For sustainability supporters (everybody?), the good news is that what has been a highly demanded consumer mandate is soon to become official legislation in some areas (or greatly expanded where it exists), with sustainability reporting soon to be required throughout the EU and in California, with other areas surely to follow suit in the near future. But the bad news is that only a select group of companies are ready to meet those legislated standards, reveals a new report from global business consultancy Bain & Company.
The results of the survey conducted by Gerson Lehrman Group finds that just 24 percent of companies say they are ready for upcoming sustainability reporting requirements—a potentially worrying statistic as it can take years to build the needed capabilities, such as the technology necessary for collecting, analyzing, and reporting sustainability data.
More than 300 executives were surveyed, with nearly 90 percent agreeing improvements in digital technology are critical for advancing their sustainability goals. However, most say that they are not taking the actions needed to make that happen.
The findings come as the global regulatory landscape rapidly shifts and expands, and as companies are under pressure to anticipate additional reporting requirements. The EU’s Corporate Sustainability Reporting Directive mandates that EU companies start reporting on their greenhouse gas emissions and other environmental factors by 2025. In California, large companies will need to report on Scope 1 and Scope 2 emissions by 2026, and Scope 3 emissions by 2027—not far off, considering the time it takes to put these systems in place.
“Technology will be essential for companies to meet their sustainability commitments and ensure compliance as regulations evolve,” said Adam Cox, Bain & Company partner and member of the firm’s Enterprise Technology practice, in a news release. “In addition to carbon emissions, companies need to be prepared to address other aspects of sustainability, such as water use, waste management, and supply chain ethics. Doing so will require companies to invest in new technology systems, often accelerating existing initiatives to modernize their IT.”
Deploying technology to meet sustainability goals
The research found that enterprise technology typically represents about 25 percent of a company’s Scope 1 and 2 emissions. Large data centers can consume as much as 5 million gallons of water daily, and end user devices, such as laptops, can contribute to a company’s electronic waste load. Developing systems to minimize these impacts helps to build the capabilities that will serve the entire organization.
Beyond IT, enterprise technology is critical for monitoring and analyzing the data that executives depend on to understand baselines and set ambitions. Companies will need to set sustainability goals that align with the existing technology roadmap. Sustainability objectives can help turbocharge the business case for modernizing legacy technology and migrating to cloud workloads, so it makes sense to align the efforts.
A path forward
Only about one-third of the executives surveyed with high sustainability ambitions believed that they have the technology necessary to deliver on them.
“Technology can become the bottleneck preventing companies from delivering on their sustainability objectives,” said Cox. “Leaders in this space have been investing in custom solutions to support their sustainability efforts for more than a decade, and most companies just getting started know they have some catching up to do. Speed will be critical for companies looking to tap sustainability as a competitive advantage.”
