By Benjamin Alleau, Executive Vice President, Group Sustainability Acceleration Services & Offer Leader, Capgemini
Capgemini is a dedicated Partner of World Climate Summit and is actively contributing to the work of broad network of World Climate Foundation, bringing invaluable expertise for achieving a sustainable future for business globally.
“We have been working with the WCF for the last 5 years with one objective in mind: leveraging this strategic partnership to increase cross-sector dialogues with our clients and partners, develop innovative collaborations and scale up our actions on sustainability and biodiversity. The WCF is the perfect partner to help us achieve this objective, thanks to its global presence and ability to bring together a huge variety of key stakeholders willing to drive the sustainable transition forward.”
- Jean-Baptiste Perrin, Vice President, Capgemini Invent
Aiman Ezzat, CEO, Capgemini and Cyril Garcia, CEO, Capgemini Invent, will speak at Closing Session “Catalysing Ambition Loops – How to Scale Up Technology, Policy & Investments to Create Bolder Pathways for Change” of World Climate Summit.
Courtney Holm, Vice President, Sustainability Solutions, Capgemini Invent will contribute to Panel Session 4A “Beyond Reduce, Reuse, Recycle – Accelerating the Shift to a Circular Economy to Achieve Climate Goals” on 14 November.
In recent years, we have seen an uptick in net-zero carbon pledges, suggesting that organisations are transforming to tackle challenges like climate change and biodiversity loss. However, new research recently conducted at Capgemini paints a more complex picture of the ongoing sustainability transformation.
Some key findings of the report, "A world in balance: Why sustainability ambition is not translating to action" indicate that, while many companies have set long-term climate goals, most struggle to turn them into actions. In fact, only half of the executives say that their company has a defined list of eco-initiatives to be implemented in the next three years. And even when sustainability initiatives are put into place, they are far from a priority: for companies with over $20 billion in revenue, average investment into sustainability represents just 0.41% of total revenue (compared to an average 4% for the R&D spend by the S&P 500 companies in 2020).*
What is the takeaway? That organisations around the world must recognise the urgent need for actionable sustainability initiatives before it is too late and implement company-wide priorities supported by realistic short-term goals that lead to tangible results.
What stands in the way of environmental action?
The gap between ambition and action is clearly linked to the lack of short-term commitments among companies. But what is causing them both? Through our “A world in balance” report, we have identified several common challenges that may impact a company’s ability to make and execute solid game plans.
First, most companies might still view sustainability solely as a cost driver, rather than understanding it as a worthwhile investment. Only one in five executives say the business case for sustainable initiatives is clear, and over half (53%) believe such measures are non-viable because the costs involved in lessening environmental impact will outweigh the potential benefits.
Second, companies can fail to coordinate efforts internally. Even where plans exist, implementation often lacks broader oversight and centralised coordination, leaving existing initiatives and their impacts siloed within certain parts of the company. For instance, few HR departments prioritise recruiting workers with sustainability skills or fostering these skills among current employees. Less than half (47%) of businesses actively recruit and hire candidates with strong sustainability skills. Likewise, among most product or manufacturing teams, eco-responsible design and circularity remain as peripheral concerns, if they are raised at all.
Facts and figures guide the way
Despite hesitation or doubts among some companies, we see very clearly from the report’s data that sustainability and financial metrics can go hand in hand. By sharing these insights with our partners and clients, we hope to correct misapprehensions about the costliness or unprofitability of environmental action.
Crucially, organisations that have made more progress than their peers in implementing sustainability initiatives have also enjoyed a 9% higher net profit margin than average from 2020 to 2021. While this does not imply causation, it does show that environmental action and profitability can — and do — co-exist.
The breadth of our data also enables us to identify results from ‘sustainability frontrunners,’ the top 11% of companies most advanced in their environmental transformations in our research. Compared to the average, these organisations reported 83% higher revenue per employee from 2020 to 2021. In this same period, ‘sustainability beginners,’ companies that have dedicated the least effort to lessening their impacts, saw their revenue per employee decline by 13%. Such differences would give even a wary executive reason to reconsider.
Again and again, we see the symbiosis between financial and environmental success. Looking ahead to the coming months and years, investment in sustainability becomes ever more critical as the global economy faces a potential downturn. In a recession, companies with a strong environmental focus can expect to recover more quickly.
Even in light of these insights, beginning to invest in sustainability may feel daunting. Happily, there are many tools and partners that can help. As experts in cutting-edge fields like artificial intelligence (AI), connectivity and more, we know from firsthand experience that many companies are investing in new technologies to help lessen their environmental impacts. In the energy sector, for instance, 72% of companies in our research have invested in AI and automation to decrease emissions. And other companies’ investment in the Internet of Things (IoT), enables them to monitor and reduce their impacts by embedding machines with sensors, software, and other tools.
A true team effort is led by the C-suite
Perhaps the most important takeaway from our research is that sustainability must be a company-wide concern, top to bottom. We know that becoming a genuinely green business will require executives to combine their efforts and take initiative.
Reflecting on our partnerships with some of the world’s leading companies, we can imagine what such a proactive C-suite might look like. The CEO would, for instance, make sustainability a business priority, working it into quarterly earnings reports and company-wide presentations. Equally, the CFO would fully grasp and articulate the business case for environmental measures, ensuring that everyone throughout the organisation is clear on key business (including ESG) indicators.
To avoid greenwashing the group’s environmental credentials, the CMO would implement rigorous protocols for reporting – ones that will provide an accurate and trustworthy picture of the company’s progress toward net-zero. Chief Design or Product Officers would be called upon to embed sustainability as a core tenet and driving principle of all design efforts. Meanwhile, the Chief Procurement/Supply Chain Officer would work directly with suppliers to help them decrease their impact alongside the company.
In this scenario, the CTO or CIO would need to strengthen sustainable IT initiatives, investing in and promoting the use of more eco-friendly tools and technologies. The COO would build the foundation of the greener organisation, exploring all opportunities to push efforts further. Finally, and this is key, the CHRO would also shape the business by ‘staffing for sustainability,’ seeking out new skill sets and shifting to a new, eco-minded leadership model.
Acting today for a greener tomorrow
By zeroing in on the business benefits of sustainability, companies will achieve two important results: they will make clear the urgent importance of these actions and they will motivate their teams. Our data, as outlined above and explored fully in our recent report, should encourage organisations at every stage of their transformations to take the next step toward net-zero.
* Sather Research, “R&D spending as a percentage of revenue by industry (S&P 500),” March 2021
Visit our website to access more insights or to download the full report.
About Capgemini
As a leading strategic partner to companies around the world, Capgemini has leveraged technology to enable business transformation for more than 50 years. We address the entire breadth of business needs, from strategy and design to managing operations. To do this, we draw on deep industry expertise and a command of the fast-evolving fields of cloud, data artificial intelligence, connectivity, software, digital engineering and platforms.
Learn more: www.capgemini.com
About the author
Benjamin Alleau, Executive Vice President, Group Sustainability Acceleration Services & Offer Leader. With more than 20 years professional experience in consulting along with strategic account management, Benjamin has always had the passion for using technology to improve the core processes of every organisation he has been working for. While he is skilled in business process, business case and IT strategy, Benjamin’s main skill is to set and implement large-scale agile digital transformation initiatives for clients using technology and partners to achieve both business and strategic outcomes. Benjamin Alleau graduated from Télécom ParisTech in 1998 as an Engineer focused on Information, Communication Science & Technology.