourced and produced in eco-friendly ways that also deliver a more personalized customer experience. They want products that help them become more environmentally friendly and ethical, and that promote health and safety. And talent, particularly millennial talent, increasingly want to work for companies that promote these values—making sustainability a competitive differentiator for a company both as an employer and as a seller of products and services.
Companies are also focused on sustainability because new technologies and low-energy enablers make it more practical to address these goals than ever before. Fully 85% of CEOs say that investments in digital technologies will be the most transformative to their industry’s ability to tackle sustainability challenges.
A third imperative: Business increasingly gets done in interconnected ecosystems of companies that collaborate in alliances and consortia. A company doesn’t just damage its own brand with a major sustainability fail, it damages the reputations of its ecosystem partners as well. So, companies will increasingly look at each other’s reputations for sustainability when choosing business partners. Some companies won’t measure up and will lose out.
With all these imperatives driving interest in sustainability, why aren’t more companies making better progress? Why do they feel blocked?
One reason is a lack of clarity around the business benefits of sustainability. Companies may not appreciate the range of benefits that accrue from a successful sustainability program, including the impact on revenues, margins, costs, reputation, market share, talent recruitment and retention, and government and community relations. Even if they do, there’s the challenge of actually measuring those benefits. For example, how much of your sales increase is attributable to personalizing your customer experience and sourcing products locally? And how long will you have to wait to see results?
A 2050 Net Zero goal is great—but you need to see your interim progress decades sooner than that. A more thoughtful approach to data analytics, including accelerators and data-driven dashboards, can help address these concerns, but many companies may not know how best to implement them.
Another reason is that many companies don’t think they have, or can support investments in, the enablers of a successful sustainability program. Significant investments require business cases, and an ambiguous business case for sustainability won’t be greenlighted.
Fortunately, many companies have already made many of the investments they need to succeed with sustainability—but they’ve made them for other reasons. Azure, IoT, machine learning, RPA: these technologies may have been acquired to support digital transformation, including greater operational efficiencies, better customer experiences and new business models. But these technologies also have applications to sustainability. Think of sustainability as an integral component of your broader digital transformation. If you’ve already made the investment, it’s time to increase your ROI.
For some companies, a lack of agile, modular operations can hold back sustainability efforts, especially those that need to be implemented to take advantage of new opportunities and innovations in connection with ecosystem plays. For example, you might use blockchain technology to mobilize your value chain and ecosystem partnerships—if you’re agile enough to successfully integrate it into your infrastructure. Developing agile, modular operations takes more than merely adopting Azure, DevOps, and related technologies. It requires knowing how best to use them in your environment, given where you are in your journey and what you’ve set as your destination.
As first steps, decide which sustainability goals are most important to you. Consider how your existing technology investments and partnerships can accelerate those goals. Develop the business cases to achieve them. Avanade has extensive experience meeting organizations where they’re at and partnering with them to accelerate their journey to go beyond net zero. I invite you the video below on how Avanade’s values inform our operating principles and contact us if we can help your organization become more resilient and responsible.