- 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 who expect organizations to have a clear sustainability strategy
- Companies with better sustainability integration say their boards are 1.5 times more confident 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.
Wilaiporn Ittiwiroon, Climate Change and Sustainability Services Partner, EY Thailand, said:
"By making sustainability a core part of decision-making and using cutting-edge technologies to drive change, businesses don't just become stronger; they also set themselves up for future success. The key is that sustainability needs to be central to business strategies, both now and in 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 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, it is noteworthy that 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.
"Businesses need to act quickly to integrate sustainability factors into their core operations, or they risk losing their competitive advantage. Sustainability efforts are not just about good intentions; it means recognising the concrete business advantages and then making significant investments to achieve it. Companies that are bold in their approach will not only become more resilient but also gain the confidence needed to thrive.", Wilaiporn added.
To support the transition to becoming sustainability integrated, the EY organization recommends the following five key actions:
- Foster alignment between the board and executive leadership on sustainability commitments.
- Cultivate a company-wide culture of shared sustainability responsibility.
- Educate all functions on the benefits and commercial advantages of sustainability.
- Invest proactively in sustainability initiatives to facilitate sustainability integration across the organization.
- Leverage technology to support the delivery of integrated sustainability strategies.