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How to Apply Sustainability to Drive Value Creation

Global climate change policy initiatives have been an emerging topic for CEOs and their leadership teams, as they look to the future. Many organizations are preparing to play their part and help reduce carbon emissions.

Eighty-seven percent of business leaders expect to increase their organization’s investment in sustainability over the next two years, according to the latest worldwide market study by Gartner.

Customers are the stakeholder group creating pressure for these organizations to invest or act on sustainability issues -- selected by 80 percent of executives, followed by investors (60 percent) and regulators (55 percent).

Sustainability Market Development

"Sustainability enables businesses to cope with disruption," said Kristin Moyer, VP analyst at Gartner. "Economic uncertainty, geopolitical conflict and escalating materials and energy costs are forcing businesses to reexamine all forms of expenditure."

According to Gartner, this focus on essentialism -- in combination with increasing stakeholder desire to see progress on Environmental, Social, and Governance (ESG) goals -- creates new opportunities for enterprises to grow while mitigating cost and risk.

The survey found that 86 percent of enterprise business leaders see sustainability as an investment that essentially protects their organization from market disruption.

Additionally, 83 percent said sustainability program activities directly created both short- and long-term value for their organization, and 80 percent indicated that sustainability helped their organization optimize and reduce costs.

Specifically, the top areas where survey respondents said sustainability programs are mitigating cost increases are energy consumption, business travel, and customer transactions.

"Executive leaders are achieving both operational and supply chain savings through their sustainability programs," said Moyer.

This kind of 'two for one', where sustainability investment supports a business goal like cost optimization, significantly enhances the ESG's program impact by creating a virtuous cycle.

Gartner analysts believe that sustainability, when applied effectively, can enable significant new value creation and the pursuit of digital business growth opportunities.

Moreover, 57 percent of respondent business leaders said their enterprise sustainability program has a strong connection to the financial results on their corporate income statement.

And, 42 percent of respondents are leveraging their sustainability activities to drive innovation, differentiation, and enterprise growth through sustainable products and services.

Outlook for Sustainability Investment Growth

"Investing in sustainability can support product differentiation but be wary of greenwashing risks – there are no shortcuts to sustainable growth," said Moyer.

Focus on product attributes that are important to customers and how these priorities shape buying decisions. When viewed through a strategic lens, sustainability can provide a ray of sunshine for businesses during difficult market conditions.

That said, I anticipate the ongoing adoption of a distributed workforce approach, and the application of flexible working models will potentially have a positive impact on corporate sustainability efforts.

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