Protect Against Disruption with Investments in Sustainability
Click The Arrow For The Table Of Contents
After a new report that says that most business leaders plan to increase investment in sustainability initiatives to protect against disruption, we look at what this means.
Report
A recent Gartner report highlighted how 86 per cent of business leaders plan to increase their organisation’s investment in sustainability initiatives to protect against disruption, and 87 per cent are already engaged in sustainability initiatives and expect to expand them in 2023 and 2024.
What Kind Of Disruption?
The kinds of disruption to businesses, supply chains, and the broader economy that companies need to protect themselves against include:
– Economic uncertainty. In the UK, for example, the effects of the recession, inflation, rising interest rates, sluggish productivity, problems in the labour market and an IT skills gap plus a relatively weak post-pandemic recovery are all creating less certainty and a challenging economic environment. For example, Office for Budget Responsibility (figures) show that the UK may not return to its pre-pandemic growth level until the end of 2024, while ONS figures show that by September, the economic output in the UK was still 0.4 per cent lower than pre-pandemic.
– Geopolitical conflict. For example, the war in Ukraine and its multiple effects, including high energy costs, higher commodity prices, and disrupted supply chains, are causing cost pressures on several industries, high food prices, and a squeeze on consumer (end-user) spending. This has led to uncertainty over future supply chains (mainly if businesses deal in Europe), the difficulty for central banks to forecast and plan, and overall uncertainty.
– Escalating materials and energy costs. Again, mainly due to the war in Ukraine, this significantly affects business costs and consumer spending. The soaring energy cost could also increase data centre costs by 40 per cent, which may soon mean price rises for business customers who are now very reliant on the cloud.
How?
As highlighted in the Gartner report, the ways that business leaders plan to tackle disruption centre around re-examining all forms of business expenditure and seeking new, longer-term sustainability initiatives and new revenue streams that leave them less at risk of the uncertainty that’s part of current models, i.e. less reliance on fossil fuels such as oil and gas (and less reliance upon big oil companies).
Sustainability
As identified by a report in October (Gartner), most investors see sustainability as the key strategic technology trend for 2023, and most CEOs see environmental and social changes as a top three priority for investors, behind profit and revenue.
In addition to getting away from expensive, volatile, and environmentally damaging fossil fuel reliance and the disruption it is currently linked to, other main drivers for business investment in sustainability initiatives include:
– Customer demand. The Gartner report shows that most business leaders (80 per cent) identified consumer pressure behind sustainability as the key reason for investing in sustainability initiatives.
– Environmental, social, and governance (ESF) expectations.
– More environmentally focused government regulations.
– Growing availability of sustainable technology.
– Opportunities to find new revenue streams, accelerate innovation, and develop new forms of customer engagement.
What Kind Of Sustainability Investment and Initiatives?
Some examples of how businesses could use/are using sustainability investment and initiatives include:
– Investments in sustainability regarding energy consumption and reallocating energy sources to areas with renewable energy sources.
– Software sustainability. Developing and using software that causes less environmental impact and producing new software standards that prolong devices’ lifecycles, thereby helping to reduce the amount of e-waste.
– Sustainability investments related to business travel, customer transactions, and productivity.
– Investing in more efficient hardware.
Return
The recent Gartner report says that 83 per cent of business leader respondents noted that their sustainability investments had created both short-term and long-term value and supply chain savings and that immediate efficiency improvements have outweighed costs for their initiatives. The key benefit is the promise of a more stable future for their companies/organisations. That said, it’s still relatively early days for many businesses that have invested in sustainability, and, as such, the returns on investments are still unclear.
What Does This Mean For Your Business?
The Gartner report reveals a growing consensus among business leaders that consumer demand is a significant driver for businesses investing much more in sustainability. In addition, the current economic uncertainty, geopolitical conflict, escalating materials and energy costs, increased environmentally focused government regulations, and the growing availability of sustainable technology, all alongside the climate crisis, are also significant reasons businesses are looking seriously at how sustainability investment could help. Turning to sustainability-focused solutions could help enterprises reduce business expenditure and possibly create new revenue streams and tackle the threat of disruption more effectively over time.
