Who are the Nows?
The Nows, Imminents, and Laters each act differently when it comes to environmental sustainability.
The sooner that respondents believe sustainability will be material to their companies’ operations, the more likely they expect their companies to:
- See higher revenue for the current fiscal year
- Consider sustainability a high investment priority
- Collect data about sustainability for a longer period
- Use sustainability data to inform more decisions
- Be more satisfied with the quality of sustainability data
- Distribute responsibility for action on sustainability more broadly within the organization
- Have a greater understanding of the positive correlations between sustainability and profitability as well as sustainability and competitiveness
The Nows – the 17% of respondents who believe environmental issues are already materially affecting their companies’ finances and operations – stand out because they are significantly ahead of even the Imminents in each of the areas listed above. They also have more committed leadership. Our survey shows that the Nows’ plans to incorporate sustainability into business operations are driven from the top. The Now leaders see the need for change and drive it forward, while other respondents are doing less and moving more slowly.
The Now respondents say their companies also have more data than the Imminents and the Laters about the environmental effects of their businesses, and they use it better. They see fewer barriers to action. They invest more, both in money and in people, to support sustainability. And, crucially, they consider sustainability an essential part of their business strategy.
In addition, the Nows are more optimistic about their companies’ strategy: They are 11% more likely than the Imminents and Laters to expect that environmental sustainability will increase long-term revenues and profits.
That’s not to say what the Now companies are doing is easy. Our survey found that pursuing sustainability involves a complex system of business drivers so intertwined that difficult trade-offs could result. But even this could work to the Nows’ advantage, allowing them to widen the competitive gap between themselves and companies that are postponing those decisions.
The complexity of acting on sustainability is lost on no one. But the correlation that we see between action and business success should be both a signal and a call to action for companies that are unsure about or resistant to making sustainability part of their business strategy and operations. Financial materiality for sustainability is already here: The question is no longer when to act, but how.
Motivations to act
Some major companies have already made sustainability not just a pledge but a strategy. U.S. automaker General Motors has committed to manufacturing only electric cars, vans, and SUVs by 2035. Meanwhile, German automaker Volkswagen has already made big changes to try to win market share early in the shift to electric. It will transform the bulk of its fleet – more than 30 models – to electric power within the next four years.
Such strategic bets aren’t limited to the auto industry. In 2020, investment giant BlackRock made sustainability its new standard for investing its US$2.7 trillion portfolio.
The big marquee names are no accident. Our survey found that the Now respondents are more likely to be from large (revenues of $750 million or more) companies. Some reasons may be that the Nows are aware that their companies have extensive effects on the environment and that larger companies have greater economies of scale and the discretionary budget to measure and mitigate those effects.
A different mindset
Across the board, the Now respondents think about sustainability differently from Imminents and Laters. The most notable differences lie in their companies’ motivations for pursuing sustainability, their methods for doing so, and what they expect the results to be. Notably, their approach seems to hinge on the actions (or lack thereof) of company leaders.
To illustrate: We asked respondents to choose up to five factors (from a list of 12) that motivate their companies to take environmental action. From that short list, we asked them to rank each factor in order of importance.
Among the Nows, the most frequently chosen number one motivator for their companies to take environmental action is CEO and board commitment, followed by government regulations, the company’s stated purpose, commitment to the United Nations Sustainable Development Goals, and revenue and profit growth opportunities. These are primarily philosophical, future-oriented drivers that suggest the Now respondents’ companies are being proactive about environmental consequences and consciously connecting them to business outcomes.
Both the Imminents and the Laters say their companies are more influenced by traditional business priorities than the Now organizations. For example, the Laters are more likely than the Nows to be motivated by factors such as revenue and profit growth opportunities, whereas the Imminents are more likely than the Nows to be motivated by customer demand and opportunities to develop new offerings. (See Figure 2.)
While the Nows say their companies have decided there are strategic benefits to moving quickly, the data doesn’t tell us why – or why the Imminents and Laters are slower to act. It may be that the latter two groups think that their companies are deliberately taking a “fast follower” approach, letting others shoulder the risk of experimenting with new solutions.