New research from Bain & Company has found that sustainability has dropped off CEOs’ priority lists, overtaken by AI, growth, inflation, and geopolitical uncertainty.
The recently published research also found that companies are struggling to meet their existing climate commitments.
Indeed, of the companies disclosing their progress via CDP, 30 per cent are well behind on their Scope 1 and 2 emissions reduction goals, and almost half are behind on Scope 3.
Moreover, in March 2024, 29 per cent of companies in the Science Based Targets initiative’s Business Ambition for 1.5C campaign were removed for noncompliance.
According to the report, many companies are reassessing, adjusting, and, in some cases, retracting their climate commitments.
But, alongside the devastating social and environmental impact of climate change, the report says sidelining the crisis will cost companies in the long run.
Bain estimates that a temperature increase of 2 degrees Celsius could cut $6 trillion from the value of the S&P 5001.
Likewise, while CEOs may have relegated the importance of the climate crisis, consumers have not.
Having surveyed nearly 19,000 consumers in 10 countries, 61 per cent of people said their concerns about climate change have increased over the past two years, often sparked by personal experience of extreme weather. For those in countries that have recently battled its effects, levels of concern were found to be even higher.
With regard to shopping, while personal experience with extreme weather was found to be the top reason consumers buy sustainable products, 35 per cent say they made the choice due to media articles and documentaries, 33 per cent attribute it to availability, and 28 per cent credit awareness campaigns by brands and retailers.
The research underlined the need for consumer companies to engage with consumers less as a monolith and more as a complex group of specific customer segments, prioritise packaging that is both recycled and recyclable, and forge partnerships across the value chain to create greater accessibility to sustainable products.
Bain’s survey of 500 B2B buyers and sellers also found that sustainability is now one of corporate buyers’ top three purchasing criteria.
Thirty-six per cent say they would leave suppliers that don’t meet sustainability expectations.
Nearly 60 per cent say they’ll be willing to do so three years from now.
Further, nearly 50 per cent of corporate buyers said they would pay a sustainability premium of 5 per cent or more today and expect their willingness to pay to increase in the future.
But while 85 per cent of suppliers say they embed some degree of sustainability in their products and services, only 27 per cent consider themselves very knowledgeable about their customers’ sustainability needs and only 53 per cent say these efforts are meeting all their needs.
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