Customers Are Demanding Sustainable Practices From Businesses In 2023
In 2022, sustainability has immersed as a key business agenda from both businesses and consumers perspectives.
As concerns about the environment mount, consumers want to know how products and services are sourced, manufactured, and delivered. An increasing number of customers want to do business with companies with strong environmental, social, and governance (ESG) values. Smart companies are taking up the challenge with action, not just words.
According to a No Planet B study, in India, if organizations can clearly demonstrate the progress they are making on environmental and social issues, people would be more willing to pay a premium for their products and services (97 percent); invest in their companies (93 percent); and work for them (94 percent).
Research shows that the entire supply chain must be considered in calculating a company’s impact on the environment, as an estimated 90 per cent of a company’s greenhouse emissions emanate from its supply chain.
What are businesses doing to meet their ESG obligations?
Unsurprisingly, companies across sectors say they do all they can to ensure that their sourcing, manufacturing, and distribution practices are sustainable over time. But in reality, many are just scratching the surface. In its Deloitte 2022 CXO Sustainability Report, the consulting firm found that more than one-third of organizations are implementing just one of five “needle-moving” sustainability actions.
For example, 67 per cent of the CXOs surveyed said their companies are using more sustainable materials and 66 per cent said they are increasing energy efficiency. But just 49 per cent of the 2,000+ CXOs surveyed said they are developing new climate-friendly products and only 37 per cent are tying senior executives’ compensation to environmental and sustainable performance.
Window dressing is not enough. Companies need to address the supply chain to improve their financial well-being. Aside from the aforementioned 90 per cent greenhouse gas stat, a company’s supply chain also generates between 50 per cent to 70 per cent of its operating costs, according to the EY Supply Chain Sustainability 2022 report. This research notes that: “Beyond risk avoidance and compliance, organizations are seeking ways to create long-term value by embedding sustainability into supply chain operations.”
How can technology help?
Business leaders and consumers are looking towards technology to advance their ESG mandates. As per the No Planet B survey – 96% of Indian respondents believe businesses would make more progress towards sustainability and social goals with the help of AI; while 83 percent in India even believe bots will succeed where humans have failed.
To address the profound challenge of transparency and visibility within their supply chains, businesses need a complete and real-time view of their inventories as well as that of their suppliers and distribution partners, and, they need world-class analytics to parse this data. Armed with these tools, they are better able to start sourcing and manufacturing products closer to buyers, thereby minimizing the mileage and fuel costs of shipping. They can also better optimize warehousing to predict or even prevent shortages and fine-tune supply chain planning to cut the overall environmental impacts of their business.
Importantly, we must realize that no company is an island. Each must work in concert with its suppliers and other partners to forge an efficient and ethical supply chain.
In addition to its other benefits, the massive move to cloud computing can help with the climate. IDC has estimated that widespread cloud adoption could prevent the emission of more than 1 billion metric tons of carbon dioxide between 2021 and 2024.
The importance of real action on ESG cannot be overstated. For one thing, customers demand it. For another, governments are moving quickly to regulation to ensure that any given business put its money (and policies) where its mouth is when it comes to sustainability. It's essentially a call to action for businesses.
Some of the forward-looking global and Indian players like Unilever, Tetra pak, Safexpress, Apollo Tyre functioning in manufacturing and logistics segments are leveraging technology for actionable practices for ESG mandates.
The way ahead for 2023
Companies that finetune their supply chain and other operations through the use the smarter technologies can truthfully claim to have minimized their negative impact on the planet and can affix that reputation to their brand. Additionally, environmentally concerned consumers will take notice.
To recap, moving into the mid-to late 2020s, businesses want technologies that will help them manage costs, grow revenue, and they want choice in how that technology is deployed. Needless to say, they will prioritize cloud providers that facilitate, rather than hinder, how they want to run their cloud workloads.
