Driving business success through sustainability

Environmental sustainability in business is becoming increasingly important for business leaders across the world.  The public, businesses, and even employees are demanding transparency and accountability to improve energy efficiency and reduce carbon emissions to help lower greenhouse gasses (GHG) across the globe. Add to that, nations across the globe continue to implement regulations to hold businesses accountable through new standards that can help lower energy consumption and carbon emissions.  

To meet these demands, business leaders are identifying opportunities to reduce their operational footprint and provide their own sustainable solutions as part of their product and service offerings. This focus represents a key opportunity for business growth, resilience, and compliance risk reduction.  

Technology is playing a crucial role in improving environmental sustainability in business, including smarter systems and better connectivity for all members of the workforce.  These tools, along with effective engagement of key stakeholders including customers, suppliers, and other collaborators, are creating a culture of sustainability throughout operations. This helps businesses reduce their energy and resource consumption and respond to the momentum behind sustainability in business. 

In the business world, sustainability refers to how companies ethically interact with  the community, society, and the environment all while delivering long-term value to the business. This means that in their operations, both direct and indirect, they mindfully prevent external negative impact on their journey to meeting their own business objectives.

How do companies become more sustainable? Well, that can be complex, but it’s very doable. Environmental sustainability in business includes, but is not limited to: 

• Energy efficiency. The Office of Energy Efficiency & Renewable Energy defines this as, “the use of less energy to perform the same task or produce the same result. Energy-efficient homes and buildings use less energy to heat, cool, and run appliances and electronics, and energy-efficient manufacturing facilities use less energy to produce goods.”¹
• Waste reduction and recycling. Many companies have shifted from a paper-based operation to a digital one. However, there are still opportunities to deepen this practice. Implementing practices like composting, recycling, and a reduce, reuse, and donate strategy can significantly improve sustainability in business.²
• Vehicle operations. Fleet operators can create more efficient operations across all business segments leveraging alternative fuel cars, trucks, vans, semis and other modes of transportation. Outcomes include reduced fuel usage, better maintenance to reduce waste, and lower carbon emissions into the environment. Adopting a remote or hybrid work model also helps to reduce the carbon emission impact of commuters. 
• New Product development. Companies can shift business and economic models from carbon-based legacy processes to low- or no-carbon alternatives like carbon capture, Electric Vehicle (EV) electrification, renewable electricity generation

There are many other operations that can result in lowering the use of resources that cause an increase in GHGs or deplete natural resources. This includes water conservation and adopting collaborative agreements with partner suppliers to ensure that the outcome across the business is a net-zero impact.

These practices for sustainability in business are not only benefiting the bottom line through cost savings, they’re also meeting the evolving expectations of stakeholders worldwide. And increasingly,  strategic use of technology is helping business leaders become better corporate citizens as they improve sustainability throughout their operations. 

The urgency of global environmental concerns has put sustainability in business in the spotlight. Whether it’s from national or local governments, nonprofits, educational institutions, consumers, or their own employees, no one is exempt from the pressure—or the opportunity, depending on your perspective—to find ways to improve sustainability in business operations.

More and more, companies of all sizes are working to be transparent about how they’re addressing concerns of external and internal stakeholders. And, because federal regulations include full accountability for sustainability throughout the business, they have to account for company owned and indirect activities as well.  This includes how suppliers and vendors address sustainability concerns.

In 2021, 96% of S&P 500 companies published a sustainability report, compared to 20% ten years ago.³ Among the smallest half by market cap of the Russell 1000 index, 68% published a sustainability report in 2021 up from 49% in 2020. According to a 2021 PwC survey, 39% of family businesses ranked sustainability as a top priority.⁴

There are a number of sources driving this accountability:

Regulatory Compliance

Regulators around the world are issuing reporting mandates to require companies to formally disclose their efforts and strategies for sustainability in business. There is increasing momentum for consistent, comparable, and transparent information that will give investors, employees, customers, and governments a holistic look at a company’s impacts and actions to reduce those impacts. “In the long term, international baseline standards for ESG [Environmental, Social, and Governance] reporting will emerge, similar to the accounting practice standards that the International Accounting Standards Board developed, and which more than 140 international jurisdictions mandated.”⁵

