I’m always excited to read Deloitte’s global CxO surveys that are based on thousands of responses from all over the world. These reports give you a good idea about what executive teams are talking about, they usually pick up on surprising data that challenge our assumptions – and they highlight those business agendas that span the entire globe.
Sustainability is one of those agendas, and despite the headwinds of recent years (economic uncertainty, supply chain disruptions, talent shortage and a lot more), the more than 2,000 CxOs that participated in our 2023 CxO survey indicate that sustainability continues to be a top priority for their organisations. Take a look at some of the results:
- Climate change ranked ahead of seven other urgent issues, including innovation, competition for talent and supply chain challenges. Only economic outlook ranked slightly higher.
- 61% of the CxOs in the survey said sustainability will have a high/very high impact on their organisation’s strategy and operating model over the next three years.
- 75% said their organisations have increased their sustainability investments over the past year, nearly 20% of whom say they’ve increased investments significantly.
Employees demand action
The numbers above are not necessarily surprising and reinforce what we already know: that the global movement towards sustainable business models is here to stay. In Denmark and the Nordics, we are also seeing this wave of companies embedding sustainability into their business strategy and core operating model.
However, what is surprising – and often left out of the story – is the fact that pressure from employees seem to be playing a bigger role in sustainability efforts than we might think. In the survey, 64% of CxOs said employee activism on sustainability matters has led their organisations to increase sustainability actions over the last year – and 24% said employee activism led to a significant increase.
As one of the American top leaders pointed out: “Sustainability is a huge factor in recruiting talent into our company. We employ a lot of very young, smart people, and when they’re interviewing with us, one of the first questions they ask is about sustainability and what we’re doing to have a positive impact on the planet.”
Barriers to action
Although many companies are making significant progress, embedding sustainability into your operating model is not easy, and many are still struggling to find the right way forward. For example, in the survey 24% of the +2,000 CxOs said that the difficulty of measuring the organisation’s environmental impact is a top barrier to transformation, and 19% said that sustainability efforts are too costly. However, 91% of the respondents agreed that companies can continue to grow while reducing negative impact.
So, how can leaders close the gap between ambition and impact, break through the barriers to greater action, and start to balance the near-term costs of sustainability initiatives with the long-term benefits? Here’s a few suggestions on how to accelerate the journey based on the responses from the more than 2,000 CxOs:
- Embed sustainability goals into the overall strategy and operating model: Often, what impedes action isn’t lack of intention; it’s the choices and tensions that CxOs and boards must navigate to clearly define their organisations’ stance on sustainability. By developing a holistic view of sustainability goals, then integrating that view into the strategy and core operating model, CxOs can reduce or eliminate stakeholder dissonance – and help ensure leaders focus on strategically aligned action.
- Take a hard look at capabilities throughout the organisation. Too many organisations leave it up to category managers to take care of sustainability without making sure that they have the skills, resources and experience to succeed with this. This approach doesn’t measure up in a time when employees (and many other stakeholders) are pushing for outcomes, not just talk. A meaningful sustainability agenda has to come with an investment of time and resources – and top management commitment.
- Build trust by taking credible actions: Maybe surprising to some, the CxO Survey 2023 uncovered scepticism about private sector commitments to address climate change and not just highlighting minor efforts with no significant impact. Organisations can fight against such distrust by ensuring the data they report is relevant and reliable. Several third parties offer widely recognized frameworks to set and measure sustainable action – as well as to eliminate greenwashing and fraud.
One of the main conclusions from our 2023 CxO Survey is that organisations can’t drive sustainable change solely on their own. A big part of this is harnessing employees’ passion, not just by finding answers, but also asking the right questions – for example how do we…
- Grow amid increasing market and customer expectations?
- Respond faster to market and competitive disruptions?
- Simplify organisational processes, both internal and external?
- Maximise returns on limited financial and human capital?
- Incubate and test new products and technologies?
- Pivot to a competitive and sustainable business model?
Re-thinking the operating model is not about disowning the past, but about fundamentally pulling the organisation in a different direction to win in the green economy. And we should be thankful for employees who are committed to showing the way.
Forfatter spotlight
Tore Christian Jensen
As a part of the Strategy & Operations practice Tore has worked with analysis, development and implementation of operational strategies. Tore has deep experience with aligning business models to changing market demands through optimisation of business processes and aligning systems, organisation and governance accordingly. He has industry experience from manufacturing, transportation, consumer products and energy. His main focus is on on the operational core processes but he also covers administrative support processes. As a program manager Tore has been leading transformation projects for international clients heading multiple parallel projects and reporting directly to executive committee members. His responsibilities cover everything from initiating assessments, identifying opportunities for improvement to building business cases and following up by designing solutions and driving teams through implementation.