Overcoming Challenges in Environmental Sustainability: Data, Regulations, and Focus

Over the past several years, a diverse range of organizations have made significant strides in enhancing environmental sustainability. These achievements include notable reductions in greenhouse gas emissions, substantial cuts in the use of toxic substances, increased utilization of earth-friendly packaging, and the replacement of energy-inefficient infrastructure. Such initiatives are not just limited to compliance, as many companies are adopting innovative practices that demonstrate their commitment to sustainability in their operational frameworks.

While these developments are certainly positive, there remain numerous challenges that require resolution. Some of these hurdles are notoriously complex, while others stem from the evolving requirements and realities within the sustainability landscape. Here are some of the prevalent challenges that organizations need to address in the pursuit of greater environmental sustainability:

• Collecting, sharing, and reporting on environmental data: For numerous organizations, the task of identifying and gathering sustainability data across their operations remains a significant hurdle. In the European Union, a staggering three-quarters of organizations are still grappling with the early phases of this undertaking (IDC’s Future Enterprise Resiliency and Spending Survey, Wave 3, April 2023). Mastering the data landscape is vital for operationalizing sustainability, especially in regards to decarbonization, which has ascended to the forefront of priorities for enterprises globally (IDC’s 2023 Global Sustainability Readiness Index). Successfully implementing a carbon-neutral strategy hinges on achieving comprehensive visibility into climate-related data. To achieve this effectively, IT departments must work to integrate insights from often disparate platforms, ultimately providing cohesive carbon neutrality inputs to procurement. On a positive note, organizations are gradually overcoming this challenge. According to projections from the IDC FutureScape: Worldwide Future of Industry Ecosystems 2023 Predictions (October 2022), by 2025, 60% of global 2000 organizations will have established cross-ecosystem environmental sustainability teams designed to foster the sharing of data, applications, operations, and expertise, thereby promoting sustainable ecosystem practices.
• Dealing with uncertain economic environments, which can distract from sustainability issues: The ongoing fluctuations in energy prices, rampant price inflation, and geopolitical tensions continue to create economic uncertainty, which can detract from the focus on environmental sustainability initiatives. Nevertheless, companies have demonstrated resilience; IDC’s July 2024 CIO Sentiment Survey revealed that despite these uncertainties, 75% of organizations intend to either maintain or accelerate their investments in sustainability efforts.
• Pursuing measurable results: Achieving success in environmental sustainability necessitates not only organizational changes but also cultural evolution to unlock both financial and non-financial benefits. Overcoming this challenge requires strong leadership and high-quality data, which in turn enables effective budget investments that yield measurable returns on investment (ROI).
• Scope 3 shock: Scope 3 emissions, which comprise between 60% to 95% of the total carbon footprint for most organizations, present a formidable challenge. These emissions—stemming from a company’s indirect responsibilities along the value chain, such as those produced by suppliers during the manufacturing processes or generated during the use of sold products—are often outside a company’s direct control. This complexity renders the measurement and monitoring of Scope 3 emissions significantly more difficult compared to Scope 1 (direct emissions) and Scope 2 (indirect emissions from energy consumed). The foundation for tackling these intricate emissions issues lies in the necessity of high-quality data.
• New and changing regulations: As governments around the world continue to introduce new environmental sustainability regulations, organizations are tasked with adapting to these changes in a manner that ensures compliance. The Corporate Sustainability Reporting Directive (CSRD) and the Carbon Border Adjustment Mechanism (CBAM) encompass all member states in the European Union, while individual countries like Germany, France, and the U.K. enforce additional regulations. Although the U.S. currently lacks a comprehensive directive comparable to the CSRD, various regulations from the Sustainability Accounting Standards Board (SASB) and the SEC, through its climate-related disclosures, are in effect. This landscape is shifting; in recent years, both federal and state agencies have begun rolling out new environmental initiatives and proposals. Significant federal acts include California’s SB 253, the Climate Corporate Data Accountability Act, which mandates the disclosure of greenhouse gas emissions, and SB 261, the Climate-Related Financial Risk Act, which requires large companies operating in California with annual revenues exceeding $500 million to produce biennial climate-related financial risk reports aligned with the Task Force on Climate-Related Financial Disclosures (TCFD).

Businesses face an imperative to adapt to these emerging regulations. This adaptation requires enhancing supply chain visibility to monitor emissions and social practices, collaborating closely with suppliers to mitigate environmental impacts, and investing substantially in sustainable practices throughout the entire value chain.

