Two-thirds of the companies in BCG’s 2022 global innovation survey ranked climate and sustainability (C&S) as a top corporate priority. But only about one in five is ready to act.
More big companies make net-zero pledges every day. But only a few are prepared to develop the product, process, and business model innovations that can deliver on those pledges. For them, C&S is a matter of redirection rather than reinvention.
This year, BCG’s Most Innovative Companies report examines the attributes that help prepare companies to tackle C&S challenges through innovation.
Or you can jump straight into each of our three individual analyses:
Many of the companies on our 2022 list of the 50 most innovative companies were among the earliest to embrace environmental, social, and governance (ESG) principles and to establish decarbonization commitments. Almost 80% (39) rank among the top C&S innovators, according to global peer votes.
These and other C&S leaders demonstrate that innovation that builds on both existing and emerging technologies is essential to combating climate change. Companies need to apply existing tech in new ways to create climate-friendly products and processes in the near term. Advanced tech is key to decarbonizing emissions-intensive industries over time.
But leaders also possess well-tuned and revved-up innovation engines. Among companies committed to C&S innovation, only 20% scored 81 or higher BCG’s 100-point innovation-to-impact benchmarking framework (i2i by BCG), marking them as ready innovators. More than three-quarters of committed C&S innovators need to raise their innovation game, and 80% of all companies face a steep learning curve.
Innovation—whether related to product, process, or business model—is not a siloed function, and it does not take place in a walled-off lab. Progress depends on the same human and technological capabilities that drive success elsewhere. These include collaboration, digitization, harnessing data, building artificial intelligence (AI), developing requisite human skills, and implementing cross-functional teams and agile ways of working.
C&S-ready companies emphasize various aspects of their innovations systems more aggressively than other companies do. They start with greater ambitions. They identify the domains they want to focus on, manage the idea funnel, and have clear performance goals. And they engage more actively with partners and even competitors.
They also understand that there are no simple paths to decarbonization, especially when it comes to accounting for scope 2 and scope 3 emissions. They must plan for and invest in technologies and solutions whose potential is uncertain and whose development timelines will likely outlast the executives’ tenures. This effort includes pushing the development and application of deep technologies—the problem-driven application of advanced technologies to address large-scale issues.
Our 2022 innovation survey found that 60% of high-emitting companies are targeting deep-tech innovation, and deep tech is the number one or number two innovation focus for these firms. In addition, many more committed C&S innovators are leveraging external innovation vehicles that are typically used for longer-term or more technologically advanced solutions.
These leaders realize that going forward, titans of industry must also be stewards of sustainability.