JessHunt
(Credit: United Nations Global Compact & Accenture)
CEOs are facing an enormously challenging global context, with the vast majority (93%) experiencing 10 or more simultaneous challenges to their businesses and 87% warning that current levels of disruption will limit delivery of the UN Sustainable Development Goals (SDGs), finds the largest CEO study on sustainability ever conducted by the UN Global Compact and Accenture (NYSE: ACN). While CEOs are increasingly concerned about these obstacles, nearly all (98%) agree that sustainability is core to their role, a sentiment that has grown 15 percentage points over the last 10 years of the study.
The 12th United Nations Global Compact-Accenture CEO Study incorporates insights from over 2,600 CEOs from 128 countries, 18 industries, and more than 130 in-depth interviews. This is the largest sample of executives since the program's inception in 2007, including the largest group of CEOs from the Global South. CEOs warn of the impact of converging setbacks on business and society in the report, from declining multilateralism and socioeconomic instability to supply-chain disruptions and the immediate repercussions of climate change.
“In a world categorized by conflict, energy shortages, rising inflation, and the threat of recession, this year’s study shows CEOs do not believe the world is as resilient to crises as we may have hoped. Businesses continue to be impacted by multiple shocks. As a result, on a broad range of issues, from runaway climate change to widening social and economic inequalities, business action right now does not match the ambition and pace needed to achieve the Sustainable Development Goals by 2030,” said Sanda Ojiambo, Assistant Secretary General, CEO and Executive Director UN Global Compact.
As these obstacles increase, CEOs refer to global issues that have previously existed outside of the corporate domain, like climate change or sociopolitical conflicts, as grounds for concerns about delivering value and relevance to all stakeholders. With only eight years remaining to save the SDGs, nearly half (43%) of CEOs globally think the geopolitical climate has adversely affected their sustainability efforts, with the proportion even higher for CEOs from developing countries (51%). Accenture discovered that virtually all of the world's major firms will miss their net zero commitments unless they double the rate of carbon emission reductions by 2030.
Agriculture
- The future of agriculture calls for healthier, sustainable practices that create more food to satisfy the needs of rising populations with less impact on the natural environment. While digital practices are a strong first step, a wide-scale transformation is needed. Bold actions, such as adopting regenerative agriculture practices that take into consideration the entire ecosystem, are necessary to this transformation. Regenerative practices not only reduce soil erosion and water usage, but also help protect and restore biodiversity.
Energy & Renewables
- 93% (of CEOs) feel that renewable energy will have a moderate to high impact in transforming their industry’s ability to contend with global challenges. In the words of Ignacio Galán, Executive Chairman of Iberdrola: “For the first time, competition, clean energy, and security are intersecting, and renewables are now the solution to this trilemma.
- Energy sector CEOs are also looking at transformative ways to diversify their fuel sources, aiming to build a diversified, distributed energy system. In terms of diversification, CEOs are especially embracing low-carbon fuel sources like clean hydrogen fuels, and biofuels (including sustainable aviation fuel). To further decarbonize the industry, the energy sector is exploring innovative avenues like carbon capture and storage (CCS) to produce and distribute energy as cleanly as possible. The removal of carbon from the energy system with CCS and industrial efficiency technologies provides significant potential in terms of emissions reduction and economic value.
Industrial
- To build the future of the industry, industrial CEOs believe in the transformative power of sustainable product design – reimagining their products to reduce environmental impact across the product lifecycle. To enable the development of these sustainable products, some industrial CEOs are investing in artificial intelligence (AI) and digital twin capabilities to understand where there may be sustainable improvements across the production chain.
Natural Resources
- The natural resources industry is particularly focused on reducing its environmental impacts, specifically around water usage and GHG emissions, and restoring biodiversity and ecosystems. Leveraging technologies, such as drones and geospatial mapping, can help businesses use resources more efficiently and precisely while promoting healthier ecosystems.
Software & Platforms
- As CEOs develop their strategies, sustainability sits at the center of leaders’ approaches. Those furthest along are integrating sustainability directly into their business models – whether by developing tools to better manage carbon footprints, transitioning to green hardware and efficient data centers, or adopting energy-efficient cloud systems.
Supply Chain
- Globally, 17% of CEOs stated that supply chain disruptions had the greatest impact on their businesses. Overall, CEOs realize the necessity of making their supply chains more resilient. Chuck Robbins, Chair and CEO of Cisco, remarks, “Supply chains were built for economics of speed and a global marketplace – a massively, complicated system that is no longer what we need. While efficiency was once the priority, resilience and durability are now at the forefront.”
- More than half (54%) of CEOs are strengthening visibility into the social impacts of their supply chain, with agriculture and high tech CEOs leading the way (63% and 62% respectively). As José Ramón Vicente Rull, CEO of HLA Group & Managing Director of HLA Moncloa University Hospital, describes, “In the past, society was okay with a business providing a product or service regardless of its environmental or labour impacts. Now, it is table stakes for company leaders to think of societal impacts of their business operations.”
Sustainable Transportation
- “The automotive industry is experiencing an irreversible trend in electrification. This is key to achieving a net zero economy. The magnitude of change electrification brings may have parallels drawn only to the transition from horse-drawn carriages to internal combustion engines in the early 1900s.” -Girish Wagh, Executive Director of Tata Motors Limited
Sustainable Travel
Utilities
- Paddy Padmanathan, Vice Chairman & CEO of ACWA Power notes, “We need to elevate this water crisis into the global consciousness and create a level of attention and recognition that this is going to become a big, all-consuming issue as time goes by.”
- One way water utilities companies are making strides to safeguard the water supply is by leveraging technologies such as Internet of Things, which helps proactively monitor leaks and water security issues, as well as make suggestions for usage changes to consumers.
In their interviews, CEOs identify key initiatives to build company resilience, ranging from establishing science-based climate targets and investing in workforce diversity to engaging in cross-industry partnerships on technology solutions, improving supply chain visibility, and advancing greater biodiversity. Furthermore, CEOs continue to advocate for government involvement in policy changes that prioritize long-term measurable goals such as standardized ESG reporting standards, a global carbon market, and incentives for sustainable business models.
