Minting a sustainable future

Let’s celebrate the good news: sustainability, which for many years was felt by business leaders to be a fringe compliance responsibility, is now almost always seen as a core business-performance issue.

Driven by environmental and geopolitical pressures as well as the growing interest from stakeholders, including customers, employees, regulators and shareholders, companies around the world have woken up to sustainability’s importance, set targets and started to adopt sustainable practices.

We should feel good about this progress. Yet, business too often addresses sustainability in a siloed and piecemeal way. So we also need to ask if the progress we’ve made is good enough – both in terms of achieving the United Nation’s Sustainable Development Goals and in terms of the benefits business can reap through sustainability. 

At Accenture, our view is that the next crucial step is for business to embed sustainability into the core of their strategy and operations. To drive step change in financial and environmental impact, sustainability must be built in, not just bolted on. Embedding sustainability calls for foundational rather than just structural change. To embed sustainability requires an important shift in mindset – that anything and everything new in the organization must be sustainable from the outset. Rather than doing things differently, it requires doing different things.

There are organizations that already exemplify an embedded approach. Some, like Brazilian cosmetics company Natura & Co., have been minting value from sustainability for years, proving that strong environmental and social commitments can be compelling value propositions. Others, like Dutch confectioner Tony’s Chocolonely, were born sustainable, as kinder, greener businesses – principled, nimble, and, crucially, profitable.

Even if leading executives have largely answered the question of why sustainability is important, many still struggle with how to embed it in their organizations and maximize its value. To shed light on this challenge, we are publishing a series of blogs over the next few months in which we’ll look at the practical steps leaders can take to embed sustainability from a wide range of angles. We’ll also show the tangible benefits that embedding sustainability brings.

Intention, yes, but what about action?

Today, a large majority of CEOs support sustainability, which represents a major shift in corporate priorities during our lifetimes. In fact, 98% of CEOs in our 2023 Accenture-UNGC Sustainability Survey believe their role is to make their business more sustainable.

Turning good intentions into meaningful action is hard, though. While 34% of the world’s largest companies have set net zero targets for 2050, only 7% of these firms are on track to achieve them.

While carbon emissions have become a priority, many other pressing sustainability challenges continue to be neglected. For example, the World Economic Forum estimates that more than half of the world's total GDP – $44 trillion – is moderately or highly dependent on our natural capital and ecosystems. But, according to the recent Accenture-UNGC CEO Sustainability Survey, only 18% of CEOs are prioritizing biodiversity, ranking it as the lowest of all sustainability initiatives.

Competing priorities

Most business leaders know broadly where they need to get to. But it can sometimes feel like competing priorities and complexity stand in their way.

They know, for example, that most consumers want companies to make sustainability more relevant and accessible. At the same time, many companies feel caught between stakeholder pressures on sustainability and business performance.

What’s more, companies are managing all this in a time of massive uncertainty – in everything from geopolitics to the economy to consumer sentiment. Accenture’s Global Disruption Index shows that disruption has tripled in the last five years, demanding often radical reinvention strategies in response.

Meanwhile, the regulatory landscape continues to surge ahead, particularly in Europe. Incoming regulations from the Science Based Targets initiative (SBTi) and Taskforce on Nature-related Financial Disclosures (TNFD) around nature and biodiversity will accelerate the momentum.

Embed sustainability to bridge the gap

So how can companies embed sustainability to bridge the gap between intent and action and start making real and lasting progress?

They must embrace five key objectives:

1. Design and integrate sustainability models, processes, activities and metrics deep within the core as a business value strategy. Incorporate social and environmental concerns into decision-making by rethinking the way goals, incentives, timelines and success parameters are set and measured. For example, reducing emissions over time can lead to lower energy costs, using water more efficiently can reduce costs for fast-moving consumer goods firms, and better ESG reporting can reduce compliance costs.
   
   
2. Get ahead of the coming wave of regulations. In particular, consider the nexus between nature and net-zero – how nature-based programs can contribute to net zero targets.
   
   
3. Break down organizational silos through an end-to-end focus on sustainability across the value chain – from circular product design to supply chain and operations to customer experience.
   
   
4. Use technology as the essential framework for sustainability – from engineering solutions such as carbon capture, to ESG data monitoring and analysis, to accelerating innovation around products and services, embedding sustainability relies on embedding technology throughout the enterprise.
   
   
5. Create a diverse and inclusive culture in which people are empowered – even expected – to become sustainable innovators. Help them adopt new processes, technologies and ways of working.

Embedding sustainability – building it in – creates more value than bolting it on. By designing models, processes and activities with sustainability from the outset, companies can lower costs, manage risks better and create competitive advantage. Embedding sustainability creates multidimensional value, increasing both financial and non-financial performance in tandem. Between 2013 and 2020, companies with consistently strong ESG performance scored 2.6x higher on total shareholder returns and 4.7x higher on operating margins than companies with mediocre ESG scores.

A good analogy for embedded versus ‘bolted on’ sustainability is found in recent generations of electric vehicles. At first, automakers swapped out internal combustion engines for electric motors and half-ton battery packs – which ended up feeling more like ballast than a boost. It was only when automakers redesigned their vehicles from the ground up – reinventing the chassis, the suspension and other vital systems that the cars performed better.

Examples of the benefits of embedding sustainability can be seen throughout this blog series and include:  

• How Metro de Madrid used AI to radically improve its ventilation system

• The way Ikea created a ‘buyback and resell’ program

Embedding sustainability must happen whenever companies are making critical changes, and it is especially crucial when leaders seek to reinvent their whole company, what we call Total Enterprise Reinvention. It is a deliberate strategy that aims to raise the performance bar for companies and the industries in which they operate. Centered around a strong digital core, Total Enterprise Reinvention helps to improve operations and drive growth. It isn’t a ‘to do’ – rather it’s a ‘to be’, requiring continuous, dynamic reinvention. It demands an outside-in perspective that connects what’s happening at the company with what’s happening in the world. And it requires new skills and an increased depth of understanding of technology, change management, communication and how to mobilize partners to achieve results faster. 

Sustainability: setting value in motion

At Accenture, we know that sustainability must play a critical role in how companies reinvent themselves for a future that’s better for both the natural world and the bottom line.

Sustainability has the potential to create new markets, new value, and a to mint a new legacy.

But, for this potential to be realized, sustainability must be much more deeply embedded in today’s businesses. We need to shift sustainability from something that’s bolted-on to something that’s built-in.

In this series of blogs, we’ll explain our thinking on how to embed sustainability – and how minting a sustainable future will set value in motion for companies, for communities, for people and for the planet.

Embedding sustainability

This blog is part of a series discussing how leaders can embed sustainability into different aspects of their organizations to create value and impact. The other topics are:

• Three steps to embed sustainability in strategy
• Energy Efficiency – where cost and sustainability first meet
• Rebalancing the books on nature and biodiversity
• So long Black Friday: Reinventing consumption
• Measuring up: Achieving resilience through ESG
• Don’t forget the “S”
• Harnessing the power of boards to embed sustainability
• Clearing the hurdle: Scope 3 emissions
• Making generative AI green

Authors

• Wytse Kaastra, Senior Managing Director – Sustainability Services, Europe Lead