Climate change is often the leading catalyst for sustainability-related regulations as policymakers and standards developers worldwide respond to its environmental, social, and economic impacts. With this comes an increased desire for oversight and understanding which companies are having the greatest impact and where progress can be made to achieve global emissions reductions goals. The U.S. Security and Exchange Commission’s proposed climate disclosure rule is one such example of this regulatory demand. As we have seen in 2023 and expect going forward, “ESG reporting mandates will sway investment and consumer behavior toward businesses that take urgent steps to reach net zero carbon emissions targets.”⁶

Regulations also increasingly target a company’s supply chain and encourage oversight of those entities both upstream and downstream, recognizing the role that companies can have in influencing their suppliers to do business in a better, more environmentally conscious way.

Customer Expectations

Pressure on companies to be more sustainable also is coming from the end customer. There’s a growing interest and desire to be a “conscious consumer,” making environmentally-informed purchasing and career decisions. As consumers continue to vote through their wallets and the workforce, more are choosing companies to support and work for based on their environmental and social impact. 

• According to an IBM survey from March 2021, 84% of global consumers consider sustainability important when choosing a brand, up from 77% in September 2019.⁷
• According to the same March 2021 survey, 79% of potential employees say they are more likely to accept a job with an organization they consider environmentally sustainable, and 70% are more likely to stay with an employer that has a good reputation on environmental sustainability.  Responding to these external pressures not only protects a company from compliance risk but can also attract new customers and employees to the brand.

The use of fiber, 5G and Internet of Things (IoT) connectivity and other technologies to make more sustainability-focused choices is growing. Both existing solutions and new innovations are supporting this effort. In the first half of 2023, just over $13 billion was invested in climate tech startups.⁸ While this is down significantly from the nearly $22 billion contributed in the first half of 2022, the number of companies receiving investment has increased from 586 to 633, illustrating the continued momentum to support a range of solutions.

Companies also are investing in their own technology to improve sustainability in business. Many technologies with broad applications, such as 5G, IoT, connectivity solutions and AI, can provide ways to reduce environmental impact by creating efficiencies and reducing waste and emissions. 

5G

5G telecommunications networks deliver significantly higher bandwidth as compared to 4G networks, supporting a greater number of connected devices. 5G’s lower latency and higher capacity enable real-time decision making and action. By providing a more robust network and connecting cars, manufacturing equipment, energy grids, and such, companies can identify and act upon efficiency opportunities.  

A 2022 report from Accenture found that 5G will enable the U.S. to achieve approximately 20% of its target emission reductions by 2025.⁹ The potential impact of 5G for business can be optimized and determined in each company’s individual case. For example, energy intensive manufacturers could use 5G enhanced connectivity of their machinery to monitor energy consumption more readily. This would allow them to optimize the timing of when energy is consumed to avoid peak energy use times and grid strains. 

Internet of Things (IoT) 

Businesses also can optimize resource use by remotely monitoring and controlling their equipment using IoT services. By connecting equipment and other devices to the internet through embedded sensors and software, companies can remotely access data about the equipment and its condition and use. The insights from this data drive smarter, more specific, and more informed decisions that help create efficiencies, anticipate maintenance to prevent outages, reduce waste and identify conservation opportunities. If equipment failures do occur, businesses can receive near real-time alerts to minimize any damages.  

Voice & Collaboration (V&C) 

More and more, business is being conducted outside of the corporate office, with many companies maintaining at least a hybrid operating model for their employees following the workplace disruption of the COVID pandemic. This hybrid work model is expected to grow to 81% by 2024.  

To keep business moving and productive, collaboration solutions are essential. These tools range from video conferencing to create more personable collaboration, to cloud services for reliable file access no matter where business takes you. All of this additional online work must be met and supported by a reliable, secure network that can handle the traffic. Edge cloud services bring all these network pieces together. In addition to the flexibility that these V&C solutions provide to allow work to happen from anywhere, they also help companies decrease their carbon footprint by reducing the need for employees to travel for meetings or work. 

Artificial Intelligence (AI) 

AI leverages the capabilities of technology and systems to monitor a wide range of activities in real-time and make recommendations and adjustments to achieve efficiencies. This developing technology can help design more efficient buildings and processes, monitor emissions and waste, and optimize energy and resource usage. AI also can synthesize weather and climate data to predict environmental changes and anticipate extreme weather events, helping businesses stay resilient and prepared. Thoughtfully integrating AI into business systems can help reduce risks, costs, and environmental impact. 

