Are you an industrial CEO? Then you’re probably facing more uncertainty and a broader array of global challenges than any of your recent predecessors.
A recent CEO study on sustainability by the UN Global Compact and Accenture found that 93% of CEOs are experiencing as many as ten or more simultaneous global challenges to their businesses—talent shortages, supply chain disruptions, and rising energy and material prices (especially copper and iron ore), just to name a few. At the same time, CEOs are forced to build diversity, redundancy, and resilience into their operations and supply chains.
Sustainability at risk?
These challenges are putting enormous pressure on business operations and profit margins. They also have an impact on sustainability.
Nine in 10 CEOs are warning that disruptions such as faltering multilateralism, socioeconomic instability, and supply chain interruptions will limit delivery of the UN Sustainable Development Goals (SDGs).
Nearly half (43%) say their own sustainability efforts have been hampered by global issues such as climate change or socio-political conflicts.
Furthermore, Accenture found that nearly 93% of all companies will miss net zero targets unless they reduce their carbon emissions much more significantly by 2030.
CEO commitment is unwavering
Despite the challenges, sustainability remains a key driver of innovation in the industrial sector. And business leaders’ commitment to the cause is stronger than ever.
Every single industrial CEO surveyed agreed that sustainability is core to their role. And not just when it comes to the environment and climate change. They’re also taking action to address issues such as socioeconomic inequality to meet customer demand and improve the bottom line.
In a recent interview, Kian Mossanen, Siemens Energy’s CIO, reaffirmed the company’s commitment to become carbon neutral by 2030 and help accelerate its customers’ own sustainability journeys. The company is pursuing a transition to hydrogen and renewable energy sources and driving change with, for example, drone technology and artificial intelligence.
The picture is increasingly encouraging across the industrial sector. The UNGC-Accenture study finds that significantly more industrial companies (53%) say they’re duplicating and diversifying value chains compared with the cross-industry average of 37%.
They’re also more likely to invest in renewable energy (60% vs. 49%), sustainable innovation (46% vs. 39%), and the transition to circular business models (52% vs. 49%). Circularity is particularly important in the industrial sector, driving not only sustainability but also cost efficiency and customer loyalty. It also has a key role to play in getting to net zero, which requires innovations across the design, manufacturing and use phases of product lifecycles.
Focus on the technology
To maintain this commitment to sustainability while also driving business growth, technology innovation needs to play an even greater role than it does today.
The indications from the study are positive. For example, more than two-thirds of industrial CEOs surveyed say they’re digitizing business processes, while more than half (57%) are also improving cybersecurity and enhancing sustainability data collection across the value chain.
However, other key technology capabilities, such as cloud infrastructure for efficiency and artificial intelligence for real-time risk analysis, are still only being prioritized by a minority of industrial CEOs. This is potentially concerning as these are central components of a modern industrial digital core that allows companies to rapidly develop new capabilities, products, services, and data insights from every corner of the business.
Strength in numbers
Sustainability goes hand in hand with resilience. Here, too, the study findings are encouraging.
Two-thirds of all CEOs surveyed use long-term strategic partnerships to build resilience; for example, by reconfiguring supply chains, reskilling workforces, reassessing natural resources, and exploring breakthroughs in technology.
CEOs are also calling for policy changes that prioritize long-term measurable objectives. This includes standardized ESG reporting frameworks, a global market for carbon, and incentives for sustainable business models.
A positive outlook for the future
The overarching message here is one of hope. Despite the growing number of challenges, CEOs of industrial companies remain committed to making their entire operations more sustainable. And most recognize the central role of technology innovation in that process. That’s the path to a more sustainable and profitable future, not only for business, but the whole planet.
