A new breed of business is emerging
These organizations will be sustainable to the core—not just green but deeply green, with sustainability encoded in their DNA.
Sustainability is fast becoming not just a way of doing business but a way of being a business. As the world grapples with the urgent need to combat climate change and resource depletion, successful businesses will be those that embed sustainability thinking into the very core of all they do, inside and outside the organization, all the way through their value chains and product and service lifecycles.
Deeply green, these businesses will stand out, competitively and commercially, as sustainability leaders. They will set the mark for transparency, authenticity and resilience in the face of the planet’s—and humanity’s—increasingly impending needs.
Rather than just tending to the sustainability of their internal operations, deeply green businesses will …
… collaborate in entirely new ways across their value chains—coordinating their vision, actions and decisions with other players and partners in their ecosystem.
… create products and offerings that go beyond mitigating environmental issues, to helping to solve them.
… shrink not only their own environmental footprint but also those of their stakeholders
… discover entirely new ways to secure resilient growth.
It’s the beer manufacturer that not only meticulously tracks the journey of its barley from the field to the bottle using blockchain but also helps its farmers adopt more sustainable agricultural practices.
It’s the fintech that puts its money where its mouth is, offering up to 10% cash back when customers buy from its socially responsible business partners.
And it’s the apparel company that has built new links between its supplier, production and retail systems, allowing customers to see a garment’s manufacturing location, materials used and conditions in the production facility.
Five ways to become deeply green
To find out more about the future of sustainability in business, we worked with Oxford Economics to survey 3,000 executives—across every market and sector—on their sustainability plans, challenges and vision.
Through our analysis, we devised five recommendations for how leading enterprises can outperform their markets with enduring and differentiating growth by embedding sustainability at their core.
From green to deep green
For the last two years, our research has tracked how the concept of sustainability has expanded and intensified. In our most recent study, we took a closer look at the actions businesses are taking now or plan to take in the near future, as well as the challenges holding them back from meeting their goals.
said sustainability initiatives would drive higher sales
said ESG was a critical part of being a modern business
said sustainability is a vital element of their corporate strategy
Recommendation # 1
Boost sustainability investments to realize full business value
Nothing reveals the future of sustainability better than expected spending levels. The willingness to spend on sustainability initiatives is set to grow rapidly over time (see Figure 1). The greatest growth will occur between 2020 and 2025, when the percentage of respondents increasing their sustainability spending by 10% or greater nearly doubles. By 2030, the percentage of respondents grows again, to 62%.
Spending sharply increases
Q: Has your company's average annual spend on sustainability changed over the following periods, and how will it change?
Respondents seem convinced that sustainability investments are justified by the financial rewards they will reap over time (see Figure 2). Here again, the steepest growth occurs between now and 2025, when the percent of respondents believing their sustainability efforts will have a positive or very positive impact on their company’s financial performance nearly doubles—and then it continues to rise.
Financial rewards rise sharply
Q: What do you anticipate will be the impact of your company's efforts to improve sustainability across all business areas, on your financial performance?
The specific areas of business impact are far-ranging, from brand reputation, to retaining customers and employees, to reducing business risk, with more than half of respondents naming these and other areas where sustainability will have a positive or very positive impact (Figure 3).
An array of business performance impacts
Q: What do you estimate the impact of your company’s sustainability efforts will be on the following business performance indicators by 2025?
Company/ brand reputation
Attracting talent, skills
The sustainability stage is set: It has captured the hearts, minds and wallets of senior leaders.
As a result, the business interests surrounding sustainability have shifted from the "why do it" to the "how to make it happen effectively." For this reason, and with 2030 goals close at hand, businesses need to develop an ambitious strategy that will propel them into the ranks of the new breed of deep-green sustainability leaders.
This is not a nice-to-have; this is a must-have, and this is table stakes to even be included in our RFP or a tender.
Senior leader, Manufacturing
Recommendation # 2
Elevate your internal sustainability initiatives for even greater return
So far, though, most sustainability initiatives are focused on the internal operations of the business, including what’s commonly referred to as Scope 1 emissions. In all, 66% of respondents are focused on internal operations—27% to a great extent—compared with 59% focused on supply chain and 50% on products and services (see Figure 4).
The primary focus is on internal operations
Q: To what extent are your environmentally sustainable strategies focused on your company’s operations, supply chain or products/services?
This emphasis on internal operations is completely justifiable as it stems from the confidence and control businesses can exert in this area. Further, there’s continued and substantial work to be done on improving the sustainability of their internal operations.
Consider that today, the number one area for sustainability initiatives by far is the broad use of digital tools to make internal operations more energy-efficient (see Figure 5). By 2025, however, the top sustainability initiatives will require a greater level of data sharing and more sophisticated analysis. In addition to moving to more sustainable premises, for example, 42% of respondents plan to create virtual simulations (i.e., digital twins) of their operations and physical assets, which will enable them to experiment with more sustainable practices without disruption.