Sustainability in business involves many areas of focus. The world economy is seeking to respond to the most pressing environmental challenges. It’s also identifying the opportunities for the highest impact. There’s recognition that we have to find fundamental ways to change the way we do business. In particular, there is an urgency behind reducing resource consumption and carbon emissions. The responsibility for these changes often rests with the large, established companies, but they cannot achieve the reductions alone. Members of global supply chains are experiencing increased oversight and pressure to do their part. 

Circular economy adoption

Our economy is largely linear. Businesses take raw materials, make products, and throw them away at the end of their useful life. There’s an increasing focus by industry to transition to a more circular economy, where materials are not discarded at the end of their life, but instead are kept in production and entered back into the system.  

Mechanisms like repair, reuse, refurbishment, recycling, and composting keep materials in circulation. The key aspects of achieving a more circular economy are to use fewer items and for a longer period of time, phase out hazardous materials, and replace them with regenerative resources. Add to that, there’s growing effort to reuse materials at the end of their current life. By creating a circular economy, systems eliminate waste, reduce pollution and ensure resource availability and continuity.  

According to the Circularity Gap Report, more than 90% of the resources extracted and consumed don’t return to production cycles because they become waste, are lost, or are locked into long-lasting goods like buildings.¹⁰ The report estimates that a circular economy could reduce global material extraction and use by one-third, bringing human impact back within safe limits.  

Climate action and emission reduction

Climate change affects every person and company, and we all have a role to play in combating its impacts. “In 2021, weather and climate-related natural disasters cost the United States $20 billion. Simultaneous natural disasters will become more common, wherein the nation could face multiple disasters a year.”¹¹  

To avoid the worst of these impacts, scientists warn that the world must reach net-zero emissions—the balance between the amount of greenhouse gases that are produced and the amount that’s removed from the atmosphere—by 2050. This is needed to hold global temperatures to no higher than 1.5°C above pre-industrial levels. They advise that heating beyond this point will lead to catastrophic and potentially irreversible impacts. The 2015 Paris Climate Agreement aims to coordinate countries and economies worldwide in a pledge to pursue efforts toward keeping global warming to that 1.5°C limit.  

Reaching net-zero emissions will require companies across industries worldwide to set emissions reduction targets and achieve net-zero emissions within their own operations. According to the Net Zero Stocktake 2023, the number of publicly listed corporations with net-zero commitments increased from 417 in late 2020 to 929 in 2023.¹² As of this writing, more than 3,300 companies have had science-based targets approved by the Science Based Targets Initiative, and more than 2,300 companies have made net-zero commitments.¹³  

Pressure from stakeholders—including investors, governments, and consumers—on companies to disclose and reduce their Scope 3 emissions is intensifying. Scope 3 emissions are the emissions produced by a company’s value chain, in contrast to those produced by their direct operations or purchased electricity (Scope 1 and Scope 2 emissions, respectively). Scope 3 includes upstream and downstream activities such as business travel, transportation and distribution, the use of sold products, and the emissions from the production of purchased goods and materials. On average these emissions account for 70% of a company’s total emissions, representing a large part of the footprint that is important to account for and understand.   

As more companies focus on decreasing the environmental impact of their value-chain emissions, suppliers, distributors, and partners who are leading on sustainability have an advantage over their competitors.  

Sustainable supply chain

As mentioned in the regulatory context, there also is an increased focus from regulators and other stakeholders on the sustainability of supply chains. The pressure from these groups to have a sustainable supply chain often rests with the large company at the end, expected to do its due diligence and use its purchasing power to be a catalyst within the marketplace. As such, many large companies are requiring suppliers to set and meet their own sustainability goals and reduce their carbon emissions, which in turn reduces the associated Scope 3 emissions of the company. Recognizing the complexity of supply chains and the varying degrees of sophistication within them, companies should help their suppliers set and reach goals by sharing their experience and knowledge.

