Sustainability-centric businesses 40% more confident than siloed peers

• EY survey finds companies that embed sustainability into their business are 40% more confident they will succeed than siloed peers
• More than 90% of businesses being pressured on sustainability issues from investors and nearly 80% pressured by activists
• Companies with better sustainability integration say their boards are 1.5 times more effective in achieving sustainability goals

A new EY report indicates that companies embedding sustainability into their core strategies are 40% more confident in their business outlook over the next year than siloed peers.

The fifth edition of the EY Long-Term Value and Corporate Governance Survey highlights the mounting pressure on businesses to prioritize sustainability. It underscores a critical need for sustainability strategies that are better integrated across the organization and that create tangible business value.

Julie Linn Teigland, EY EMEIA Area Managing Partner and EY Global Vice Chair – Alliances & Ecosystems, says:

“By embedding sustainability at the heart of decision-making and leveraging the latest technologies to drive change, businesses not only bolster resilience but also position themselves for success. The call to action is clear: sustainability must be central to business strategies today and into the future.”

The report finds that businesses are facing increased demands from both investors and activists: 91% of companies surveyed report investor pressure to enhance sustainability efforts, while 78% face similar pressures from activists. Reputational damage is a significant concern: more than a third (39%) of those surveyed reveal they have faced backlash in the media for inadequate sustainability efforts. This figure drops dramatically to only 6% for companies with fully integrated sustainability strategies.

Sustainability still siloed in most organizations

The report identifies a pioneering group, termed "Sustainability Integrators," which have successfully embedded sustainability into the fabric of their operations.

These businesses boast enhanced brand reputation, improved employee recruitment and retention, and tangible impact on the world around them. They also report their boards to be 1.5 times more effective on sustainability issues compared with the rest.

However, only 27% of surveyed businesses fall into this category, with the majority of companies (55%) keeping their sustainability strategy completely separate from their business, or even not having a strategy at all.

Sustainability initiatives more likely to be cut

The majority of companies surveyed (57%) say that if they need to make cuts, sustainability initiatives are more likely to be eliminated than business initiatives. Thirty-nine percent of companies believe sustainability has always been — and remains — a lower priority than commercial objectives.

However, only 2% of Sustainability Integrator respondents say they believe sustainability is a lower priority than commercial objectives, and only 4% say they would wind down sustainability initiatives before commercial ones if business conditions worsened.

More than nine in 10 (94%) of Sustainability Integrator respondents also reported that their board is effective in approving capital expenditure for sustainability projects, while less than a third (28%) of siloed companies reported the same.

Andrew Hobbs, EY EMEIA Public Policy Leader, says:

“Companies must act now to embed sustainability or risk being left behind. Embracing sustainability means understanding its tangible commercial benefits while also putting serious investment plans in place. Those who take the boldest steps will not only boost resilience but also gain the confidence to succeed.”

To support the transition to becoming sustainability integrated, the EY organization recommends the following five key actions:

1. Foster unified leadership on sustainability commitments.
2. Cultivate a company-wide culture of shared sustainability responsibility.
3. Educate all functions on the commercial advantages of sustainability.
4. Invest proactively in sustainability initiatives to facilitate integration.
5. Leverage technology to support the delivery of integrated sustainability strategies.
   

For a comprehensive view of the findings and recommendations, please visit here.

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Notes to Editors

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