Respondents (41%) also want to take the same principles used in making their physical assets more efficient and apply those to their business processes, leveraging process mining to more deeply understand which processes could be automated to reduce operational waste or be eliminated altogether.
The bottom line is, while many companies today have taken the step of assessing their most critical sustainability issues, they’ve often underinvested in building the data foundation to understand their real impact on these issues and effectively manage them. Rather than just tracking single impacts, like carbon emissions, they also need to account for impacts on biodiversity, water usage, habitat and other natural resources. This means augmenting their sustainability strategy with a data strategy that tracks several relevant impacts and provides dashboards customized to different user groups.
It is essential to use this internal operations work—and particularly the data foundation—as a platform to broaden the scope and elevate the sophistication of sustainability initiatives to open new opportunities and drive a wider and more significant impact.
Internal initiatives will grow in data and analytics intensity
Q: When did you start, or when do you plan to start, implementing the following initiatives related to improving the sustainability of your internal operations?
Top 3 initiatives
Source: Cognizant Research Base: 3,000 senior executives
While many companies today have taken the step of assessing their most critical sustainability issues, they’ve often underinvested in building the data foundation to understand their real impact on these issues and effectively manage them.
Recommendation # 3
Expand your sphere of influence, upstream and downstream, to secure greater business benefits and impact
It’s easy to see why fewer respondents are currently engaged with sustainability initiatives focused on their supply chain, products and services, and Scope 3 emissions. Doing so requires businesses to expand their efforts into areas that, until now, seemed completely out of reach.
With a solid data and advanced analytics foundation in place, combined with other increasingly sophisticated and mature technology capabilities, however, they have the tools to break through the walls of their organizations to see and shape environmental impacts, mitigate risk and discover new opportunities throughout the value chain.
There are two broad categories of externally focused sustainability initiatives: downstream (the products and services the business sells) and upstream (the supply chain that makes it all possible).
In our study, the top three actions respondents are taking today to improve supply chain sustainability include working to responsibly source raw materials and components, and selecting suppliers committed to meeting specific sustainability metrics (see Figure 6).
But these actions don’t take into account the ability to see what’s behind suppliers’ claims—the actual data-based evidence that shows how those metrics and conclusions were arrived at. That level of scrutiny would require full transparency into the supplier’s environmental impacts, something that isn’t on the top-three list today.
By 2025, supplier transparency reaches the number two spot on supply chain sustainability endeavors. To gain these insights, businesses will need new levels of cooperation and coordination with their supply chain partners, and new trusted and secure mechanisms, such as distributed ledgers (blockchain), for both sharing data-driven insights and metrics and modeling out possible scenarios.
Transparency will be key to reaching supply chain sustainability goals
Q: When did you start, or when do you plan to start, implementing the following initiatives related to improving the sustainability of your supply chain?
Top 3 initiatives
Source: Cognizant Research Base: 3,000 senior executives
We have started a project to collaborate with blockchain service providers, where a blockchain node will record our CO2 emission data and energy consumption in a certifiable and secure way.
Senior leader, Spanish insurer
Downstream activities encompass the product design itself and what happens when the product is in the customer’s hands.
Fewer than half of respondents are engaged in even the top three downstream activities named: using recycled materials, helping customers save energy and ensuring a net positive impact on the environment (see Figure 7).
By 2025, the number-one downstream activity will shift to completely reimagining product design. This involves exploring innovative solutions, such as new materials and sustainable packaging, to create a closed-loop system that eliminates waste and reduces environmental impact. These types of circular business models focus on designing out waste, retaining the use of products and components, and returning materials to the product lifecycle.
In addition, respondents intend to work directly with consumers to educate, advise and incentivize them on making a positive impact on the environment. Doing so will require a deeper understanding of how products are being used by outfitting the products themselves to convey that information. These new insights will, in turn, support new business and operational models such as "everything as a service" (XaaS) business models.
Circular and XaaS models will drive product/service sustainability
Q: When did you start, or when do you plan to start, implementing the following initiatives related to improving the sustainability of your products and services?
Top 3 initiatives
Source: Cognizant Research Base: 3,000 senior executives
Brands owe it to themselves to be honest and transparent and share their journey. I've repeatedly heard customers and consumers saying, 'We don't expect you to be perfect; we expect you to be honest.'
Senior leader, US manufacturer
Recommendation # 4
Explore the deeper application of emerging and maturing technologies, and commercially creative ways to deploy them
Technologies in use
Today’s sustainability needs and opportunities are arriving just as key technologies such as AI, blockchain and digital twins are reaching more mature and widespread use. In our study, respondents have implemented a wide range of technologies to support their sustainability initiatives (see Figure 8).