Companies should take a holistic look at their operations to see what solutions they can implement in achieving the environmental impact reduction that is so urgently needed. By integrating a sustainable mindset throughout a company’s workforce and culture, governance and procurement practices, and product design, companies can turn a “nice to have” into an integral part of their operations. To start: 

• Communicate with your workforce or governance body about the expectations and demands of customers and stakeholders to ensure buy-in at every level. 
• Engage your supply chain to outline your expectations related to sustainability. Develop an oversight policy that sets the rules for engagement. 
• Create and maintain a robust data management system for accurate representation that can be externally verified. 

Leverage innovative technologies that can remove some of the guesswork and help you achieve efficiencies and more effectively use resources, from design to production to waste.

Creating a sustainability strategy and program is a continuous process that requires a holistic perspective to help drive both environmental improvement and business success. By weaving a focus on sustainability through all procedures and business culture, companies can do their part to mitigate environmental impacts, deliver value for their stakeholders, grow their business through sustainable product and service offerings, and achieve cost savings.

There is a reputational benefit to achieve as well, if a company can back up its sustainability claims with clear, transparent data and storytelling. Illustrating not only the actual numbers behind environmental impact reductions, but also the consideration and commitment given throughout business operations, can help improve perception of a business.

The business case for sustainability is clear and it is important that companies around the world seize the opportunities before them. Innovation, creativity, and a clear balance of priorities will enable both protecting the planet and maintaining the bottom line. This balance reduces risk, creates value for shareholders, and responds to the challenges we face. The biggest outcome? Businesses across the globe become leaders in creating a more sustainable environment for our planet.

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¹ “Energy Efficiency: Building and Industry,” Office of Energy Efficiency & Renewable Energy, Accessed September 7, 2023, https://www.energy.gov/eere/energy-efficiency-buildings-and-industry.

² “Reducing Waste: What You Can Do,” U.S. Environmental Protection Agency, Accessed September 7, 2023, https://www.epa.gov/recycle/reducing-waste-what-you-can-do.

³ “2022 S&P 500 +Russell 1000 Sustainability Reporting in Focus,” Governance & Accountability Institute, Inc, Accessed September 7, 2023.

⁴ Peter Englisch, “Family businesses have an opportunity to lead on ESG,” PwC, July 28, 2021, https://www.pwc.com/gx/en/issues/reinventing-the-future/take-on-tomorrow/family-business-and-esg.html. 

⁵ 2023 Top Trends—Growth Opportunities, Frost & Sullivan, 2023, https://store.frost.com/2023-top-trends-growth-opportunities.html. 

⁶ Ibid. 

⁷ “Sustainability at a turning point,” IBM, Accessed September 7, 2023, https://www.ibm.com/downloads/cas/WLJ7LVP4. 

⁸ Ibid. 

⁹ “Chart: What’s the state of climatech startup funding in 2023?,” Canary Media, June 30, 2023, https://www.canarymedia.com/articles/climatetech-finance/chart-whats-the-state-of-climatetech-startup-funding-in-2023.

¹⁰ “5G Connectivity: A Key Enabling Technology to Meet America’s Climate Change Goals,” Accenture, Accessed September 7, 2023, https://api.ctia.org/wp-content/uploads/2022/01/5G-Connectivity-A-Key-Enabling-Technology-to-meet-Americas-Climate-Change-Goals-2022-01-24.pdf. 

¹¹ “State of the Industry: Future of Work,” Incisiv, Accessed September 7, 2023, https://www.incisiv.com/industry-insights-state-of-the-industry-future-of-work.

¹² “The Circularity Gap Report 2023,” Circular Economy, Accessed September 7, 2023, https://assets.website-files.com/5e185aa4d27bcf348400ed82/63ecb3ad94e12d3e5599cf54_CGR%202023%20-%20Report.pdf. 

¹³ U.S. Mega Trends Part 2: Technology in America, (Frost & Sullivan, 2022). 

¹⁴ “Net Zero Stocktake 2023,” Net Zero Tracker, Accessed September 7, 2023, https://zerotracker.net/analysis/net-zero-stocktake-2023.  

¹⁵ “Companies Taking Action,” Science Based Targets, Accessed September 7, 2023, https://sciencebasedtargets.org/companies-taking-action. 

¹⁶ “Scope 3 Emissions,” Global Compact network UK, Accessed September 7, 2023, https://www.unglobalcompact.org.uk/scope-3-emissions/.