Sustainability Progress Slows Amidst Global Challenges

The world is gearing up for the United Nations Framework Convention on Climate Change (UNFCCC) COP28, and Ernst & Young's 2023 Sustainable Value Study highlights concerns about the slowing pace of sustainability progress. The study surveyed over 500 chief sustainability officers (CSOs) and equivalents representing companies with revenues over $1 billion worldwide. Key findings indicate a decline in progress on greenhouse gas (GHG) emissions reductions to a median of 20%, compared to 30% in 2022. Many businesses surveyed are extending their target deadlines for achieving their climate goals, with the median year shifting from 2036 to 2050.

Key Takeaways:

• Only 34% of surveyed companies plan to spend more to address climate change, down from 61% in 2022.
• The number of actions that organizations are taking relating to climate change has fallen from an average of 10 in 2022 to just four, out of a possible 32 benchmarked in the study.
• Delivering on sustainability initiatives has significant financial benefits, with 52% of surveyed companies experiencing financial value exceeding their expectations.
• 63% of respondents witnessed better-than-expected improvements in product and brand value.
• The rise in "observers," companies taking the least action on climate change, continues, with 67% of these companies having public climate commitments, down from 95% among "pacesetters" (organizations leading the charge on climate action).
• "Pacesetter" organizations experience higher-than-expected financial value (80%) compared to "observers" (45%).
• Only 7% of surveyed companies qualify as "pacesetters," compared to 32% in 2022.
• External market demand for climate action remains, with over half of sustainability leaders surveyed saying that investors (58%) and customers (51%) are accelerators motivating them to deliver on their sustainability programs.
• The shift in focus from public declarations to implementation and delivery indicates an inflection point for CSOs.
• Empowering CSOs to become transformational agents leads to higher-than-average emissions reductions (21.2%) and more success with sustainability programs.
• The study highlights the need for CSOs to have a clear mandate, significant influence, involvement in corporate strategy, and authority to hold others accountable for sustainability performance.

Statistics:

• 34% of surveyed companies plan to spend more to address climate change, compared to 61% in 2022 (0.34 vs. 0.61).
• The number of actions organizations are taking relating to climate change has fallen from 10 to four (10 vs. 4).
• 52% of surveyed companies experience financial value exceeding their expectations.
• 63% of respondents witnessed better-than-expected improvements in product and brand value.
• 7% of surveyed companies qualify as "pacesetters" (0.07).
• 32% of surveyed companies qualify as "pacesetters" in 2022 (0.32).
• 58% of sustainability leaders say investors are accelerators for climate action (0.58).
• 51% of sustainability leaders say customers are accelerators for climate action (0.51).
• 21.2% of CSOs experience higher-than-average emissions reductions.
• 80% of "pacesetter" organizations experience higher-than-expected financial value (0.8).
• 45% of "observer" organizations experience higher-than-expected financial value (0.45).

Sources:

• Ernst & Young, 2023 Sustainable Value Study
• United Nations Framework Convention on Climate Change (UNFCCC) COP28