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ESG (environmental, social and corporate governance) is a topic that organizations like to tout — with some getting blasted for greenwashing as a result.
Still, according to Vodafone’s latest Fit for the Future Report, organizations are increasingly taking the concept to heart (and greatly benefiting their bottom lines in the process).
“Sustainability, once a ‘nice to have,’ is now a business requirement,” said Vodafone president and CEO David Joosten. “Two things we know for certain are that consumers demand action and investors reward it. Now, we have the data to prove being good to the planet can be good for business, too.”
As Joosten explained, the annual report aims to provide companies with a barometer to track their progress and help accelerate their journey toward becoming “future ready.”
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Conducted in partnership with B2B International and surveying 3,101 firms across 15 countries, the report revealed significant benefits: 47% of companies in the U.S. that reported higher profits have a formal ESG program in place; this is more than double (22%) those reporting lower profits.
“We found this data encouraging and are hopeful this will incentivize companies to invest more time and resources into developing their own ESG strategies,” said Joosten. “Unfortunately, that change won’t happen overnight.”
Still, despite the “clear link” between sustainability efforts and greater profits, the number of companies that consider sustainability an absolute necessity for survival (21%) is the same as last year’s survey, he pointed out.
U.S. firms are in line with that global figure, he said, but lag the global averages in reporting action on sustainability measures.
“That gap should be of concern given the U.S.’s outsized impact on carbon emissions,” said Joosten.
Optimistic about the future
The good news? U.S. firms are more optimistic than their counterparts worldwide about their ability to make measurable progress on sustainability over the next 10 years, said Joosten.
More than seven out of 10 say progress should be “quite” or “fairly” straightforward, compared to 63% globally.
“Sustainability is a competitive advantage for high-performing companies, enabling the creation of more durable, resilient and innovative operations,” said Joosten.
Also, resilience means organizations are positioned to adapt faster to changing customer demands and they can improve in developing people skills and attracting talent.
“We hope this report can serve as a barometer for businesses and help them put the necessary systems in place to tackle any challenge they encounter,” said Joosten.
Fit for the future: A fit for success
Using responses from the survey, Vodafone qualified organizations as “Fit for the Future” (FFTF) by scoring them against their peers in areas of speed-to-market, their willingness to embrace change and new technologies, detailed strategic planning and how well they kept up with emerging trends.
This year, 27% of U.S. firms surveyed achieved the “Fit for the Future” status, said Joosten. And:
- 6 out of 10 U.S. FFTF firms have higher profits than a year ago, compared with 51% of non-FFTF firms.
- 83% of FFTF firms in the U.S. forecast higher earnings over the next five years, compared with 71% for non-FFTF U.S. firms.
Additionally, more than 60% of U.S. firms surveyed said that environmental sustainability is a potential differentiator, and more than half (55%) are making sustainability a strategic goal.
Enabling growth and longevity
Organizations identified as FFTF understand that their growth and longevity require long-term commitments, said Joosten.
“However,” he said, “larger commitments like sustainability can create short-term challenges, as many organizations still lack the proper technological infrastructure to support meaningful solutions.”
For instance, organizations identified the top three most critical areas where technology can boost sustainability as:
- adopting renewable energy (44%)
- reducing energy consumption from digital devices (37%)
- more organic or biodegradable packaging materials (36%)
- reducing energy consumption from digital devices
“Future-ready companies will often see these issues through,” said Joosten, “and will be rewarded for their efforts.”
Also, he pointed out, it was interesting to see how broadly FFTF firms around the world define sustainability. For some, it means having a lasting, positive impact on their community. For others, it means using more renewables, being resilient to business disruptions or investing in technologies that achieve more sustainable supply chains.
In particular in the U.S., 4 out of 10 companies define it as “business durability,” he said.
Collaboration is essential for sustainability
Encouragingly, FFTF organizations see it as their responsibility to lead the way and acknowledge that cooperation is required to drive systemic change. Across different verticals and business sizes, more than half of FFTF companies were willing to partner with another business other than a supplier, and larger corporations were the most open to partnering with competitors.
“There is a growing recognition of the impact made when resources and expertise are pooled together to drive progress toward common objectives,” said Joosten.
To this end, most companies surveyed agreed that local and national governments must also significantly propel sustainability investments, especially by creating tax incentives, R&D funding and financial support.
As Joosten noted, “rather than making changes on a purely individual level, they want to create a more comprehensive ‘ecosystem’ of change that links businesses, universities, charities, regulators and governments that are all working toward a common goal.”
Vodafone, which operates mobile and fixed networks in 21 countries, has committed to reach net-zero emissions across its full value chain by 2040, said Joosten. The company is also helping its customers reduce their own carbon emissions by 350 million tons by 2030. And, it is aiming to reduce device waste and achieve a target to reuse, resell or recycle 100% of its network waste.
“We view sustainability as a shared commitment,” said Joosten, noting that the sustainability and resiliency challenges before us are “so vast” that they will require contributions on all fronts.
Ultimately, “collaboration holds the potential to not only help us meet necessary standards, but also create a thriving, sustainable global community.”
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