Companies are setting sustainability goals, but many are finding it much harder to generate real gains in terms of overall impact. One common challenge is that organizations often try to solve the sustainability challenge separately, instead of embedding it into their business model. A growing body of BCG research shows that companies that build for the future are taking a more holistic approach to sustainability that is yielding financial and nonfinancial benefits. By building up their capabilities across a wide range of areas, these companies create a competitive advantage from sustainability, even as they solve other business challenges.
Pressure on companies to take action to slow the rate of climate change is growing from regulators, customers, investors, and other stakeholders. Yet many organizations are not delivering. In our Build for the Future research, approximately 80% of companies aspire to be sustainability leaders in the next three years, but less than 5% are systematically implementing advanced use cases to generate sustainability and societal benefits.
Leading companies create a competitive advantage from sustainability in two major ways:
Making the core sustainable. First, they innovate and transform their existing organization, operations (to reduce Scope 1 and Scope 2 emissions), and supply chain (Scope 3 emissions) to reduce their environmental impact and become more inclusive. In doing so, these companies mitigate risks to their business from climate-related disruptions, increased regulation, and other factors, becoming more resilient even as they reduce costs. For example, IKEA is shifting its business model to become fully circular across a range of initiatives by 2030. Furniture designs now emphasize renewable materials and recycled contents, with products that are built to be more durable and repairable.
Driving new sustainable growth. Sustainability leaders also grow by innovating their business model, developing new offerings, and acquiring green businesses. Schneider Electric developed a new platform called EcoStruxure, which includes connected products and sensors, control hubs, apps, analytics, and services, all aimed at helping customers measure and improve their sustainability performance. Since launch, the platform has been deployed in almost 500,000 sites and now connects more than 1 billion devices, according to the company. Schneider Electric’s sustainability transformation has seen the company triple in size, growing from €9 billion in 2003 to €34 billion in revenues in 2022.
One key finding from our research is that 36% of future-built companies are also leading in terms of sustainability, compared with just 4% for stagnating companies—a nine-fold increase. What separates these future-built companies? We have analyzed the differences and developed a Build for the Future framework. It includes six elements, each of which has a sustainability component:
Sustainability is a complex challenge, and companies simply cannot succeed through isolated, standalone efforts. Instead, they need an all-of-the-above approach, applying the six elements of the Build for the Future framework and integrating sustainability into their business model, their overall strategy, and everything they do. As our data shows, that approach yields a range of benefits. Perhaps the most important? Helping to protect the environment and better meet the needs of all stakeholders.
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