It’s no surprise that stability is essential in today’s business market. More than 4,500 companies worldwide are working with science-based initiatives to measure, track and reduce their carbon emissions. And while an MIT Sloan Management Review study shows [1] 90 percent of executives think sustainability is important, while only 60 percent have a sustainability strategy.

Data traffic is expected to grow eightfold by 2030 (BT and Accenture [2]). This can have a significant carbon footprint depending on the source of energy fueling the data and is a concern for both companies that have not set a sustainability strategy and those that have ambitious net zero emissions strategies.

We are at a crossroads and it is worth asking: what are companies? at risk By not developing and implementing strong sustainability strategies when it comes to their digital footprint?

If companies don’t act soon, they are going to face real and lasting challenges. As head of sustainability at BT, a company with around 100,000 employees in the telecoms industry, I see this first hand.

Companies that fail to develop or implement sustainability strategies put themselves at risk. Failure to expand sustainability strategies in line with the growing focus on “going green” can also negatively impact a company’s long-term success.

Let’s take a closer look at the top three challenges a company can face if they don’t have a proper sustainability plan.

Global sustainability regulations and carbon taxes

Governments around the world are enforcing sustainability laws and regulations and non-compliance is becoming a financial risk for companies. For example, in the European Union, the Corporate Sustainability Reporting Document (CSRD) aims to improve the transparency and consistency of sustainability reporting by companies. The CSRD will require companies with more than 500 employees to disclose various sustainability-related information.

The UK is seeing similar regulation with the passage of mandatory climate-related financial disclosures. And in the United States, the Securities and Exchange Commission is close to agreeing on climate disclosure rules similar to the CSRD, which will affect many companies.

Carbon taxes are also becoming increasingly common, where governments levy taxes that companies must pay based on the amount of greenhouse gases they emit. According to financial and tax website GCC FinTax [3], 27 countries currently have carbon taxes, including Japan, the EU, the UK, and Mexico, which are expected to pass similar laws. In December 2022 the EU introduced the first Carbon Border Adjustment Mechanism (CBAM) to put a fair price on the carbon emitted during the production of carbon intensive goods entering the EU.


Maintaining a positive reputation among stakeholders, consumers and employees

According to Gartner [4], 85 percent of investors are using environmental, social and governance (ESG) metrics to inform their decisions about who and how much to invest in organizations. Investors and other stakeholders are increasingly concerned about sustainability, which poses reputational and financial risks for companies that don’t follow suit. Companies that are lagging behind the trend are seen as high risk holdings which will affect their ability to raise capital. Loss of stakeholder trust can lead to reduced sales, reduced market share and negative publicity.

We’ve already seen this in play, for example when UBS excluded Exxon Mobile from their climate fund and four other “irresponsible” energy companies, citing in a statement that they were “lagging on climate change performance.”

But, as mentioned, there is a secondary reputational risk at play: stakeholders factor into a company’s long-term investment, but companies that choose not to focus on sustainability can lose their consumer base, as well as their talent pool.

A 2021 study [5] 10,000 people in 17 countries found that “sustainability is becoming increasingly important in consumers’ purchasing decisions.” Consumers are increasingly aligning themselves with companies they consider to be green. Similar study of 2020 by Accenture [6] 60 percent of consumers find they are making environmental, sustainable or ethical purchases.

The pattern is almost the same for employees. More and more, the workforce is preferring to work for companies committed to sustainability and environmental responsibility. A study conducted by IBM [7] By early 2022, 67 percent of their 10,000 respondents said they would be more willing to apply for and accept jobs from environmentally sustainable companies.

The data also shows that 35 percent of respondents who changed jobs in the past year accepted a position at a company they perceived to be more sustainable, in some cases taking a pay cut to do so. Companies that do not develop and implement strong sustainability programs may lose talented employees to their competitors.

Market volatility reduced by net zero emissions

Since 2020, many changes – from the global pandemic to the Ukraine-Russia conflict, rising inflation and the predicted recession – have hit the global supply chain. Market volatility, such as we have seen over the past three years, can affect a company’s ability to operate efficiently and mitigate risks. Business leaders have to survive in the market rather than focus on sustainability.

Climate change has increased the number and severity of natural disasters such as hurricanes, fires and other severe weather, further impacting supply chains. Such disruptions increase prices and decrease profits at the same time. shows the data [8] The 2011 Japan earthquake and tsunami created $210 billion in costs for Japan. The United States saw a similar impact when Hurricane Maria hit Puerto Rico, home to a large production of pharmaceuticals and medical devices. As a result, American hospitals lost their supply of saline bags and resorted to rationing saline.

The problem is that not investing in a sustainability strategy can increase business costs in the long run. Moving to net zero emissions can save businesses. A focus on net zero emissions is critical to combating climate change, which can also drive market volatility. Businesses that focus on net zero emissions have been shown to benefit from enhancing their reputation, reducing costs and protecting their businesses from the volatility of fossil fuel-based energy supplies, according to the British Business Bank. [9].

Next steps:

Recognizing some of the key challenges companies face—more sustainability regulations, increased financial risk and volatile supply chains to add to the mix—is the first step in addressing sustainability concerns.

Another is putting together a strong strategy to combat this, including assessing your digital footprint and considering effective ways to reduce carbon emissions in every part of the organization.

Now is the time to move on. As we move into midyear 2023, companies need to proactively strategize. Threats and reactions to external factors will only delay the inevitable. Sustainability can no longer be relegated to being a “nice to have” or checking a box – it’s time to strategize to face potential challenges and become a leader that paves the way for sustainability success.


  • [1] sloanreview.mit.edu/projects/investing-for-a-sustainable-future
  • [2] www.bt.com/bt-plc/assets/documents/digital-impact-and-sustainability/our-approach/our-policies-and-reports/accenture-bt-harnessing-data-to-empower-a-sustainable- future.pdf
  • [3] www.gccfintax.com/articles/what-countries-have-a-carbon-tax–4100.asp
  • [4] www.gartner.com/smarterwithgartner/the-esg-imperative-7-factors-for-finance-leaders-to-consider
  • [5] www.businesswire.com/news/home/20211014005090/en/Recent-Study-Reveals-More-Than-a-Third-of-Global-Consumers-Are-Willing-to-Pay-More-for-Sustainability-as- Demand-Increases-Environmentally-Friendly-Alternatives
  • [6] newsroom.accenture.com/news/covid-19-increasing-consumers-focus-on-ethical-consumption-accenture-survey-finds.htm
  • [7] www.esgtoday.com/ibm-survey-employees-more-likely-to-accept-jobs-from-sustainable-companies/
  • [8] www.thomasnet.com/insights/how-natural-disasters-affect-the-supply-chain-and-how-to-prepare-for-the-worst/
  • [9] www.british-business-bank.co.uk/finance-hub/business-guidance/sustainability/net-zero-how-being-carbon-neutral-can-help-your-business-grow/

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