Going Green, but stuck in amber on sustainability disconnect

There may be more uncertainties than one. And not just in India, but the whole world is going through these uncertainties. Significantly, however, Indian organizations across verticals, continue to prioritize sustainability despite such global uncertainties.

More than 4 in 5 organizations are planning to increase investment in environmental sustainability, up eight per cent since last year. Compliance with regulations remains the lead factor driving sustainability initiatives, followed by business value – such as profitability, cost savings, and operational efficiency.

Despite the business case, two thirds of executives say they are under increasing pressure to demonstrate credible, science-based progress. Yet only 21 per cent of organizations have developed detailed transition plans with interim targets and capital allocation. All these and much more have been revealed by the fourth edition of the Capgemini Research Institute’s latest report.

Internally, progress is hindered by budget constraints, inadequate data and measurement systems and operational silos. Externally, nearly two thirds of executives agree that geopolitics is currently slowing down sustainability investments and projects, a share that is stable since last year.

Having said all these, one must also remember that climate strategies are in place, but execution still remains limited across organizations.

In today’s global environment characterized by global warming and climate disasters, organizations are feeling the strain of climate impacts, with more than seven in ten executives reporting disruptions to supply chains, noting further disruptions to production, and suffering from raw material shortages. Additionally, two-thirds foresee difficulties in managing insurance or financial risks. While the majority say they prioritize climate adaptation, more than half consider their organization underprepared for the impacts of climate change.

The disconnect between perceived readiness and actual resilience suggests that few organizations are taking adequate tangible action, with only 38 per cent upgrading infrastructure, 31 per cent shifting production to less climate-vulnerable regions and only 26 per cent redesigning products.

If Capgemini research is to be believed, although sustainability regulations are putting less pressure on organizations, business leaders still see sustainability as a core driver of business value. However, with global uncertainty and constrained budgets, many companies are facing a reality check.

With climate risks increasingly high on the corporate agenda, business leaders need to adopt a pragmatic, operational approach and urgently implement concrete, financed transition and adaptation measures. This will not only build true resilience, but also fuel innovation and competitiveness.

When it comes to consumers, skepticism is rising sharply – more than six in ten (that is, 62 per cent) consumers believe companies are engaging in greenwashing, up from a third in 2023 and over half in 2024. Further, more than three quarters of the consumers surveyed, believe corporations should do more to reduce GHG emissions. This highlights the need for transparent and evidence-backed sustainability communication. In addition, only a quarter of consumers consider sustainable products affordable, and just 16 per cent feel they have access to sufficient sustainability information.

There is no doubt whatsoever that’s sustainable is a core future-proofing strategy for majority of the Indian organizations to drive long-term competitiveness, innovation, and resilience. However, there is still a gap between perceived preparedness and actual resilience, suggesting organizations are still somewhat confused planning with concrete climate adaptation. The sooner this confusion goes, the better.