INSIGHT 4
99% of CEOs see barriers to decarbonization
The World Economic Forum’s annual risk perception report highlights that although organizations are concerned about some elements of sustainability – namely extreme weather conditions – the general perception is that it’s a long-term risk, with the short term flooded with competing challenges that require more immediate action.
The reality, though, for organizations that have set decarbonization targets by 2030 is that only 1-2 sourcing cycles are left to get key suppliers on board with the program. However, as Proxima’s Scope 3 Maturity Benchmark report revealed, although great strides have been made in setting ambition and organizational strategy, many organizations lack the procurement strategy and basic infrastructure to make structured progress within the supply chain.
An astounding 99% of participating CEOs recognize that there are barriers to supply chain decarbonization. While the largest barrier is the complexity of the work (29%), the other response options carry nearly the same weight. Interestingly, the leading barrier in larger organizations is the lack of access to required data, at 30% in contrast to the 22% average for all organizations.
The leading barrier also varies by sector. If we look at Aviation, for example, a lack of specialist skills is the predominant inhibitor at 33%, and the costs are only 18%. A complex industry to tackle decarbonization with a significant research and development demand. Compare this to, for example, Financial Services, and it’s the opposite story – 32% for the costs involved as the leading barrier, and just 14% for the lack of specialist skills required, reflecting a perhaps easier quest but one constrained by investment prioritization.
More generally, the complexity of work seems to concern CEOs across sectors the most and the lack of access to the required data the least. This is particularly true in Retail, Utilities, Raw Materials, Communications and Hi-Tech, arguably some of the most high-profile sectors facing the decarbonization challenge.
As far as talent is concerned, 86% of CEOs are positive that they have sufficient talent in place to implement sustainability across the supply chain. This figure is marginally higher in the DACH and Benelux regions, which may reflect a more developed approach to sustainability. That said, 50% of CEOs globally find navigating sustainability regulation difficult.
Private Equity, Financial Services, Aviation, and Consumer Goods reflect a higher degree of difficulty than the average, perhaps highlighting the additional complexities associated with cross-international border trade, including regulatory variation, legal nuances, and significant administration.
Collaboration is vital in tackling Scope 3 if we're open, transparent and share what we're doing with others we'll get to net zero faster.