One in five organisations ready to act on climate and sustainability: BCG

As more and more organisations commit to net zero, only one in five are ready to act on climate and sustainability as a top corporate priority a new BCG report claims. 

According to a new Boston Consulting Group report, these organisations have incorporated climate and sustainability priorities into their innovation engines, have built the capabilities they need, and are ready to develop the product, process, and business model innovations that can deliver.

As more big companies announce net-zero pledges almost daily, the innovation readiness gap between commitment and capability that emerges from the research becomes an existential problem, the report noted.

Justin Manly, global leader of BCG’s growth and innovation segment and co-author of the report said, “While many companies talk about sustainability and make net-zero emissions pledges, far too few of them have truly done the work of integrating climate and sustainability priorities into their innovation engines and producing tangible results.

“At the same time, investors, regulators, customers, and shareholders are all looking to big companies and their CEOs to take the lead in making real progress against global warming.”

The report revealed that those industries responsible for the highest emissions—durable goods (85 percent), automotive (78 percent), utilities (77 percent), and oil and gas (77 percent)—are the ones that prioritise climate and sustainability the most.

Additionally, high-emitting companies are 20 percent more likely than low-emitters to target the kind of deep-tech solutions needed to substantially decarbonise.

Climate and sustainability-ready companies emphasise a number of aspects of their innovation systems more aggressively than other ready innovators do, BCG reported.

They start with greater ambitions, identify the domains to focus on, manage the “idea funnel,” and have clear performance goals. They also engage more actively with partners and even competitors.

Ready innovators have also seen a positive impact on the productivity of their innovation and R&D activities, with 80 percent of companies surveyed working remotely two or more days a week and 49 percent of climate and sustainability-ready innovators reporting that the productivity of their innovation and R&D activities have improved by 10 percent to 50 percent because of these new ways of working.

Michael Ringel, global leader for innovation analytics and research at BCG and co-author of the report said, “As sustainability moves up the agenda in boardrooms and C-suites everywhere, the importance of innovation rises commensurately.

“But innovation—be it in products, processes, or business models—is not a siloed function and does not take place in a walled-off lab. Progress depends on innovation being embedded throughout the organisation, with the same human and technological capabilities that drive success on other topics.”