Sustainability has emerged as a crucial component of corporate strategy, driven by regulatory demands, stakeholder pressures, and the recognition of its long-term benefits. This article examines the prevalence of sustainability strategies among global organisations, provides notable statistics related to sustainability, and discusses the implications for companies that do not adopt these strategies.

1. Prevalence of Sustainability Strategies

The commitment to sustainability is not a local trend, but a global movement. Approximately 76% of CEOs worldwide consider it central to their business strategy (Greenplaces). This shift is indicative of a broader trend, where sustainability is becoming an integral part of core business operations. More than 5,760 companies and financial institutions across the globe have set science-based targets to reduce environmental impact (OECD).

Corporate governance structures have not just evolved, but urgently adapted to incorporate sustainability. About one-quarter of organisations have established board-level sustainability committees, while many others discuss sustainability within committees focused on audit, risk, and strategy (KPMG). This integration underscores the urgent and increasing importance of sustainability in corporate decision-making, highlighting the need for immediate action.

2. Regulatory Requirements

The regulatory environment for sustainability reporting has become more stringent. The European Union’s Corporate Sustainability Reporting Directive (CSRD) requires over 50,000 companies to disclose detailed environmental, social, and governance (ESG) data (Greenplaces) (KPMG). Similar regulatory trends are observed in other regions, such as California, where major companies must report their emissions by 2026 (Greenplaces).

These regulations extend beyond large corporations to include small and medium-sized enterprises (SMEs), emphasising the need for transparency and accountability across all levels of business, not just the big players.

3. Investor and Market Expectations

Investor priorities are increasingly aligned with sustainability. Global ESG assets under management are projected to reach $40 trillion by 2030 (Greenplaces). Sustainable funds have shown superior performance, generating median returns of 12.6% in 2023 (Greenplaces). This demonstrates the financial viability and attractiveness of sustainable investments.

Most executives (75%) believe sustainability drives better business results, and 76% think it is central to their business strategy (Greenplaces). Furthermore, 73% of CEOs have committed to achieving net-zero emissions by 2050 (Greenplaces). This commitment is reflected in the inclusion of ESG key performance indicators (KPIs) in executive compensation structures, with many organisations linking a substantial portion of executive pay to sustainability performance (KPMG).

4. Employee and Consumer Demand

Sustainability is a critical driver in attracting and retaining talent. Surveys indicate that 67% of job seekers prefer environmentally sustainable companies, and 69% of employees want their employers to invest in sustainability efforts (Greenplaces). This trend is particularly strong among younger employees, with 64% of Gen Z and Millennial workers feeling empowered to drive change within their organisations (Greenplaces).

Consumer demand for sustainable products and practices is also on the rise. Companies that align their operations with consumer values around sustainability can enhance brand loyalty and market competitiveness (IMD Business School).

5. Implications of Not Having a Sustainability Strategy

Organisations without a sustainability strategy face several significant risks:

Regulatory Non-compliance

The increasing number of regulatory requirements means that companies without a sustainability strategy are at risk of non-compliance. This can lead to legal penalties, increased regulatory scrutiny, and significant reputational damage (Greenplaces) (KPMG).

Investor Aversion

Investors are more likely to avoid companies that do not demonstrate a commitment to sustainability, limiting access to capital and impacting the company’s financial health (Greenplaces) (World Economic Forum).

Talent Acquisition and Retention Challenges

Companies may struggle to attract and retain top talent without a sustainability strategy. This is particularly true for younger workers who prioritise environmental and social responsibility in their career choices (Greenplaces).

Market Competitiveness

Companies that ignore sustainability risk falling behind competitors who leverage sustainable practices for innovation and market differentiation. Sustainable practices can drive efficiency, reduce costs, and open new market opportunities, whereas ignoring these practices can result in a competitive disadvantage (Greenplaces) (IMD Business School).

Conclusion

Incorporating sustainability into core business strategies is no longer optional but essential for long-term success. Companies that fail to adopt sustainable practices face regulatory, financial, and reputational risks. Conversely, those who integrate sustainability into their operations can benefit from enhanced market competitiveness, investor confidence, and employee engagement. As global awareness and regulatory demands increase, the importance of sustainability strategies will only continue to grow.

The business case for sustainability is clear: it is a strategic imperative that drives value mitigates risks, and meets stakeholders’ growing expectations. By embracing sustainability, organisations can contribute to a better world and secure their long-term success in an increasingly complex and demanding business environment.

Connect with Emergent Africa

At Emergent Africa, we are dedicated to advancing sustainable business practices and fostering long-term value creation. Our team of experts is committed to helping organisations navigate the complexities of sustainability, from regulatory compliance to strategic integration. By partnering with us, you’ll gain access to innovative solutions, insightful guidance, and a network of forward-thinking professionals. Connect with Emergent Africa today to drive your sustainability initiatives forward and make a lasting impact on both your business and the environment. Let’s work together to build a more sustainable future.