Did you know that Sustainability is the top business risk for CEOs in Europe, even above cybersecurity? (IDC EMEA, CEO Survey, January 2023, n=108). This is the first time sustainability has been at the top of the board’s agenda, and it is likely to stay for some time. But why is it a risk and not an opportunity? Why saving the planet is seen as a threat to business?
For many, climate change and the new sustainability regulations are a disruption to their operations. After all, today’s economy was built on the premise that Nature had given us a cheque in blank, with a limitless use of resources. How wrong it was.
Therefore, having Mother Nature behaving in the most unpredictable ways (e.g., heatwaves, floods, droughts) and government policies shaping business operations (e.g., taxes, quotas, disclosures) can be painful.
These are some examples: if you’re a semiconductor company with factories in South Asia, severe droughts can be material to your manufacturing processes as governments can prioritize water for local people. Or, if you’re a mobile phone manufacturer, the use of plastic packaging can be material to your business because of taxes or a complete ban by governments.
Sustainability is a moral, regulatory, and ultimately business mandate. There’s no opt-out: stakeholders are watching closely, e.g., customers, investors, business partners, regulators. As the executive of one of the world’s largest insurers shared in an interview recently “We don’t work anymore with customers that are not improving their sustainability. They are uninsurable for us“.
Therefore, if sustainability is indeed a risk, can companies turn it into a business opportunity? The answer is “yes”, according to most European companies (IDC EMEA, Future Enterprise Resilience, May 2023, n = 220).
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Sustainability: Evolving from Risk to Opportunity
Sustainability can be a business opportunity if there’s a clear vision and commitment from leadership. Only then, “doing good” is embedded in every facet of work, across all business units, from procurement and production to logistics and customer service.
To make this happen, sustainability targets need to be fully aligned with the agenda and goals of each executive in the C-Suite. This is an illustrative example: