Dive Brief:
- Global sustainability progress will likely either “hold steady” or “accelerate” over the next year, said 63% of sustainability leaders from large companies in a recent survey from the World Economic Forum.
- Three-quarters of respondents said they expected corporate transition-related investments to remain stable or increase in the same period, according to the survey. WEF surveyed 189 leaders, receiving 103 responses, between Feb. 10 and March 18.
- The vast majority of respondents, 85%, said they expect adaptation to climate and nature-related physical impacts across operations, infrastructure and value chains to “become a greater global focus,” with 77% saying private sector investment will “play a decisive role in scaling up adaptation,” the survey found.
Dive Insight:
The current operating environment for businesses is marked by “slower growth, political fragmentation, technological disruption and more visible climate and nature risks,” said Sebastian Buckup and Akanksha Khatri, managing director and head of strategic insights and impact for WEF’s Centre for Nature and Climate, respectively, in the report’s foreword. That means the framing of the sustainability transition has shifted to a business case, they said.
That is a view shared by sustainability leaders, as 64% of respondents said that the biggest boost for global sustainability progress in the next three years will be a stronger business case for sustainability measures.
The difficult geopolitical and economic environment is “sharpening the focus on what makes sustainability durable: embedding it in business strategy, building resilience and directing capital toward solutions that can deliver both impact and long-term value,” said Marisa Drew, chief sustainability officer at British bank Standard Chartered, in an accompanying article by the WEF. Drew is also a part of the steering committee for WEF’s CSO Community, a platform with 190 CSO participants, from which the survey respondents were drawn.
In addition to a stronger business case, more than half of survey respondents (56%) pointed to lower costs and greater availability of sustainability technologies, and 50% pointed to increased corporate collaboration within and across value chains as drivers of acceleration in the next three years. Respondents were able to select up to three drivers of sustainability progress over that time frame.
In the shorter term, almost three quarters of respondents (72%) said they expected AI and other digital technologies to be an important driver of sustainability progress over the next year, “particularly through risk modelling, process and resource efficiency, measurement and reporting.”
Fifty-two percent of respondents said AI would lead to measurable improvements in businesses’ sustainability performance in the next 12 months, but 68% said gaps in workforce skills and capabilities will be a major constraint on taking advantage of this tool.
But there is less certainty on whether the benefits of AI will outweigh its heavy environmental impact: 37% said it would, 35% were neutral and 28% disagreed.
Meanwhile, policy was seen more as a hindrance than a help at the moment. Only one-third of respondents, spread across five continents, said they expected increased predictability and clarity of regulatory frameworks to boost sustainability progress, and just 7% identified international agreements as an accelerator of progress. Conversely, 68% said the greatest constraints on progress in the next three years would come from policy reversals or inconsistent regulatory signals, while 54% worried about international tensions.
Sixty-one percent of respondents agreed that business short-term performance pressures could also hobble sustainability progress, with 66% thinking that companies will shift their priorities to those short-term goals in the next year.
A healthy majority, 78%, of respondents said that balancing short-term and long-term goals would be either important or critical for progress. “Embedding sustainability consistently depends on how firms manage seemingly competing priorities,” WEF said.
Over the next three years, as businesses adapt to climate impacts, 77% of respondents said private-sector investment will play a decisive role in adaptation. But realizing the potential of private capital “will require investable opportunities, clearer revenue or repayment models, risk-sharing mechanisms and stronger public-private collaboration to reduce uncertainty and crowd in investment,” the report said.
Indeed, 62% of CSOs said they thought uncertainty about costs versus benefits would impede financial investment in adaptation.
These results “reflect the distinctive economics of adaptation,” the report said. “Unlike many business investments, adaptation often creates value through avoided losses rather than additional revenue.”
