About half of global corporate executives say worsening economic headwinds are hampering progress on their sustainability initiatives, a Google Cloud survey has found, as companies are caught in the crosshairs of environmental pressures and a slowing global economy.
Difficulties in accurately measuring environmental, social and governance (ESG) efforts and the lack of corporate organisational structure with clear accountability are also slowing down progress on sustainability initiatives, according to the survey.
Conducted by Harris Poll on behalf of Google Cloud, the survey of 1,476 vice presidents and executive-level managers was conducted from January 12 to January 23. It covered companies spanning the Americas, Europe, the Middle East, Africa and Asia-Pacific regions. The executives worked in sectors including financial services, retail, healthcare or life sciences, manufacturing, technology, telecommunication, media, entertainment, or gaming and supply chain and logistics.
Some 45 per cent of executives believe the current economic climate is "regressing" sustainability efforts, with regional conditions like the energy crisis in Europe hurting progress, the survey found. With these challenges, the number of new sustainability programmes getting implemented fell 8 per cent from 2022.
"Navigating economic headwinds while maintaining sustainable practices is proving difficult," the Google Cloud Sustainability Survey 2023 said.
"While almost every organisation still has at least one sustainability programme in place, executives admitted cutting corners in sustainability efforts and recognised year-over-year declines in programmes moving into implementation phases."
ESG efforts dropped from being companies' top organisational priority in 2022 to number three in 2023, the survey found.
The findings come amid a growing chorus of concerns about a global economic slowdown, financial instability, high debt levels, rising interest rates, persistent inflation and geopolitical tensions.
The International Monetary Fund lowered its global economic growth estimate for this year by 0.1 percentage points to 2.8 per cent, from an earlier projection in January. The latest estimate is below the 3.4 per cent expansion recorded in 2022 and the historical growth average of 3.8 per cent over the 2000-2019 period.
The global economy is projected to grow 3 per cent in 2024, a 0.1 percentage point decline from the previous estimate, the IMF said in its World Economic Outlook report released this week.
Companies are facing increasing pressure from stakeholders and climate change activists to reduce their carbon footprint and adapt to the global energy transition, as the world rebounds from pandemic-related disruptions.
However, ESG auditing of corporate sustainability initiatives is still in its infancy and there is no unified global mandatory standard.
Sustainability and greenwashing
Without tangible measures of ESG impact, corporate greenwashing and "green hypocrisy" remained major concerns among respondents, with many executives admitting to overstating — or inaccurately representing — their sustainability activities, the second Google Cloud survey showed.
Greenwashing is a phenomenon that refers to companies exaggerating or misrepresenting the benefits of their ESG activities.
Four out of five executives say when companies cannot effectively measure sustainability efforts, they struggle to "communicate authentically" about sustainability progress, and they overstate their efforts, according to the report.
Some 72 per cent of respondents believe that most organisations in their industry would actually be caught greenwashing if investigated thoroughly.
When asked about their own companies’ claims, 59 per cent of executives admitted to overstating — or inaccurately representing — their own sustainability activities, the survey found.
"Executives don’t admit this lightly. Respondents overwhelmingly agree that greenwashing should have harsher consequences (83 per cent) and that sustainability should be more than a PR stunt (88 per cent)," the report said.
Nine in 10 companies are speaking publicly about their sustainability commitments, but only 58 per cent are implementing these programmes and even fewer, only 22 per cent, are measuring them against targets, the survey found.
Executives are feeling the pressure to overstate their green efforts because they want to reach clients who prefer sustainable brands, increase revenue or profit, improve their brand image, attract top talent and lack ways to meaningfully measure their progress.
Some 72 per cent of the respondents agree that while everyone says they want to advance sustainability efforts, no one knows how to actually do it.
In the UAE, 92 per cent of surveyed company executives believe that sustainability should be more than a PR stunt, versus 88 per cent globally.
About 44 per cent of company executives in the Emirates said they have an ESG measurement programme in place, compared with 37 per cent globally.
Globally, a generational divide emerged when company executives were asked about personal motivation for sustainability efforts and the negative consequences of greenwashing.
Some 64 per cent of boomers said they are willing to tie compensation to sustainability targets, compared to 100 per cent of Gen Z and 92 per cent of millennials surveyed.
Still, 84 per cent of all respondents said they care more about sustainability than before and 96 per cent of companies have at least one programme in place to advance their sustainability initiatives.
Company leaders cited technology and operational investment as the main solutions to sustainable future growth, while cost and lack of investment remain critical barriers, the Google Cloud report said.
They want better systems to track their progress, with 87 per cent of respondents looking to incorporate better measurement into their organisations to help make more accurate targets, it said.
