Sustainability
Staying The Course: An Overarching Strategy For Sustainability
5 min read
Company progress on corporate sustainability is ebbing. Economic and geopolitical headwinds are slowing momentum, with companies reducing or postponing sustainability efforts. Due to market instability, many boards are now focusing on financial health and stability.
Much of this is due to the fact that for many companies, the initial progress made from easy sustainability wins is over and they now face harder sustainability choices in a more difficult financial environment.
As a result, an increasing number of companies have extended net-zero targets from 2036 to 2050. Similarly, just 3% of shareholder resolutions aimed at improving corporate sustainability passed in 2023, down from 21% the prior year. This decline highlights a significant reduction in support for these resolutions.
Despite this, over two thirds of CEOs still view sustainability as a leading factor in their long-term strategies and rank it as a top ten business priority. So how do business leaders balance financial costs with the desire to maintain sustainability progress? This is how we’re seeing leaders approach sustainability in a more challenging period.
Recognizing the need for responsible leadership
Responsible leadership is key to balancing financial pressures with long-term sustainability goals.
Cutting sustainability efforts for short-term cost savings can harm future resilience, brand reputation, and compliance with evolving regulations. Responsible leaders understand that staying committed to sustainability, even during tough times, is essential for long-term success.
Rather than viewing sustainability as a cost, responsible CEOs see it as a competitive advantage. By integrating sustainability into core business strategies, they inspire innovation and find new ways to reduce costs without sacrificing progress on sustainability goals.
CEOs who communicate openly about their sustainability journey, even during financial strain, build trust and maintain support from investors, employees, and customers. This transparency also helps align business goals with stakeholder expectations.
Building an unbeatable employee value proposition
A strong employee value proposition (EVP) is essential for attracting and retaining top talent, especially in challenging times. Companies that maintain a clear commitment to sustainability offer a compelling reason for employees to stay, even when financial pressures rise.
This is also about creating an engaged and motivated workforce.
Employees who see their company leading in areas like environmental protection or social responsibility are more likely to feel connected to the mission and less likely to leave.
By integrating sustainability into the company’s EVP, businesses can differentiate themselves in the market. Offering employees opportunities to be part of sustainability initiatives, such as green innovation or community engagement projects, strengthens their sense of belonging and purpose.
An EVP with sustainability as one of its core pillars is now critically important. According to a 2024 Deloitte survey, 46% of Gen Z and 42% millennials have already changed or plan to change jobs or industry due to climate concerns. Leaders who want to maintain an attractive workplace now and in the future, cannot afford to reduce corporate sustainability efforts.
Getting ahead of regulation
As governments and regulatory bodies ramp up climate and environmental standards, companies that are proactive in their sustainability efforts will be better positioned to adapt.
Forward-thinking leaders recognize that delaying sustainability investments to reduce costs can result in higher compliance expenses down the road. By staying the course, leaders can avoid future fines, penalties, and rushed, costly adjustments.
Proactively addressing sustainability not only ensures compliance but also gives companies a competitive edge. Companies that get ahead of regulatory changes can position themselves as industry leaders and influence the direction of future policies.
Moreover, staying ahead of regulations helps companies reduce risk. In a fast-changing regulatory environment, responsible leadership ensures that sustainability measures are implemented early, reducing the chances of being caught off-guard by new laws or requirements.
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