THE FINDINGS

DO CUSTOMER DEMANDS FOR SUSTAINABILITY COME SECOND?

Overall, businesses think their customers view sustainability as secondary to core product quality and better experiences. Customer service, speed of delivery and low costs also take priority. This has impacted business attitudes and may partially explain the lack of progress on sustainability overall. Though our research hasn’t explored the factors influencing customer demand, it’s important to note that recent events such as the cost-of-living crisis may be impacting sustainability efforts.

64%
of businesses believe their customers want them to have a purpose and a stance on social issues.
60%
of businesses overall said sustainability was an important strategic goal.
21%
of businesses in 2022 say the sustainability agenda is ‘absolutely necessary’ for their organisation to continue to operate.
39%
of businesses had the view that sustainability was ‘absolutely necessary’ in 2021.

FIT FOR THE FUTURE BUSINESSES DON’T SEE IT THAT WAY

FFTF businesses perceive their customers to be much more demanding when it comes to sustainability purpose and practice. Compared to the perceptions of businesses overall, FFTF businesses think their customers prioritise buying from sustainable companies with bold stances on social issues. However, these customers also expect high product quality and engaging brand experiences.

There’s a balancing act here that FFTF businesses have to do to get it right.

Where do expectations around sustainability fit within the broader set of customers priorities?

Higher quality products and services
%
Better customer service and support
%
Speed of process/delivery
%
Smoother, more tailored user experience
%
Lower costs
%
Environmental sustainability of companies they buy from
%
Brands acting ethically
%
Brands needing to have a purpose alongside their core business
%
Access to a self-serve customer experience
%
Brands being bold in their stance on prominent social issues
%

Significantly higher for FFTF businesses

60%

Environmental sustainability of companies they buy from.

57%

Brands needing to have a purpose alongside their core business.

58%

Brands being bold in their stance on prominent social issues.

FIT FOR THE FUTURE BUSINESSES BACK THEIR COMMITMENT WITH ACTION

FFTF organisations are generally more active when it comes to sustainability. They believe climate change is inevitable and they’re taking real steps to adapt.

Extent to which ‘adaptation’ to climate change is taken into account in business planning.

%
2-9 employees
%
10-49 employees
%
50-249 employees
%
250+ employees

Our study reveals that, on average, almost half of all businesses are taking steps to adapt, and larger ones are more likely to lead the way. But even more than a third of SOHOs and SMEs are adapting, too.

47%

of businesses have taken any action so far in terms of ‘adaptation’ to climate change.

Businesses are also starting to switch from ‘tidying up their own house’ to adapting their areas of influence.

They’re looking at changing their supply chains, value chains and wider spheres of influence. This transition impacts organisations of all sizes, because changes in larger businesses inevitably lead to changes in the smaller ones that support them.

Most Common Actions

Attention to health and wellbeing of employees

Building more resilience into technology and other systems

Managing water scarcity

Changes to working patterns

GOVERNMENTS SHOULD LEAD THE WAY

Many businesses agree that local and national governments should play a big role in driving sustainability improvements. In terms of exactly how governments can help, businesses have suggested a range of activities, including tax incentives, R&D funding and financial support.

%
Regional/Local Government
%
National Government

Appropriate role of government & regulators to improve environmental sustainability (Top 3 mentions)

44%
Tax/Financial incentives for improving performance
43%
Financial support to fund R&D
42%
Financial support to fund R&D
75%
Mentioned some form of financial support (vs legislating, improving skills etc)

BUT FIT FOR THE FUTURE BUSINESSES ARE HAPPY TO LEAD TOO

A majority of FFTF organisations feel it’s up to them to lead improvements in sustainability in their sectors. Their confidence in leadership comes from a deeper understanding of how to adapt to environmental sustainability as well as their willingness to collaborate with others.

% ‘Businesses like ours’, by Company size (employees)

%
2-9 employees
%
10-49 employees
%
50-249 employees
%
250+ employees

50% of businesses believe they can lead. 63% of FFTF businesses feel they have the responsibility to lead.

50%
Businesses like ours
63%
Significantly highter for FFTF businesses

BUSINESSES AGREE COLLABORATION IS KEY

We also found that most businesses think collaborating with other organisations will help overcome sustainability challenges. This was consistent across different verticals and business sizes.

More than half were willing to collaborate with another business other than a supplier, and larger businesses were the most open to collaborating with their competitors. Rather than making changes on a purely individual level, they want to create a wider ‘ecosystem’ of change that links businesses across sectors as well as universities, charities, regulators and governments.

71%
Agree that ‘greater collaboration between organisations is needed to fully conquer the biggest sustainability challenges in business.’

Who are businesses willing to collaborate with?

53%

of firms willing to collaborate with some other business, other than a supplier

%
Access to a self-serve customer experience
%
Access to a self-serve customer experience

Businesses like ours

  • Competitors within our industry (30%)

Other Businesses

  • Suppliers (35%)
  • Local/neighbouring businesses (33%)
  • Other companies outside our sector (25%)

Citizen groups

  • Charities, NGOs and not-for-profit organisations (29%)
  • Community groups (25%)

SUSTAINABILITY AS A PATH TO INVESTMENT

Despite a certain level of scepticism, businesses are starting to see sustainability as way to attract investors. This is because big investment houses are going beyond offering green portfolios and are moving towards excluding non-green investments entirely.

