Capgemini: Geopolitics Impacts Sustainability Innovation
Geopolitical tensions around the globe threaten both business operations and sustainability initiatives.
Conflicts can undermine sustainability efforts and divert resources away from initiatives,and international cooperation on regulations is needed urgently.
Capgemini Research Institute’s latest report titled ‘A world in balance 2024: Accelerating sustainability amidst geopolitical challenges’ shows insights from leaders in sustainability around the world.
The report surveyed 2,152 executives at 727 organisations, each with more than US$1bn in annual revenue, and 6,500 consumers.
“This year’s report shows sustainability projects continuing to build momentum in 2024 despite current headwinds,” says Cyril Garcia, Head of Global Sustainability Services and Corporate Responsibility and Group Executive Board Member at Capgemini.
“Business leaders have the power and the responsibility to steer us towards a more sustainable economy.”
Rory Burghes, Head of Sustainable Futures at Capgemini, says: “This year, 84% of executives report being on track to meet their carbon emissions goals, a significant increase from previous years.
“We also discovered a 22% increase in the adoption of sustainable practices from 2022 to 2024, with key areas of improvement including circularity, sustainable design and biodiversity.
“This data clearly shows that businesses are increasingly recognising the importance of integrating sustainability into their core business strategies.”
Consumer perceptions and greenwashing
Capgemini’s report finds three quarters of consumers expect corporations to play a bigger role in reducing GHG emissions in 2024.
As organisations are increasing sustainability efforts, Capgemini says that consumers are now more sceptical than ever.
More than half of consumers now believe organisations are greenwashing their sustainability initiatives. This has increased nearly 20% from 2023.
In Gen Z and millennial consumers, the percentage that believe organisations are greenwashing increased by 26% and 22% respectively from 2023 results.
Six out of 10 executives reported they are concerned about public perceptions of their sustainability efforts, an enormous increase from 11% in 2023.
Executives agreeing with the statement that “consumers consider my organisation’s sustainability initiatives as greenwashing” increased by more than a quarter.
Regulations are being put in place to prevent greenwashing around the world, including the EU’s Green Claim Directive, the US Federal Trade Commission’s Green Guides and the Australian Competition and Consumer Commission’s guidance.
The Sabin Centre for Climate Change Law at Columbia University says that in 2023, at least three climate litigation cases were filed each week.
“The best way to build trust and credibility with consumers is by demonstrating tangible outcomes and planning for a future with sustainability at its heart,” Cyril says.
Geopolitics and its impact on sustainability
US-China relations, wars in Ukraine and the Middle East and the European energy crisis are all posing risk to business operations and supply chains.
The 2024 report shows that 64% of executives surveyed agree current geopolitics is an increasing consideration in sustainability investments.
Capgemini says US executives may be worried about the availability of governmental funding for climate and green-tech initiatives.
Nearly three-quarters of executives from the USA surveyed reported their organisation received funding from the US federal government to invest in sustainability initiatives such as the Inflation Reduction Act or the CHIPS Act.
However, Capgemini says that geopolitics is not always a threat to sustainability as it can serve as an accelerator to investments in some situations.
Russia’s war in Ukraine forced countries to revise energy policies and Germany’s government created a new target to get all energy in the country from renewable sources by 2035.
Regulation as a sustainability driver
Rory says: “While business leaders report that regulatory pressure is a key driver for their green initiatives, we believe that sustainability is a strategic imperative that can drive innovation and growth.”
Three quarters of executives surveyed by Capgemini agreed sustainability regulation is necessary to achieve global climate goals.
More than 60% agreed that “without regulation, my organisation would not have launched many environmental sustainability initiatives”.
“As we look to the future, companies need to take advantage of tools and insights to navigate this complex landscape,” Rory explains.
“By leveraging advanced technologies such as AI and big data, organisations can optimise resource utilisation and minimise environmental impacts.
“Ultimately, organisations that understand the importance of sustainability as a competitive advantage and prioritise it as a key strategic driver will be able to transform faster, achieve their sustainability goals and contribute to a more resilient and greener world.”
Kristen Siemen, Chief Sustainability Officer at General Motors, told Capgemini: “Regulations, transparency and standards are critical, allowing everyone to talk a common language.
“The possibility of over-regulating does concern me, however. For example, designing vehicles for European or US safety standards sometimes influences design choice without directly benefiting the customer.
“One set of standards is not better, they are just different. If there were more consistency across countries, we could spend more time working on outcomes.”
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