Cost is the biggest barrier for firms seeking to achieve their sustainability targets, a new report from research and advisory firm Information Services Group (ISG) has found.
According to the ISG Market Lens Digital Sustainability Study, which surveyed more than 200 business leaders worldwide, firms often spend more money on reporting and compliance than on programmes to drive actual sustainability benefits.
Cost was cited by 45% of respondents as the top challenge they face when it comes to sustainability implementation, followed by integrating sustainability into business metrics (cited by 34%), and prioritising sustainability investments (31%).
Larger firms are spending around 0.2% of their revenue on sustainability initiatives, the study found, with half spent on environmental initiatives, and half split between social and governance programmes.
Digital sustainability
Digital sustainability, i.e. the use of IT and associated services to improve the sustainability footprint of a business, accounts for just over a third (35%) of general enterprise sustainability spending.
Within the digital sustainability budget, 60% of respondents say spending on data and reporting solutions will account for the greatest proportion of their spending in 2024, followed by digital sustainability strategy services (51%) and industrial and operational optimisation solutions (46%).
“Companies plan to spend more on reporting and compliance this year than on any other area of digital sustainability,” commented Michael Dornan, principal analyst and co-author of the study. “As with so many business domains, sustainability progress is limited by the ability to collect and analyse data. Enterprises need technology and business services providers to help report on their progress and benchmark their sustainability performance against others.”
The biggest reporting challenge firms face is around accuracy of data, ISG said, particularly when it comes to Scope 3 emissions.
Supporting sustainability programmes
A large proportion (85%) of respondents have engaged managed service providers to support their overall sustainability programmes, while 39% are using providers to run ESG-specific programmes. Furthermore, around 60% of enterprises expect to engage a service provider for ESG data and reporting.
“There is a wide expectation that ESG-related partnerships with service providers will grow in 2024,” added Alex Bakker, ISG distinguished analyst and co-author of the study.
“Three-quarters of our respondents say they have insufficient skills and resources to meet their ESG needs over the next two years and will rely on service providers to not only plug that gap but help them evolve ESG programs from a complex reporting exercise driven by regulation to a program that drives real value for the business.”
You can read the full report here.
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