New findings from Bain & Company released today reveal a concerning gap in corporate readiness for forthcoming sustainability reporting standards. Only 24% of companies feel prepared for the upcoming regulations, which could take years to comply with due to the technological demands of collecting, analyzing, and reporting sustainability data.
The research surveyed over 300 executives, finding a consensus that advancements in digital technology are crucial for achieving sustainability objectives. Despite this agreement, most companies have not taken the necessary steps to implement these technological changes. This discrepancy arises as the global regulatory environment evolves rapidly, with entities such as the European Union and the state of California setting stringent timelines for reporting on environmental impacts, including greenhouse gas emissions. EU companies must start reporting under the CSRD by 2025, and California companies are to follow with detailed emissions reporting in subsequent years.
Adam Cox, a partner at Bain & Company and a member of the firm’s Enterprise Technology practice, emphasized the critical role of technology in meeting these regulatory demands. “Technology will be essential for companies to meet their sustainability commitments and ensure compliance as regulations evolve,” said Cox. He highlighted the need for comprehensive approaches that include carbon emissions and other sustainability facets like water usage, waste management, and supply chain ethics.
Bain’s study also found that enterprise technology accounts for approximately 25% of a company’s direct and indirect emissions (Scope 1 and 2). The environmental footprint of IT infrastructure is significant, with large data centers consuming millions of gallons of water daily and end-user devices contributing heavily to electronic waste. By optimizing these systems, companies can significantly reduce their environmental impact and enhance overall sustainability.
Technology plays a vital role beyond IT department as an indispensable tool for monitoring and analyzing data that executives use to set and pursue sustainability goals. Aligning these objectives with the company’s existing technology roadmaps can enhance the business case for upgrading legacy systems and moving to cloud-based solutions, effectively merging sustainability targets with broader business strategies.
Despite high sustainability ambitions, only about one-third of the surveyed executives believe they possess the necessary technology to meet their goals. "Technology can become the bottleneck preventing companies from delivering on their sustainability objectives," Cox stated. He noted that while leaders in this domain have been developing custom solutions for over a decade, many companies are only now beginning to realize the urgency. "Speed will be critical for companies looking to tap sustainability as a competitive advantage," he concluded.
This stark reality of unpreparedness presents a dual challenge and opportunity for businesses to accelerate their technology investments, ensuring they not only comply with evolving regulations but also position themselves as leaders in the ever-important realm of corporate sustainability.
