Incentives propel Europe forward
ROS will take some time to drive increased profitability, but with government regulation of carbon production, a negative impact on company performance may hit old-school ROI of other projects soon. This may explain why European respondents are more confident in their leadership’s support of green projects compared with counterparts in the US.
For example, the European Union’s ETS allocates a price to carbon emissions, creates a market for them and incentivizes carbon reduction in strict financial terms. The mechanism has reduced emissions by 42.8% over the past 16 years in the EU’s energy-intensive industries. No such program exists in the US (so far) and, as such, any progress made is largely due to action taken by individual organizations or states, such as California’s climate law. But our survey shows that the uncertainty around ROI remains a concern for European companies and signals the need for a wider cultural transformation to continue toward a low-carbon economy.
Make sustainability the cultural norm
Along with the external perception of a company regarding sustainability, the way in which its own employees regard ESG efforts is critical. The famous quote by management guru Peter Drucker, “Culture eats strategy for breakfast” is prescient. For a business to implement its strategy, incorporate returns in sustainability to its business cases and ensure its operations are not hindered by regulatory risk, its employees need to be bought in and assured of authenticity, from top to bottom. Unfortunately, a simple page on the company intranet professing to care about sustainability isn’t enough; it’s not even table stakes.
As detailed in an earlier study we conducted on modern corporate culture, the employee voice needs to resonate up and down the organization; communication lines and forums must be open at all times. Net zero initiatives need proving with real-time analytical data to mitigate accusations of greenwashing, and employees should feel part of the process, rather than feel like they are having it done “to” them. If the right company culture is built around sustainability — with authenticity in leadership, inclusiveness and ready access to information — not only will this be beneficial to the bottom line in terms of staff retention, but it will also activate all other areas of strategy that can be powered with an enthused workforce.
Over time, this investment in culture will prove itself in tangible terms, as organizations avoid the operational risks of transitioning toward a net zero future, as well as future employees and customers who choose a business that is authentic and responsible.
Read parts 1, 2 and 3 of this series to further explore other aspects of the Green Rush in Europe.
This article was written by Euan Davis, an AVP who leads Cognizant’s Center for the Future of Work in Europe, and Rouzbeh Amini, Senior Director – Head of Cognizant’s Sustainability Practice, EMEA.
To find out more about sustainability opportunities and business benefits, read our white paper, “Green Rush: The Economic Imperative for Sustainability,” or contact us at the Center for the Future of Work.