91% of Indian businesses increased their sustainability investments over the last year, prioritising a just transition alongside growth: Deloitte CXO survey

Mumbai, 26 November 2024: According to the Deloitte CXO Sustainability Report, Indian CXOs have significantly ramped up sustainability investments, with 91 percent reporting an increase over the last year despite challenges such as a lack of sustainable solutions, senior leadership buy-in and difficulty measuring environmental impact. This increase is driven by growing concerns over climate change, with 87 percent of Indian CXOs feeling concerned about it most of the time.

Climate change is the top priority for 40 percent of Indian CXOs this year, outpacing AI-driven innovation (39 percent) and economic outlook (37 percent). However, 62 percent of Indian executives also emphasise that this focus must be accompanied by a commitment to climate equity and ensuring a just transition within their companies’ sustainability efforts.

“Indian CXOs have a unique opportunity to lead on climate action by aligning their sustainability investments with strategic goals that drive business growth. As they increasingly prioritise climate equity and work closely with local communities, they can set new standards for a just transition, ensuring a resilient workforce ready for green jobs. While challenges such as integrating sustainable solutions, securing stronger internal buy-in and measuring environmental impact exist, CXOs can address these by fostering cross-departmental collaboration, leveraging innovative technologies and enhancing data analytics capabilities. By adopting advanced tools for tracking and reporting environmental performance, companies can gain clearer insights into their sustainability initiatives. This, combined with promoting teamwork and innovation, will help align sustainability goals with overall business strategy, ensuring more effective ESG outcomes,” said Viral Thakker, Partner and Sustainability and Climate Leader, Deloitte South Asia.

The increase in climate investments among Indian CXOs can be attributed to the potential for business impact. About 78 percent of CXOs in India expect that climate change will impact their companies’ strategies and operations to a high/very high extent in the next three years. This is a noticeable increase from 2023, notably higher than the global average (70 percent). Among the most important climate issues already affecting companies are changing consumer patterns of preferences (61 percent), increased insurance costs or lack of insurance availability (57 percent), the operational impact of climate-related disasters (56 percent), employee physical health challenges due to environmental changes (55 percent) and employee mental health considerations due to climate change concerns (54 percent) emerged as top issues.

Another reason for increased investment is the significant pressure from stakeholders to enhance climate initiatives. About 81 percent of Indian CXOs and 79 percent of global CXOs report this influence, indicating a need for strong collective action worldwide.

Indian executives anticipate significant returns from their increased investments. Over the next five years, the top benefits of climate action are expected to include improved investor returns (45 percent), enhanced asset values (43 percent), increased revenue from new businesses (39 percent), better employee morale and well-being (39 percent) and stronger brand recognition and reputation (38 percent).

Indian CXOs have started implementing a range of strategies towards corporate sustainability. About 41 percent are transforming their business models to accommodate climate change, while 40 percent have embedded sustainability considerations throughout their organisations. The report also highlights that Indian CXOs consistently outpaced their global peers in sustainability actions. For instance, 56 percent use more sustainable materials, compared with 51 percent globally, and 55 percent implement technology solutions to meet environmental goals, versus a global average of 50 percent. Additionally, 54 percent are investing in renewable energy and reconfiguring operations for climate resilience, higher than the global averages of 49 percent and 46 percent, respectively.

This gap is also prevalent in the harder-to-implement, needle-moving actions. For instance, 54 percent of Indian CXOs are reconfiguring their operations, infrastructure, and supply chains to be more climate-resilient, compared with 46 percent globally. Additionally, 50 percent are tying senior leaders’ compensation to environmental sustainability performance, exceeding the global average of 43 percent.

Indian CXOs remain optimistic about tackling climate change, with 97 percent optimistic that the world will take sufficient steps to avoid its worst impacts. About 91 percent of Indian executives agree that the world can achieve global economic growth while also reaching climate change goals, and 94 percent of Indian CXOs agree that their companies can continue to grow while reducing GHG emissions.

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This press release has been issued by Deloitte Touche Tohmatsu India LLP.