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4 Key Challenges & Insights

As environmental challenges intensify, businesses find themselves at a crossroads between financial pressures and the urgent need for sustainability.

According to a global study of 5,000 CEOs by IBM, business leaders struggle to fund their sustainability efforts, with six in 10 admitting to making trade-offs between financial and sustainability outcomes. In the U.K., specifically, just four in 10 leaders feel motivated to act on sustainability pledges, while 28% report difficulty building the business case for environmental projects, according to research by SAP.

That’s not to say that these challenges make sustainability efforts futile. With new technology offering cost-effective solutions for green initiatives and consumer trends shifting towards eco-friendly products and services, there are strong incentives for businesses to adapt and innovate.

Here are some key insights and actions driving the shift toward sustainable practices in the U.K. in 2024.

Renewable energy

Renewable energy sources like wind, solar and hydroelectric are playing an increasingly central role in the U.K.’s energy production. According to the U.K. government, as of 2022, renewable energy accounted for 43% of the country’s electricity generation, with the government pledging to increase offshore wind capacity to 40 GW by 2030.

For businesses, this shift means opportunities to invest in renewable energy projects and clean energy sources that could result in cost savings over time. Ben Fielden, CEO of cleantech startup Sunswap, believes mobile energy storage — or “batteries on wheels,” as he calls it — can play a key role here, particularly in industries like logistics.

“Harnessing trailers for batteries on wheels not only cuts emissions but also enhances operational flexibility and resilience,” said Fielden. “It’s a promising avenue for businesses looking to meet sustainability targets while improving efficiency.

“It’s exciting for an industry like logistics because margins are everything, so if you can in effect turn trailers into renewable battery sources it opens up possibilities for operators to adopt the tech.”

SEE: U.K. IT pros should stay ahead of these top IT skills trends.

Promise for green fuel

While demand for green and renewable energy sources in the U.K. is growing, cost remains a prohibiting factor for wider uptake.

Andrew Symes is a climate technology scientist and CEO of OXCCU, an Oxford University spin-out exploring sustainable aviation fuel. He says that technology plays a key role in reducing these costs, with a £53 million (US $68 million) funding for SAF from the U.K. government in 2023, sparking fresh momentum for innovation.

“Green electricity prices and the affordability of reliable, low-cost electrolysers heavily influence the cost of green hydrogen,” said Symes. “However, as the industry scales, both these costs are decreasing.

“Key to scaling SAF is cost, and this is where new technologies play a crucial role in sustainable energy growth to propel future air travel.”

Carbon neutrality

Achieving carbon neutrality is a goal for many U.K. businesses, driven by both regulatory requirements and consumer demand for sustainable practices. Companies are adopting a number of strategies to reduce carbon emissions, from energy efficiency improvements and carbon offsetting to sustainable supply chain practices and green product innovation.

The U.K. government’s commitment to achieve net-zero by 2050 has spurred businesses into action, with many setting their own targets for carbon neutrality.

Tech innovation brings environmental costs

However, Hilary Stephenson, managing director at design and development company Nexer Digital, says business leaders need to fully understand their carbon footprint before they can set effective strategies for reducing it.

SEE: Tech approaches to sustainability include net-zero carbon by 2030.

“The digital industry currently accounts for around 4% of global emissions, surpassing that of the aviation industry … ,” said Stephenson. “Every choice we make impacts the environment, necessitating action from businesses to make their digital footprint eco-friendly.”

The growth of energy-intensive technologies like blockchain and generative AI poses additional challenges for organizations trying to balance technological innovation with sustainability.

“The energy required for AI and large language models can offset positive environmental behaviours,” noted Stephenson. “Businesses should start by evaluating their digital infrastructure and identifying areas for improvement.

“Businesses should also consider switching to cloud-native technologies if they haven’t already, as all major cloud providers have committed to net zero and water positivity.”

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Recycling and waste management

The Food Waste Reduction Roadmap, initiated by the Initiative for Global Development and the Waste and Resources Action Programme, has been instrumental in getting producers to commit to halving food waste by 2030.

Meanwhile, The Plastic Packaging Tax, introduced in April 2022, imposes a levy on plastic packaging with less than 30% recycled content, incentivizing businesses to use recycled materials and design products for end-of-life recyclability. Many companies are being motivated into action by an upcoming ban on single-use plastics in Europe.

“With the EU set to introduce new rules aimed at reducing packaging pollution, with a focus on ensuring that all packaging is recyclable by 2035, this trend is partly driven by a need to comply with regulations,” said Laura Grant, marketing manager at eco packaging firm, BlueSky Solutions. “However, it is also being driven by consumers themselves, who are becoming increasingly aware of the environmental impact of packaging and are supporting businesses who commit to taking action on improving sustainability.”

SEE: Top five benefits of applying ESG standards to your business.

Sustainable companies win customers

Indeed, sustainability is increasingly a key factor in consumer decision-making, with 2023 research by Elopak finding that 75% of U.K. consumers consider companies’ environmental commitments when making purchasing decisions.

Sian Sutherland, co-founder of sustainability campaign group A Plastic Planet, says this requires both a change in the infrastructure and technology used in the supply chain as well as in the mindset to adapt to consumer preferences.

“The data on this topic speaks volumes: 60% of shoppers would want to switch to brands using returnable versus single use packaging,” said Sutherland. “Turning a blind eye would be nothing short of foolish for any business given the upsides to both their bottom line and the environment.”

Business leadership and ESG goals

For business leaders, understanding and integrating environmental, social and governance (ESG) goals is key to balancing sustainability with digital transformation. And, with eco-conscious consumers holding companies under closer scrutiny, business leaders can no longer gloss over sustainability targets.

“Businesses that are able to foster a sustainability mindset not only align with global ethical standards but also enhance resilience in the face of evolving market demands,” said Paul Warburton, chief digital and marketing officer at professional services firm NSC Global.

“Companies must establish robust sustainability criteria which should include defining clear objectives for environmental, social, and economic impact and implementing monitoring and reporting mechanisms. This enables businesses to ensure accountability and track and communicate their progress transparently.”

PREMIUM: Learn more about ESG.

Establishing sustainability roles in SMEs

For some, however, this may be easier said than done, particularly as resource limitations can hinder organizations’ ability to implement effective ESG initiatives.

“Small and medium-sized enterprises may face challenges in meeting sustainability expectations, potentially creating a gap between smaller and larger suppliers,” says Stephenson.

“To address this gap, SMEs should establish specific roles and processes dedicated to sustainability, ensuring they can meet the same standards as their larger counterparts.”

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