Achieving lasting success in environmental sustainability across operational, financial, environmental, and cultural dimensions demands vigilance and sustained focus on each of these aspects.

The potential for lucrative rewards is worth the effort. IDC forecasts that by 2027, companies that have made significant strides in sustainable business transformation will integrate sustainability comprehensively throughout their organizations (IDC FutureScape: Worldwide Sustainability/ESG 2024 Predictions, October 2023).

Learn more about IDC’s research for technology leaders OR subscribe today to receive industry-leading research directly to your inbox.

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the technology markets. IDC has recently been recognized as Analyst Firm of the Year for the third consecutive year. Their Technology Leader Solutions offer expert guidance, supported by industry-leading research and advisory services, as well as best-in-class benchmarking and sourcing intelligence data. To learn more, contact us today.

Karen D. Schwartz serves as an adjunct research advisor within IDC’s IT Executive Programs (IEP), emphasizing IT business, digital business, disaster recovery, and data management. With extensive experience as both a researcher and a technology journalist, she covers a wide array of topics, including cybersecurity, disaster recovery, storage, unified communications, and wireless technology. Karen is a proud alumna of UCLA, holding a Bachelor of Arts degree.

**Interview with Sustainability Expert Dr. Sarah Lawson**

**Interviewer:** Thank you‌ for joining us today, Dr. ‌Lawson. With many companies striving for environmental ⁢sustainability,⁣ could you explain the three major challenges you see in their transformation journeys?

**Dr. Lawson:** Certainly! The three main challenges are data management, economic distractions, and the complexity of emissions reporting, particularly Scope 3 emissions.

**Interviewer:** Let’s start with data management. Why is collecting and reporting environmental data such a hurdle for organizations?

**Dr. Lawson:** Many organizations struggle ‌to⁢ identify⁣ and ‍gather sustainability data‍ across‍ their operations. A staggering three-quarters of companies in the EU are still in the early phases of this task. Effective sustainability efforts, ⁢particularly in decarbonization, require comprehensive visibility into ⁤climate-related data, and this often means integrating insights from disparate platforms. ⁢However, I am hopeful because projections indicate that by 2025, many‍ organizations will establish dedicated teams focused ‌on cross-ecosystem sustainability.

**Interviewer:** That’s promising. Now, about economic distractions—how do fluctuating economic conditions ⁤impact sustainability initiatives?

**Dr. Lawson:** Economic uncertainty, including fluctuating energy prices and geopolitical tensions, can⁢ divert attention from sustainability projects. However, despite‌ these challenges, 75% of organizations still plan to maintain​ or accelerate their sustainability investments. This demonstrates a collective resilience, ‌which is encouraging.

**Interviewer:** Lastly, can you elaborate on the challenges related to Scope 3 emissions?

**Dr. Lawson:** Absolutely!⁣ Scope 3 emissions ⁢often ‍make ‍up 60% to‍ 95% of an organization’s total carbon‌ footprint,‌ coming‍ from indirect responsibilities along the value chain. Because these ‍emissions are typically outside of a ‌company’s ⁣direct control, measuring and monitoring them is significantly more complex. This highlights the‍ need for​ high-quality data to effectively tackle these emissions.

**Interviewer:** It sounds like the evolving‍ regulatory landscape also ⁢plays ⁤a significant role in sustainability efforts. How should​ organizations adapt to new regulations?

**Dr. Lawson:**⁤ Organizations ⁢must enhance visibility ‌across their supply chains, collaborate with suppliers to‌ minimize environmental impacts, and invest in sustainable practices throughout their value chains. Adapting to new ⁢regulations, such as the Corporate Sustainability Reporting Directive‌ in the EU, means navigating compliance effectively while continuing to push forward with ⁣sustainability⁢ goals.

**Interviewer:** Thank you, Dr. Lawson. What‍ final thoughts would you share with organizations embarking on their sustainability journeys?

**Dr. Lawson:** Lasting success in sustainability ⁢requires a concerted effort across operational,​ financial, environmental, and cultural dimensions. While challenges exist, ⁤the potential rewards for companies deeply integrating sustainability into their operations are significant.‌ According to recent forecasts,⁢ those who successfully transform their businesses will find themselves ahead of the curve by‍ 2027.

**Interviewer:** Thank you for your insights, ⁣Dr. Lawson. ​It’s clear that ⁢while the path to sustainability is challenging, ‌it is also filled with opportunity.