By Cyril Garcia, Head of Global Sustainability Services and Corporate Responsibility – Member of the Group Executive Board, Capgemini
In 2023, we have experienced hotter temperatures, more volatile weather, rising sea levels and other dangerous effects of climate change. Clearly, there has never been a more decisive moment for action.
And fortunately, according to some of our recent research, executives now understand that meeting financial, social, and planetary objectives is not a zero-sum game: we can all win.
Many forward-thinking organizations are making a shift, whether it’s crafting concrete strategies to slash emissions or restructuring supply chains with an eye to more sustainable operations. Promising steps, yes – however, they are just that: small steps on a longer journey. And if we are to have any hope of achieving meaningful change, we need to understand where we are lagging, and why. Only then can we successfully ramp up efforts on a global scale.
The Sustainability Business Case Comes into Focus
Let’s not downplay the value of the change already taking place. In fact, compared to a year ago, three times as many executives today believe that there is a business case for sustainability (up from just 21% in 2022). This impressive evolution, demonstrated by one of the latest reports from the Capgemini Research Institute, shows a promising mindset shift toward a world where business and sustainability can go hand in hand.
The research shows that not only are executives clear on the possible synergy between sustainability and business; they realize that eco-friendly practices are becoming a business imperative. They are looking to put in place sustainability strategies to increase future revenue, meaning that overall, there is a broader understanding of the fact that business as usual will simply not cut it in the future. That is to say, companies that don’t take sustainability into account now will soon become obsolete.
What has created this change? A number of recent events and evolutions have contributed to driving a positive attitude toward aligning business and planetary objectives. For a start, the extreme weather in many different areas across the globe in the past year, and the destruction it has caused, are pushing the needle forward. As a result, climate risk and the effects on business are firmly on executives’ radars. Many are also spurred on by the uptick in pressure from regulators and governments, and the need to comply with current and future regulations. However, while the will is there, the way forward is not clear-cut.
Action Lags Behind Awareness in Key Areas
Despite some promising trends, we still have yet to see much progress in terms of concrete, sustained efforts. Promisingly, the number of companies with a defined priority list of sustainability initiatives is on the rise.
And when we dig a little deeper, we find that while companies worldwide may be identifying and managing scope-1 and -2 emissions, scope-3 is a struggle: the proportion of companies that successfully collect scope-3 emissions actually dropped from 60% in 2022 to 51% this year. This decline is not what we want to see at this stage in our collective sustainability journey – especially not as more companies will start reporting to the EU’s Corporate Sustainability Reporting Directive (CSRD). The CSRD expanded on January 1 to companies trading in Europe with over 250 employees or more than €40 million in annual revenue. These companies, too, will now have to exhaustively detail their scope-3 emissions to be compliant.
What we need now is not only for organizations to take their responsibility seriously by getting on top of their emissions data. We urgently need them to think further and more holistically, following up their best intentions with invention. Take sustainable product design and development: we know that the possibilities for companies wanting to be part of the circular economy are endless, yet the proportion of organizations that are designing longer-lasting products actually fell from 57% to 47% in the last year.
Social Sustainability Takes Center Stage
At the same time, there’s a beacon of hope: more and more organizations are prioritizing the social side of sustainability. Over half of companies now focus on analyzing and optimizing their impact on employees, workers throughout the supply chain, customers, or surrounding communities. And almost all are launching programs that focus on employee well-being, for example with initiatives such as training and upskilling on subjects like diversity and inclusion, or providing mental health support.
Meanwhile, the broader supply chain remains a disappointing blind spot in sustainability’s social dimension. Organizations are not supporting workers outside their direct workforces as effectively as they could be. For example, while 45% of global consumers expect brands to work exclusively with suppliers that pay a living wage, our data shows that only 38% of companies do so.
It is imperative, now, that executives harness their awareness to take large-scale action. Businesses need to upskill internally and externally, partner up with other groups, and leverage technology to get our global environmental journey truly underway.
