Leaders and consumers agree: Sustainability still matters
People are increasingly worried about climate change: they are experiencing extreme weather firsthand
Bain & Company / The Brief
Sustainability continues to be a hot topic for the C-suite. Climate Week just wrapped, and following a year of excitement around sustainability, business leaders across sectors are facing demands for commitment from customers, consumers, and regulators alike. Our second annual edition of The Visionary CEO’s Guide to Sustainability offers critical insights and data to help today’s executives plan for a sustainable tomorrow. We’ve broken down what you need to know:
Leaders and consumers agree: Sustainability still matters. Based on our research, more than roughly 60% of consumers report being more concerned about climate change than they were two years ago. And the International Monetary Fund suggests that a temperature increase of 2 degrees Celsius could cut $6 trillion from the S&P 500. So, how will CEOs meet the moment of addressing sustainability? It starts with charting your ambition. We’ve worked with hundreds of executives across industries and have identified four key questions that will help leaders chart the path ahead.
- How will global sustainability transitions shape the future business landscape?
- What are our critical priorities, and how fast must we move?
- How can we build a business case for sustainability?
- What actions should we take with external stakeholders?
Like last year, our second annual global study found that people are increasingly worried about climate change, especially as they are experiencing extreme weather firsthand. Many are using their wallets to make meaningful impact. Respondents also told us that they want to live sustainably, believing that their personal choices could be effective, but they’re having trouble figuring out how to do that. With consumers looking to brands, retailers, and the government to help them, smart businesses should not only think about how customers can buy more sustainably, but live more sustainably. We’ve identified five steps companies can take:
- Invest in finding and developing programs that meet untapped sustainability needs and fine-tune your messaging.
- Align teams—operations, supply chain, and marketing—on your sustainability goals.
- Be prepared to manage a fragmented market—different consumer segments require different messaging.
- Improve and invest in sustainable packaging and communicate the benefits to your customers clearly.
- Use partnerships to expand access to your sustainable products.
Sustainability isn’t just a factor in B2C purchases: B2B buyers also place it as a top criterion for purchasing. In fact, our survey suggests that more than one-third of companies would be willing to leave a supplier that doesn’t meet their sustainability objectives, and 60% say they would be willing to do so within the next three years. But only 27% of suppliers say they’re very knowledgeable about their customers’ sustainability priorities. So, how can suppliers master selling sustainability? Focus on these initiatives:
- Use data to identify your customers who are most interested in sustainability and target them effectively.
- Tailor your value proposition to meet their sustainability needs.
- Ensure your sales team understands how your products align with their customers’ sustainability goals.
- Align your pricing strategy with the full value of your sustainable product offerings.
Another hot topic in the business world? Artificial intelligence. Both AI and sustainability are still in early enough stages that they can be used together to generate business value. In our CEO’s Guide to Sustainability, we explored four strategic approaches to AI that are beneficial to both the environment and the corporate bottom line:
- Use AI to educate customers on your sustainable offerings: We see that Ikea created an AI recommendation engine that tailors product suggestions based on customers’ sustainability preferences.
- Create innovative, sustainable products that reduce costs: For example, a food company could use digital tools to track and reward farmers who reduce their emissions, creating a more sustainable supply and a low-carbon product line.
- Reduce operational risk while maximizing resilience: Using AI and other predictive technologies to assess and mitigate risk can help you build more resilient operations. We estimate that losses due to natural disasters could represent 4% of global GDP by 2050.
- Build operational and supply chain digital twins: Creating AI-powered digital twins can help companies identify sustainability improvements both within operations and along the supply chain.
Although AI has the potential to help with sustainability efforts, it’s important to understand and address its potential impact on emissions from the beginning. This will require your firm’s technology and sustainability functions to work together to take a smart and sustainable approach.
It’s not just directives to our clients, we also take on sustainability initiatives both within our organization and through partnerships. In fact, we’ve committed to investing $1.1 billion in pro bono consulting work for social causes by 2025. In this episode of Beyond the Bio, Keith Bevans and Sasha Duchnowski discuss the work we’ve done with The Nature Conservancy and the Republic of the Marshall Islands to deliver sustainable cans of tuna. Sasha explains our work in the wild-caught tuna industry, which has historically faced issues in the environmental, social, and governance spaces. When working on the project with The Nature Conservancy, it was important for the local community of the Marshall Islands to have agency in designing the system that they’ll take part in. The work had positive impacts on workers’ environments, retailers’ visibility, and consumers’ trust in the products they’re buying.