Over half have deployed a core set of technologies—cloud/edge, IoT, artificial intelligence/machine learning: (AL/ML) and big data analytics—that can now be considered table stakes.
Core technologies are seeing widespread use
Q: Which of the following technologies have you implemented to improve your environmental sustainability?
#4 Big data / analytics
Even more revealing, however, is a look at which technologies respondents cite as having been most effective at driving environmental sustainability (see Figure 9).
One stand-out finding is the wide gap between the use of intelligent process automation / robotic process automation (IPA/RPA) and its perceived effectiveness. IPA jumps from the top five most implemented technology to the number one in effectiveness. This is primarily because intelligent automation tools can greatly enhance internal operations, leading to greater efficiency and thus, sustainability.
A key benefit of blockchain is its public ledger of immutable records. This highly secure and “trustless” technology
provides transparency between suppliers and customers regarding everything from the origin of components and ingredients used in products, to their journey through the supply chain, all without revealing competitively sensitive information.
Another technology notable for its usage versus effectiveness gap is digital twins, which are virtual representations of physical things, from tech infrastructures to factories. Although they’re used by just 8% of respondents, 40% of them say digital twins are effective or highly effective.
In particular, digital twins hold much promise for supporting upstream and downstream sustainability initiatives. By developing digital twin ecosystems, businesses and other stakeholders can model the impacts of their decisions on areas of the economy far beyond their immediate value chains.
Bold tech decisions pay off with high effectiveness scores
Q: How effective has each technology you’ve implemented been in improving your environmental sustainability? (Percent of respondents naming each as effective or highly effective)
IPA jumps from the top five most implemented technology to the number one in effectiveness
While blockchain doesn’t make it to the top six list of technologies used, 73% of those who’ve implemented it are convinced of its effectiveness
#5 Remote work technologies
#6 Big data / analytics
In our survey, well over half of respondents (62%) believe that yet more significant technological advancements are needed to achieve net-zero ambitions. But from what we’re seeing, the technology is already here—there’s no "magic bullet" solution that’s yet to emerge.
Instead, what’s needed are the bold decisions to move into new technology areas that are showing high rates of effectiveness now and that can support the more complex endeavors involved in managing upstream and downstream environmental impacts. By doing so, businesses can expand their sphere of influence and promote collaboration and transparency throughout the value chain.
Recommendation # 5
Evolve power structures to allow for necessary shifts in culture and accountability
Sustainability strategies are only as effective as the business’s ability to deploy them. This means strategies need to be sufficiently funded and clearly communicated.
It means everyone in the organization is aware of their role and incentivized to fulfill it.
It means investing in the right talent and preparing the ground for the often-profound organizational change that will be necessary.
And it means the people held accountable for achieving strategic sustainability goals are the ones empowered to make the bold decisions and disruptive changes needed to achieve expected outcomes.
But that’s not what we’re seeing in our survey data.
When we asked respondents to describe the responsibility and accountability structures in their organization, the resulting power equation appears out of balance.
For the majority of respondents, it’s the CEO who creates and signs off on the strategy and allocates budget. As would be expected, the responsibility for executing the strategy cascades down to the lower levels of the hierarchy.
What’s misaligned, however, is who in the organization is held accountable for reaching the strategic sustainability goals. Rather than the strategy creators (usually the CEO) and budget approvers (CEOs and CFOs) taking ownership for the strategy’s outcomes, it’s the CSOs and senior managers whose performance is measured against meeting sustainability targets. Only in a tiny minority of cases is the strategy creator’s performance tied to sustainability goals (see Figure 10). This is not to say that the senior manager and CSO roles should not be held accountable but that the accountability should be more evenly shared. This will require leadership models to evolve.
New leadership models are needed
Q: How is responsibility and funding for your environmental sustainability strategy spread across your company?
With this organizational misalignment, it’s no wonder that, when asked to name the top challenges of setting and achieving their sustainability goals, respondents’ top responses were all indicative of this imbalance of strategy and accountability: lack of alignment between different business units and stakeholders, lack of strategic clarity, and a lack of awareness, skills or broader understanding of sustainability (see Figure 11).
The fact is, the entire workforce needs to share responsibility for realizing sustainability goals and be motivated to contribute to them. While sustainability ambassadors are vital, it will take a wide array of people in the organization to build, share and monitor baselines, targets and plans.
Revised power structures will solve key challenges
Q: Which of the following internal challenges inhibit progress toward setting and achieving your environmental sustainability goals the most?
