Businesses tone down sustainability ambitions as CFOs look for opportunities to cut
Sustainability initiatives are the most likely enterprise programmes to be cut or paused by CFOs to hit short-term earnings targets according to a new EY report.
The consultancy also found that companies are pushing back the date by which they hope to achieve their climate ambitions from a median of 2036, to 2050.
Its 2023 EY Sustainable Value Study suggests a growing crisis of execution where the rubber hits the road on sustainability action. As EY puts it pithily in that report: “Most organizations face an important challenge: they have made climate commitments (80%) and now must undertake the hard work to meet them.”
The demands placed on those leading this hard work, means the required skill set of the Chief Sustainability Officer role is beginning to change, EY suggested.
“You need to have someone who has a very thorough business understanding,” as Lutz Hegemann, President, Global Health & Sustainability at Novartis puts it in the report, saying: “You don’t want a sustainability strategy and a business strategy – you want a sustainable business strategy” – a view echoed almost to the word by many of the Chief Sustainability Officers interviewed by CSO Futures this month.
EY’s survey of 520 CSOs and peer-level equivalents also revealed a “decrease in the average number of actions companies have completed as part of their climate agenda from 10 to just four (out of 32 actions benchmarked)” as ambitions slip.
There is a growing polarisation between organisations, with the gap between “pacesetter” companies (those taking the most action on climate change) and “observers” (those who have taken the fewest actions) widening significantly: “For example, 95% of pacesetter organisations continue to have public climate commitments, yet among observers this has dropped from 94% to 67%.”
The “transformational” CSOs leading organisations with the most effective sustainability action taking place, meanwhile, are heavily focussed on working with suppliers, the survey found, using procurement power and other engagements to improve Scope 3 emissions data quality among partners.
That remains a key pain point: "One of the critical challenges of scope 3," as Keith Tuffley, Vice Chairman, Global Co-Head, Sustainability & Corporate Transitions, of Citi puts it: "is simply getting access to reliable data, which is compounded in larger, multi-level supply chains. Global companies often have thousands of suppliers, from different regions of the world, and at multiple levels."
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