Avoiding sustainability false summits

Enterprises and their supply chains are making Everest commitments when it comes to sustainability. Net zero goals abound. Although we are seeing some companies run towards their goals, there is a concern from leaders that either we will run out of energy before we hit those goals or arrive at a false summit.

In fact, Gartner has predicted that: “By 2026, 80 percent of global enterprises with net-zero goals will restate interim milestones under stakeholder scrutiny of progress and underinvestment.” 

This is our problem

This is a supply chain problem — our problem. A majority of GHG emissions are in Scope 3 upstream and downstream in our value chains. Meeting ambitious sustainability goals is a race of endurance, not a sprint. Mindset matters as much as muscle. Chief supply chain officers who win this race of endurance and meet their sustainability goals will have adopted three practices.

The never finished mindset

What looks ambitious today will be just a footnote tomorrow. The expectations for sustainability performance from our stakeholders are constantly increasing, and standards and measures are evolving. Gartner's 2022 Sustainability Opportunities, Risks and Technologies Survey results show that customers (80 percent), investors (60 percent) and regulators (55 percent) are the top three stakeholder groups creating pressure on enterprises to invest in sustainability.

How many of us put sustainability in the “too difficult bucket,” turn our attention onto short-term priorities, or treat sustainability as a compliance activity? A compliance mindset leads to minimum investment and we cannot reasonably expect to gain value from this approach.

While we focus on the short term, the world around us is changing. We will see the rise of a climate economy – and what drove our success in the past is not guaranteed to lead to our success in the future.  We need to not see sustainability as a destination, but as a constant change and opportunity. We gain value by having a “never-finished mindset.”

Going the distance together

Meeting sustainability goals will not happen in isolation. Our achievement will be reliant on an ecosystem of partners. This means engaging collaboratively with our suppliers on an emissions-reduction journey. It means aligning our processes so that we think about the trade-offs between cost, cash, service and carbon. Without partnerships to enable our sustainability strategies, our chances of failure will be higher than success.

Rewrite the rules

We are on the cusp of change, like we saw in the transition from the horse and cart to the car. Companies that are the leviathans of today can so easily become the has-beens of tomorrow.

There are significant rewards to be gained from deploying a successful sustainability strategy: cornering a new part of the market, engaging with new customers. Our 2022 CEO and Senior Business Executive Survey shows that new products will need to have both a price and environmental sustainability impact. Environmental sustainability was ranked as the third reason to invest in new products.

We are starting to see a new breed of organization that is beginning to rewrite the rules needed to win. Companies are developing new IP and buying up start-ups to solve some of the biggest environmental and social challenges. To thrive, sustainability goals must be integrated into our product-innovation strategies. Use scenario planning to assess the speed of a transition to a low-carbon economy by market.

Ask Yourselves This

So as, CSCOs, we need to ask ourselves three questions to assess if we have what it takes to achieve our sustainability goals, to win:

• Do we recognise that we will constantly need to raise our sustainability performance to meet changing stakeholder and market expectations?
• Do we have the right people, partnerships and skills to enable us to meet ambitious sustainability goals?
• Are we playing to win by looking at how and where we can rewrite the rules? Are we leveraging our sustainability strategy as a competitive advantage?

If your answer to any of these questions is “no,” there is still time to make change. We still have time to enable our success.

This article was republished with permission from the Gartner Blog Network.