AI Offers a Smarter Way Forward
The future is here, today. Generative artificial intelligence (AI) will be essential as we fight to outpace the climate crisis, and over half of executives told Capgemini that it is key to their company’s sustainability transformation. The use cases are boundless. As an example, generative AI can create models that make precise weather predictions and track air quality. It can also measure in real-time the carbon footprint of a product – or of an entire supply chain1.
At Capgemini, we’ve also seen successful applications ranging from the highly specialized to cross-sector. While generative AI can be a real asset for tasks such as streamlining complicated financial writing to automate sustainability reporting2, there are myriad possibilities to improve highly specialized processes. For example, the technology can analyze demand patterns and market trends to cut costs and waste in the retail sector3, or optimize delivery routes to reduce carbon emissions for logistics operators4. We’ve also seen it used to support generative design processes to develop vastly lighter aircraft components that slash CO2 emissions. And on the largely overlooked but critical issue of mitigating biodiversity loss, AI has a plethora of potential applications. One example: creating planting recommendations based on its analysis of the coexistence between different plant species5 .
Even as we recognize its strengths, we must bear in mind that generative AI can also be costly itself in terms of carbon. Executives are aware, as well; our data shows that 78% of executives know that generative AI can have a greater output of pollutants than even traditional IT. However, more than half of companies have started to offset the impact of generative AI, for example with guidelines for responsible use or renewable energy investments.
What can The C-suite Do?
It goes without saying that executives are instrumental in creating and implementing tangible, lasting sustainability strategies. And it is the responsibility of each C-suite member to champion progress where they can. But, most importantly, they must bear in mind that change only comes when people, companies and ecosystems work together in unison.
So, while the CEO must be responsible for establishing sustainability as a top priority, they should work with the CFO in ensuring it is embraced as an investment opportunity and that a larger percentage of the company’s overall revenue is put toward the planet. This could help bring commitments up: today, a mere 0.42% of larger corporations’ revenue is earmarked for environmental initiatives.
It is also important to highlight the crucial role of the Chief Product Officer (CPO). People in this role are in a prime position to spearhead a widescale shift toward circular design to help the organization cut back on waste, extend product lifespan and gain consumer trust. Speaking of trust, this is also the domain of the Chief Marketing Officer (CMO), who should adopt a policy of total transparency. Communicating honestly about the company’s progress can mitigate the increasing skepticism among consumers and growing concerns of greenwashing.
The Race Toward 2024 and Beyond: Placing Sustainability at the Fore
Our research clearly confirms that more and more companies are on board with the idea of marrying business and planet. However, we have yet to identify the same uptick in actual sustainability initiatives and results. The window to act is rapidly shrinking, and we must begin today to create a fairer, cleaner future.
Now more than ever, we need cutting-edge sustainability strategies – ones that not only come from thinking outside the box but that leave the box behind entirely. As more advanced organizations propel themselves into the next phase of their journey by leveraging technology, now is the moment for more players to put plans into action and future-proof their business by committing to making lasting change.
Our detailed recommendations and more can be found in the Capgemini Research Institute’s report, “A world in balance 2023.”
Visit our website to download the report for more insights on business and sustainability in 2023, and beyond.
As a leading strategic partner to companies around the world, Capgemini has leveraged technology to enable business transformation for more than 50 years. They address the entire breadth of business needs, from strategy and design to managing operations. To do this, the company draws on deep industry expertise and a command of the fast-evolving fields of cloud, data artificial intelligence, connectivity, software, digital engineering, and platforms.
1 United Nations Environment Program, “How artificial intelligence is helping tackle environmental challenges,” November 2022. Accessed October 2023.
2 C3.ai, “Monitor, report, and accelerate ESG performance with AI,” Accessed May 2023; Capgemini Research Institute, “Harnessing the value of generative AI: Top use cases across industries,” June 2023.
3 Xenonstack, ”Generative AI in supply chain optimization,” August 2023. Accessed October 2023.
4 Logility, ”Revolutionizing supply chain planning: The power of generative AI,” July 2023. Accessed October 2023.
5British Ecological Society, “A deep generative Artificial Intelligence system to predict species coexistence patterns,” February 2022; Capgemini Research Institute, “Preserving the fabric of life: why biodiversity loss is as urgent as climate change,” September 2023.