Each year the Boston Consulting Group takes the corporate temperature in terms of innovation. In their latest report, they look specifically at sustainability innovation, both in terms of the priority firms are assigning to it and the results they’re achieving.
They found that around two-thirds of respondents said that climate and sustainability were a key priority, with half saying that innovation in this area was something they were committed to. Despite these noble ambitions, however, just 20% of firms are actually doing anything about it in terms of developing the capabilities they need or actually building out innovations in products, processes, or business models that can make a difference.
Hollow pledges
“While many companies talk about sustainability and make net-zero emissions pledges, far too few of them have truly done the work of integrating climate and sustainability priorities into their innovation engines and producing tangible results,” BCG explains. “At the same time, investors, regulators, customers, and shareholders are all looking to big companies and their CEOs to take the lead in
making real progress against global warming.”
When compared against BCG’s innovation-to-impact benchmarking framework, just 28% of companies committed to climate and sustainability achieved a score of 80 or higher, which would mark them as ready and equipped to deliver meaningful innovation. This highlights the clear need for most companies to up their game considerably.
It’s perhaps no surprise that most of the firms found to be most innovative more broadly were also highly innovative in terms of ESG, and climate and sustainability more specifically. Indeed, 80% of the top 50 most innovative firms fell into this camp.
The rankings found that Apple was the most innovative firm for the second consecutive year, with Microsoft in second, and Amazon in third. The top five were rounded out by Alphabet and Tesla. Half of the top 50 firms were based in North America.
In a positive development, the report suggests that the sectors most likely to contribute to emissions are also those that most prioritize climate and sustainability innovation. Whether this squares with longstanding accusations about greenwashing aimed at both automotive and oil and gas sectors is another matter, however.
“As sustainability moves up the agenda in boardrooms and C-suites everywhere, the importance of innovation rises commensurately,” BCG concludes. “But innovation—be it in products, processes, or business models—is not a siloed function and does not take place in a walled-off lab. Progress depends on innovation being embedded throughout the organization, with the same human and technological capabilities that drive success on other topics.”
