With the US administration turning its back on the Paris Climate Agreement, demands for corporate climate leadership are mounting. At a time when executives should be filling the leadership gap, too many CEOs continue to be trapped by short-term, profit-only thinking.
Positive return on investment (ROI) is one sign of a healthy business. But equating ROI with profits alone is dangerously outdated thinking. For business leaders, especially those based in the US, the stakes have changed and the pressure is on - from consumers, employees and shareholders alike - to build a broader understanding of ROI into your business models.
A recent Environmental Defense Fund study of 600 executives at companies with $500 million or more in earnings shows that the belief in balancing profits with environmental stewardship is strong. Stakeholder pressure is substantial. The technologies are readily available. But so far the investments are not. Many business leaders have a gap to fill between their talk and their walk.
When looking at five specific technologies - data analytics, sensors, artificial intelligence (AI), automation and blockchain - uptake across all sectors has increased year over year, with 94% of business leaders saying they are putting these technologies to work in order to stay competitive (we're not talking about research and development here, but the deployment of newly available innovations). Yet despite overwhelming agreement that this tech can boost both ROI and sustainability, only 59% of leaders say they are actually investing in tech for sustainability.
Businesses are embracing new technology - but are they missing the bigger picture?
Image: Environmental Defense Fund
First, congratulations to the almost two-thirds of executives who are stepping up. Over time, your businesses will enjoy a tremendous advantage over those who do not. Second, for the 33% who understand the need to invest in environmental innovation, yet aren't doing so: we need to talk. The gap between belief and investment represents a critical opportunity for companies to double-down on sustainability commitments and lead on climate - as your consumers, employees and investors all expect.
Before we dig deeper, let's acknowledge that businesses have made real strides on sustainability in recent years. We're seeing an uptick in corporate commitments to major emissions reductions, procuring expanding renewable portfolios, and even engagement on climate policy. However...