Last year we found that organisations with a ‘fit for the future’ score that’s higher by 10 points have an ESG commitment that’s 6 points greater. Furthermore, when the FFTF score is 10 points higher, the likelihood of outperforming their competitors financially is greater by 36%.

This year, we’ve found that FFTF businesses continue to lead the way, with 56% viewing sustainability as a hugely significant differentiator for investors.

56%

of businesses believe their customers want them to have a purpose and a stance on social issues.

However, large businesses also tend to be ahead of the game. Nearly half of businesses with over 250 employees reported that investors are focussing on sustainable businesses, compared to 35% of smaller businesses and 23% of SOHOs.

Extent to which environmental sustainability is seen as a potential differentiator by businesses.

%
2-9 employees
%
10-49 employees
%
50-249 employees
%
250+ employees

BUSINESSES HAVE GOT TO BE THE REAL DEAL

Customers and investors expect genuine commitments to sustainability.

Businesses agree that customer demands on sustainability are only likely to increase, particularly as younger generations enter business decision-making roles.

In terms of fulfilling genuine commitments to sustainability, most businesses acknowledge there’s a gap between ambition and reality. They expect to fill this gap in a piecemeal way, depending on the resources available to them.

Meanwhile, businesses are wary of greenwashing accusations, with 38% believing it can cause a major loss of reputation.

Effect of Greenwashing Accusations On The Business

38%   |   MAJOR - loss of reputation
34%   |   MINOR - an impact for some customers
24%   |   NOT AN ISSUE AT ALL
4%   |   DON’T KNOW

SO THEY’RE CHANGING THEIR WAYS

Businesses are making some improvements when it comes to environmental sustainability.

A majority of businesses agreed they’ve been too reliant on offsetting activities such as carbon certificates or tree planting. They’re now moving away from offsetting and focusing more on direct action, such as introducing recyclable packaging, limiting the use of pollutants and recycling tech products.

54%
Agree that Businesses in our sector are too reliant on ‘offsetting’ their environmental impact (e.g. carbon certificates, planting trees) rather than real action.
%
%
Producing or using products and packaging that can be recycled
%*
%
Recycling technology products
%*
%
Actively aiming to limit harmful pollutants and chemicals
%
%
Utilising renewable energy sources where possible
%
%
Producing carbon or sustainability reports
%
%
Committing to net zero emissions
%*
%
Offsetting our carbon impact
2022
2021
* SIGNIFICANT CHANGE VS. 2021

TECHNOLOGY IS A CRITICAL SPARK FOR CHANGE

As many as 74% of FFTF businesses believe another industrial revolution is needed to re-engineer the economy and make it more sustainable. For these businesses, technology is therefore a key driver of progress. Support for another industrial revolution is also reflected across multiple sectors, including telecoms, construction, transport, manufacturing and media.

Despite some scepticism, many see technology as an optimiser as well as a catalyst for change.

85%
of FFTF businesses agree that technology can help them understand where they’re wasting resources.
65%
of non-FFTF businesses also see this potential.

Another industrial revolution is needed to re-engineer the economy to be more environmentally sustainable

23%
14%
23%
14%

FFTF numbers are significantly higher than the non-FFTF

DISAGREE
NEITHER AGREE NOR DISAGREE
DISAGREE
%
Telecoms
%
Const.
%
Transport
%
Mfg.
%
Media

Technology can help our business to better understand where we are wasting resources

21%
70%
10%
85%

FFTF numbers are significantly higher than the non-FFTF

DISAGREE
NEITHER AGREE NOR DISAGREE
DISAGREE
%
Telecoms
%
Const.
%
Transport
%
Mfg.
%
Media

BUT TECHNOLOGY SKILLS CAN ALSO BE A BARRIER TO PROGRESS

Despite a certain level of scepticism, businesses are starting to see sustainability as way to attract investors. This is because big investment houses are going beyond offering green portfolios and are moving towards excluding non-green investments entirely.

Last year we found that organisations with a ‘fit for the future’ score that’s higher by 10 points have an ESG commitment that’s 6 points greater. Furthermore, when the FFTF score is 10 points higher, the likelihood of outperforming their competitors financially is greater by 36%.

30%
Not enough money/financing to make green investments.
27%
Lack of skills in green technologies/disciplines.
26%
Lack of understanding of how to make improvements.
26%
Lack of visible/tangible benefits to our organisation.
26%
Lack of maturity of key technologies that would enable sustainability.

BUSINESSES WANT BREAKTHROUGHS

We found that a majority of businesses think major technology breakthroughs will be needed to enable progress on sustainability.

We also found that the businesses who defined sustainability as ‘a need to build sustainable ecosystems’ tended to believe more strongly in the need for breakthroughs.

Meanwhile, FFTF businesses are more likely to see environmental impact as a catalyst for innovation than their non-FFTF counterparts. Those who think this way are also more likely to take actions such as improving energy management, using low-emissions transport or reviewing the sustainability of their suppliers and partners. These findings are consistent across all business size bandings.

58%
believe that there will need to be major breakthroughs in technology to enable progress towards environmental sustainability in their industry.
27%
of FFTF businesses cite environmental impact as a catalyst for innovation (compared to 20% of businesses that are not FFTF).
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