Even amid economic headwinds, our recent study finds business leaders in the UK increasingly recognize the benefits of sustainability investment.

Like it or loathe it, the UK’s January 2020 departure from the EU forced a once-in-a-generation opportunity to forge future-fit sustainability ambitions and regulations. But this hugely profound moment arrived with the global pandemic, closely followed by the first large-scale conflict in Europe in over 70 years and the associated cost-of-living crisis.

Thankfully, the UK’s characteristically pragmatic business leaders are simply “carrying on.” And, with similarly characteristic conviction, they demonstrate that a sustainable business is an enduring one.

In keeping with this conviction, UK businesses are doubling down on sustainability investment, with the highest anticipated growth in spend of any country in our recent survey of 3,000 executives globally, including 250 in the UK. The study, conducted with Oxford Economics, projects UK business sustainability spending to grow 260% between 2018 and 2030, and 13% year-over-year between 2025 and 2030.

As in other regions, core digital technologies (i.e., cloud, IoT and analytics) are well deployed in the UK. However, substantial opportunity remains for wholesale operational optimization through technologies that are less widely adopted (i.e., artificial intelligence, intelligent automation, digital twins and blockchain) to accelerate and scale enterprise response to environmental risk.

Similarly true of other countries, the focus of UK businesses’ intervention in sustainability remains resolutely focused on internal operations rather than across the value chain, despite the huge business opportunity of doing so. For example, non-profit CDP reports that, globally, businesses leading value-chain-wide (Scope 3) initiatives reduced emissions by 619 mt CO2e in 2020, saving $33.7 billion as a result.

There appears to be further opportunity in the UK from the closer coupling of business, sustainability and digital strategies. However, there needs to be a more equal distribution of responsibility for strategy and budget authority, and accountability for outcomes. After all, there’s arguably no better theme than sustainability to galvanize and mobilize every corner of the C-suite.

What’s clear is that despite recent perturbations, investor pressure is growing; consumers are ever more environmentally conscious, fluent and committed to change; and business leaders increasingly recognize the benefits of sustainability investment. All of these accelerating trends underpin UK businesses’ commitment to sustainability despite economic headwinds, and we anticipate an ever more surgical focus on the commercial outcomes of such investments.

Through our analysis of the survey data, we’ve devised five recommendations for how UK businesses can outperform their markets by embedding sustainability at their core:

#1 Boost sustainability investments to realize full business value

Source: Cognizant Research
Figure 1

Convinced of the benefits of sustainability transformation, businesses across the UK have been given the green light to increase investment in their initiatives. The growth in sustainability budgets is expected to accelerate from an annual rate of 8% between 2018 and 2020, to 12% from 2022 to 2025 and 13% between 2025 and 2030.

If we apply these growth rates across the full analysis period (2018 to 2030), we estimate the average sustainability budget will almost quadruple (260% increase)—the highest projection across all countries surveyed.

#2 Elevate your internally focused sustainability initiatives for even greater returns

Source: Cognizant Research
Figure 2

The top initiative UK businesses are undertaking for sustainability is applying digital tools to make operations more energy-efficient, with more than four in five currently doing so. UK businesses are also recycling waste from back-office operations more so than any other country surveyed (70%).

Looking ahead to 2025, the top initiatives will require a greater emphasis to unlock the potential of digital tools and data strategies. Over 40% will start employing digital twins, while 35% will use data analytics to identify areas to improve resource efficiency, reduce waste and limit environmental harm.

#3 Expand your sphere of influence, upstream and downstream, to achieve greater business benefits and impact

Source: Cognizant Research
Figure 3

Nearly three-quarters of UK businesses (73%) are greatly focusing their sustainability strategy on internal operations, compared with just over half (55%) focusing on supply chain engagement and impact. This emphasis on internal operations is understandable given the greater visibility and control businesses have on their own estate.

Conversely, it’s more difficult to effect change in areas traditionally out of their direct control, such as the complexities of modern supply chains or a product’s impact once in a consumer’s hands. Businesses can gain greater rewards, however, by using digital technologies to extend their reach to obtain visibility and increase their influence across the entire value chain.

Encouragingly, over half (53%) are focusing sustainability strategies on developing and launching products and services to accelerate and grow their contribution to address environmental challenges and boost their bottom line.

#4 Explore new ways to apply and deploy mature and emerging technology

Source: Cognizant Research
Figure 4

At UK businesses today, cloud, IoT and data analytics are the core set of technologies implemented to accelerate sustainability transformation. However, there are some less deployed technologies that may be even more impactful. Although only 41% of businesses in the UK have applied intelligent automation, for example, nearly nine in 10 of those that have say it’s been effective.

#5 Evolve power structures to allow for necessary shifts in culture and accountability

Source: Cognizant Research
Figure 5

While it’s primarily CEOs in the UK who allocate the sustainability budget (53%) and approve the sustainability strategies (67%), very few (7%) are accountable or have their performance measured against the strategy’s success. Instead, it’s the Chief Sustainability Officer and senior managers who are responsible and accountable for outcomes despite their regular absence from the strategic table. Better recognition of the mutual dependency between the C-suite and its universal ownership of the sustainability agenda will unlock out-sized returns.

To embed sustainability into the company’s culture, businesses must clarify roles and responsibilities, and clearly connect these to an incentive system to encourage all employees to participate in sustainability endeavors.

Learn how your business (or you) can become sustainable to the core in our report “Deep Green: How data, technology and collaboration will drive the next phase of sustainability in business.”

For even more on this topic, visit our Sustainability & Resilience webpage.

This article was written by Rohit Gupta, UK and Ireland Country Head, and Philip Smith, VP and Global Head, Cognizant’s Sustainability Advisory Practice.