Bain & Co Survey: CEOs are Losing Interest in Sustainability
Research by Bain & Company reveals a worrying trend amongst CEO — a dwindling focus on sustainability as the challenges of adhering to carbon reduction pledges become apparent.
While leaders are preoccupied with AI, growth, inflation, and geopolitical instability, global temperatures—and public concern for them—continue to rise. This shift occurs as consumers increasingly emphasise the importance of sustainable living.
"For sustainability, 2023 was the year boundless excitement gave way to pragmatic realism," explains Jean-Charles van den Branden, Leader of Bain's Global Sustainability Practise. "As the challenge of meeting bold commitments became clear, many companies started to rethink what is achievable and on what timeline."
Contrasting this leadership trend, a separate Bain survey involving nearly 19,000 consumers across 10 countries found that 61% are more worried about climate change now than they were two years ago, a shift often triggered by experiencing extreme weather firsthand. Moreover, a significant majority of global consumers, 76%, consider living sustainably important, with even higher percentages in countries like Brazil, Indonesia and Italy, which are experiencing the direct impacts of climate change.
This disparity in priorities is not lost on B2B consumers either. Another Bain study highlighted that for corporate purchasers, sustainability is among the top three criteria, with 36% willing to switch suppliers if sustainability benchmarks are not met—a figure expected to rise to nearly 60% within three years.
Risks of neglecting sustainability
Ignoring sustainability ambitions may lead CEOs to jeopardise their organisations' future. Bain's analysis suggests that a 2-degree Celsius surge in global temperatures could erase US$6tn from the S&P 500's value, not to mention the severe environmental and societal fallout.
A significant portion of companies that disclose their carbon emissions are failing to meet their targets, with nearly half lagging on broader Scope 3 emissions.
Jean-Charles comments, “The journey towards sustainability is marred by pragmatic realism, as the daunting nature of bold commitments becomes evident, prompting a recalibration of objectives and timelines.”
The tangled web of supply chain management
CEOs are equally, if not more, concerned about the complexities within their supply chains, particularly regarding carbon emissions and human rights. A staggering 86% fret over an increasingly compartmentalised world, and over two-thirds express concern about potential human rights violations within their supply chains, especially within utilities, manufacturing, and retail sectors.
Decarbonising the supply chain comes with its own set of challenges, with no clear consensus on the most significant hurdle. Although the complexity of decarbonisation is identified as the top barrier by 29% of CEOs, other factors like cost, skill deficits, and data access are also substantial obstacles.
While there's much excitement about AI's potential to revolutionise supply chains, the reality of its adoption paints a different picture. Despite nearly all CEOs exploring AI for supply chains and 82% initiating new AI projects, only a fraction anticipate a notable impact by next year. Simon Geale, executive vice president and chief procurement officer at Proxima, a Bain entity, reflects, “Global supply chains continue to perplex CEOs worldwide, compounding the urgency to address multifaceted challenges.”
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