There has been a sharp decline in CEOs’ relative prioritisation of sustainability, as AI, growth, inflation, and geopolitical uncertainty have risen to the top of their agendas, according to the latest report released by Bain & Company.
Ahead of Campaign Middle East‘s “The Do Good Issue” on sustainability, ethical marketing, and CSR, we’ve been keeping a close eye on whether the momentum on sustainability has kept pace with previous years.
Bain & Company’s “Visionary CEO’s Guide to Sustainability 2024,” which was released earlier today, shows that companies are already struggling to meet their existing sustainability commitments, with many companies reassessing, adjusting, and, in some cases, retracting their climate commitments.
“The transition to a sustainable world is following a familiar cycle,” said Jean-Charles van den Branden, Bain’s global Sustainability practice leader. “What began a few years ago as boundless excitement has given way to pragmatic realism. As the challenge of meeting bold commitments becomes clear, many companies are rethinking what is achievable and on what timeline.”
Jean-Charles van den Branden added, “But slowing progress would be a mistake. Our research shows many sustainable technologies are likely to reach their tipping point more quickly than expected. Forward-thinking companies will stay the course and lead the way as a mix of new technologies, consumer and customer behavior, and smart policy creates valuable opportunities for their industries.”
Sustainability still a top concern for consumers
While personal experience with extreme weather is the top reason consumers say they decided to buy sustainable products, 35 per cent say they made the choice due to media articles and documentaries, 33 per cent attribute it to availability, and 28 per cent credit awareness campaigns by brands and retailers.
As such, when it comes to sustainable shopping, consumers say brands and retailers play a big role in their decision-making process.
Bain’s research points to the imperative for consumer companies to de-average shoppers—engaging them less as a monolith and more as a complex group of specific customer segments, prioritise packaging that is both recycled and recyclable, and forge partnerships across the value chain to create greater accessibility to sustainable products.
Also, it’s not just consumers who are shopping for sustainability. Bain’s survey of 500 B2B buyers and sellers shows sustainability is now one of corporate buyers’ top three purchasing criteria, and 36 per cent say they would leave suppliers that don’t meet their expectations. Nearly 60 per cent say they’ll be willing to do so three years from now.
Likewise, Bain’s survey found nearly 50 per cent of corporate buyers said they would pay a sustainability premium of 5 per cent or more today, and they expect their willingness to pay to increase in the future.
This message seems to be getting lost on suppliers. While 85 per cent of suppliers say they embed some degree of sustainability in their products and services, only 27 per cent consider themselves very knowledgeable about their customers’ sustainability needs.
Bain outlines four steps — on customer, value, salesforce, and pricing — suppliers can take to start selling sustainability smarter.
Marrying AI and sustainability
Consumers and customers continue to rate sustainability as an important purchase criterion, but they often lack a clear understanding of what makes a product or service sustainable.
The Bain report has suggested that AI can help close this gap by providing more effective approaches to communicate about sustainable products and propositions.
“We advise companies to incorporate AI into their sustainability strategies to boost both innovation and resilience,” said Eric Guraieb, Partner and member of the Energy & Natural Resources and Sustainability practices at Bain & Company in the Middle East
“However, it’s crucial that they account for and mitigate AI’s impact on carbon emissions right from the start. By embedding sustainability from the outset, businesses can take the lead in shaping a greener, tech-driven future,” Guraieb concluded.
