Sustainability & Consumer Behaviour 2023

Companies from every industry are facing increasing calls from their consumers, investors and employees to play a greater role in accelerating the transition to more sustainable business practices. As they do so, they need to manage the risks and seize the opportunities created, from enhanced reputation and new revenue streams, to better risk management and business continuity.

Lead with transparency

Increased transparency not only allows consumers to make more deliberate choices about sustainability, it also supports better reporting, which increasingly is becoming a requirement.

Given the role trust plays in building consumer engagement, improving transparency can drive higher levels of loyalty. Transparency requires an underlying infrastructure, one that combines agreed standards for better ESG data collection and sharing, paired with intelligent analytics and real-time delivery of data.

 

Think sustainability first to create value and cut costs

Demonstrate to your shareholders the value creation that comes with environmental, social and corporate governance (ESG) initiatives, such as decarbonisation or human rights programmes, rather than treat them just as compliance issues.

For example, revisit consumer expectations with a sustainability lens, rethink your segmentation and align your offering accordingly. Consider the impact of existing products and services, embed a circular model, and roll out sustainable products and services that satisfy the increasing demand for more sustainable alternatives outpacing your peers as a result.

Sustainability initiatives can also achieve efficiencies through cutting waste, shortening the supply chain, and achieving saving energy and water.

 

Bring circularity into your value chain

The application of circular principles offers significant potential for organisations to achieve commercial and strategic objectives including cost reduction, value chain resilience, new revenue streams and net-zero targets.

Becoming more circular is challenging, requiring engagement from functions right across the business, from operations to finance and logistics. It also relies on wider systemic change, meaning that there are often factors which fall outside a company’s direct sphere of control. Shifting to a more circular economy will require experimentation with new approaches, new technologies and revised business models.

 

Transform while building risk resilience

How an organisation responds to climate risks and opportunities will be key to its long term sustainable growth. To lead a transformation to a more sustainable business, leaders need knowledge paired with a clear action plan. They also need to ensure that every function is accountable for implementing ESG strategies that will improve and protect margins, build brand value, and enhance risk resilience.

 

Navigate and influence the wider system-level change

Be involved in your sector’s path to decarbonisation and sustainable practices, including working more closely with the policymakers, the financial sector and businesses in your wider value chain (such as logistics) to accelerate consumer access to greener products and services at standard pricing.

Also, take advantage of the policy incentives that exist in your jurisdictions, to benefit from existing grants that have been established to activate and reward sustainable developments and investments.

 

Get ahead of regulatory change

While new regulations invariably introduce additional compliance costs, they can also provide the opportunity to mobilise for change and open first-mover advantages.

As sustainability regulatory requirements and standards expand, it is essential to adopt a strategic approach to navigate the complexity, and to proactively engage with regulators.

Anticipate new regulations, such as the EU’s Corporate Sustainability Reporting Directive (CSRD), which will eventually require every large company to design and disclose a transition plan. Approaching regulations holistically can create value beyond compliance.

 

Empower your finance function

Regulatory and assurance requirements are driving the demand for verifiable and detailed ESG data for qualitative and quantitative disclosure.

Embed sustainability metrics and measures into the planning, budgeting and forecasting process and review cycles. Look beyond the traditional financial metrics, to also consider social and environmental information as part of management information; and adapt capital investment appraisal processes to integrate social and environmental issues.

Your finance team will have a key role in ESG disclosure as non-financial information becomes a part of many companies’ annual reports.