IBM – Sustainability is top priority and challenge for CEOs

Sustainability is rising higher on corporate agendas, with CEOs recognising it as a business imperative and growth, according to a new IBM Institute for Business Value (IBV) study.

But even as business leaders face mounting pressures from boards and investors, a lack of reliable data insights is hindering their ability to take action.

CEOs believe sustainability can help drive business performance

IBM’s annual CEO study, Own your impact: Practical pathways to transformational sustainability, which surveyed more than 3,000 CEOs worldwide, found that nearly half (48%) rank sustainability as a top priority for their organisations, up from roughly a third (37%) in 2021.

And many leaders are hands-on with nearly 70% saying they are directly involved in defining their organisation’s sustainability strategy.

As Guy Cormier, CEO of Canadian financial services Desjardins Group, says, it starts with the CEO. “I’m totally convinced it starts at the top on climate change and on ESG. You can’t fake it, especially with your younger employees.”

Leaders increasingly believe that sustainability can help drive business performance, with more than 80% of CEOs saying that their company’s sustainability investments will produce improved business results in the next five years and nearly half (45%) thinking that sustainability will accelerate business growth.

Pressure mounts from stakeholders, but challenges stand in way

This comes as pressure mounts from stakeholders with leaders reporting receiving the greatest pressure from board members (72%), followed by investors (57%), ecosystem partners (49%), regulators (49%) and government (46%).

As a result, CEO investment in sustainability has more than doubled as a percentage of revenue over the last five years.

That said, more than half (51%) say sustainability is among their greatest challenges in the next 2-3 years, up from 32% in 2021, and ahead of other compelling challenges including regulation (50%), cyber risk (45%), technology infrastructure (41%) and supply chain disruption (38%).

Nearly 60% of leaders list unclear ROI and economic benefits as a leading challenge to achieving objectives and implementing sustainability in their organisation, followed by a lack of insights from data (44%), regulatory barriers (43%) and technological barriers (35%).

CEOs are acting, but not embedding fully

CEOs are putting words into action, but aren’t embedding sustainability strategies across their organisation.

Most leaders (64%) are confident of ultimately achieving their net-zero and other sustainability goals, with just one in five (20%) believing that the sustainability targets announced by government for their industry were not achievable.

And while nearly all (95%) CEOs report being at least in the piloting stage of implementing their sustainability strategy, just under a quarter (23%) say they are implementing their sustainability strategy across their entire organization.

“CEOs are leading during one of the most complex environments ever, including war, inflation, talent shortages, and the COVID-19 pandemic health crisis," says John Granger, Senior Vice President, IBM Consulting.

"Despite these challenges, they aren’t taking their foot off the gas when it comes to sustainability, and more now rank it among their top priorities. Yet, many don’t fully appreciate the extent to which data and technology can bridge the gap from strategy to impact."

IBM CEO study