Lack of alignment between different business units and stakeholders
Lack of strategic clarity of environmental sustainability roadmap
Lack of awareness, skills or broader understanding of sustainability among staff
Lack, scarcity or high cost of specialized talent required to execute strategy
Mature technology solutions suitable for our business are not available
Specialized technology required is too expensive
Inflexible and inefficient business processes
Difficulty collaborating with suppliers
With a structural rebalance of power, a reskilling of the workforce and employee empowerment, senior leaders will have the pieces in place to inspire the rest of the business to embody a culture that values incorporating sustainability into every aspect of operations, partnerships and products.
The world has awakened to the dire needs of our planet, its resources and the diverse forms of life that populate it. And for businesses, that means finding a path forward—far beyond “business-as-usual”— to an as-yet undefined way of producing goods and services that meet both economic and environmental needs.
We feel sure that businesses will find that path. Driven by ingenuity, a collaborative spirit and the courage to change, business leaders will meet the call for radical transparency, authenticity and resilience, in tune with the prevailing winds of change.
In the name of sustainability, we will see these businesses put aside old competitive tropes to form atypical partnerships, creatively deploy emerging and maturing technologies, and boldly seek commercial differentiation from their sustainability leadership. The pieces and parts are there—it will be the winners who assemble them.
What you do next as a leader is critical. Whatever path you take demands humility, open-mindedness, and a willingness to partner to address the complex and interconnected challenges of the day. It won’t be long before the ideas of “sustainability” and “business” become one and the same, as the two become intertwined in a deeply green world.
Associate Vice President, Head of Cognizant Research
Euan Davis leads thought leadership worldwide at Cognizant. He determines the strategic thought leadership themes for the company, from shifting customer dynamics and accelerated digitization to sustainability and corporate resilience. He leads a team of thinkers and writers.
Euan is a sought-after advisor and keynote presenter on issues, trends and emerging opportunities. He joined Cognizant in 2013 to set up a think tank called the Center for the Future of Work (Europe). He now assumes leadership of Cognizant Research globally.
Before joining Cognizant, Euan served as a Principal Analyst for Forrester Research based in London. He holds a BA degree from Portsmouth University and resides in Cambridge, UK.
Senior Manager, Cognizant Research
Duncan Roberts is a Senior Manager in Cognizant Research. He joined the company in 2019 as a digital strategy and transformation consultant in industries ranging from satellite communications to educational assessment. He has advised clients on utilizing technology to meet strategic objectives and discover the art of the possible through innovation.
Before Cognizant, Duncan worked for one of the largest publishing houses in Europe, playing a leading role in the digital publishing revolution, helping transform their operations and launching new innovative products. He holds a Masters in Philosophy and Classics from the University of St. Andrews.
Global Head of Cognizant’s Sustainability Advisory Practice
Philip Smith has spent over 20 years supporting clients in multiple vertical and geographic markets and addressing their sustainability challenges through the lenses of policy, regulation, strategy, technology and organizational change.
Vice President and Global Head of Cognizant’s Sustainability Services and Engineering
Manoj Mathew has over 22 years of experience across multiple industries globally, advising clients and delivering on transformation by rethinking business operating models to deliver on sustainability goals. He is passionate about developing a systems approach to engineering sustainability goals into supply chains.
The authors would like to thank Catrinel Bartolomeu, Director of Storytelling & Content at Cognizant, Sophia Mendelsohn, Chief Sustainability Officer at Cognizant, and Mary Brandel, editor, for their contributions to this report.
Cognizant commissioned Oxford Economics to design and conduct a survey of 3,000 C-suite and senior executives, including individuals at the C-suite and VP levels, from large corporations around the world. Our focus was on those who play a significant role in shaping, contributing to or making final decisions on their organization's environmentally sustainable operations. The survey was conducted between Q4 2022 and Q1 2023 via computer-assisted telephone interviewing (CATI).
Respondents were evenly distributed across the following geographies and industries:
- North America (US and Canada)
- Europe (UK and Ireland, France, Germany, Switzerland, Belgium, Luxembourg, the Netherlands, Denmark, Finland, Norway, Sweden, Italy and Spain)
- Asia Pacific (Singapore, Australia and UAE).
- Banking & capital markets
- Food & agriculture
- Life sciences
- Manufacturing & automotive
- Retail & consumer goods
- Telecommunications & technology
- Transportation & logistics
- Energy & utilities
- Media & entertainment
- (A smaller group was from the public sector.)
All respondents were from organizations with over $250 million in revenues.
- 10%: $250 million to $499 million
- 10%: $500 million to $999 million
- 80%: $1 billion or more in revenue
In addition to the quantitative survey, Oxford Economics conducted 24 in-depth interviews with executives across the countries and industries surveyed. The conversations covered the major themes in this report, providing real-life case studies on the challenges faced by businesses and the actions they are taking. The resulting insights offer a variety of perspectives on sustainability initiatives.