Creating Business Value With Embedded Sustainability

A recent study by the IBM Institute for Business Value sheds light on a challenge facing many executives: the alignment of sustainability goals with business strategy. The data shows that organizations that embed sustainability within their operations see better business results. However, nearly half (47%) of the executives surveyed struggle to fund sustainability investments while 60% concede to making trade-offs between financial and sustainability outcomes.

Titled Beyond Checking the Box - How to Create Business Value with Embedded Sustainability, the study surveyed 5,000 C-suite executives across 22 industries and 22 countries. While there’s a promising uptick (10%) in executives reporting significant progress in executing sustainability strategies, the overall number (30%) suggests that a lot more work needs to be done. 

The companies that make sustainability part of the core DNA have reaped the rewards, and are 52% more likely to outperform their peers on profitability. The key is seamlessly integrating sustainability into everyday processes rather than treating it as a separate entity. 

Embedding sustainability into your business

How to best incorporate sustainability into day-to-day operations remains a challenge. Executives who’ve effectively integrated sustainability into their company’s processes were able to do so across four levels: strategy, workflows, organization, and decisions. They share a few common traits:

1. They avoid overspending on sustainability by incorporating it into existing spending and investment decisions.
2. They integrate sustainability into core operations rather than launching large, separate initiatives.
3. They align sustainability with long-term business value rather than treating it as something special.

Reporting vs. action

Despite the advantages of sustainability, many companies view it as a mere accounting exercise. In fact, spending on sustainability reporting surpasses actual investments in sustainability innovation by 43%. Only 31% of surveyed executives report incorporating sustainability data and insights into operational improvements to a significant extent.

Many organizations are scrambling to handle the many varying, changing reporting requirements around the globe, and compliance, rather than real business value and results, becomes their focus. 

“Sustainability needs to be part of the day-to-day operations, not viewed only as a compliance task or reporting exercise,” said Oday Abbosh, Global Managing Partner, Sustainability Services, IBM Consulting.  “By embedding sustainability across their business, organizations are more likely to drive internal innovation, attract and retain skilled talent, and be better positioned to deliver both positive environmental impact and financial outcomes.”

Neste’s sustainability success story

In 2015, Neste Oil rebranded itself as Neste and revamped its refining operations to concentrate on environmentally-friendly forms of energy. With a newfound focus on prioritizing renewable feedstocks such as used restaurant cooking oil and animal fat over traditional crude oil drilling, Neste was able to drastically shrink its carbon footprint. 

The company increased its renewables production capacity, projected to reach 6.8 million tons by the end of 2026. Over 90% of Neste's renewable raw materials are now sourced from waste and residue products while all of its renewable refineries are capable of running on 100% waste and residue raw materials, showcasing Neste's sustainability commitment.

“At Neste, we are in the business of fighting against climate change,” said Marko Mäki-Ullakko, Neste’s Head of Integrated ERP. “We want to create a healthier planet for our children.”