While sustainability initiatives have become a priority for many businesses, a shift in the economy could be putting such plans on the back burner while sustainability technology remains an important tool, according to a survey by Gartner.
Gartner surveyed 128 CFOs and CEOs and found that sustainability will be among the first areas to face cuts as companies face tighter margins due to situations such as rising inflation and supply constraints. The responses show that 39% of the business leaders see sustainability as an investment to cut first due to economic volatility, only ranking behind mergers and acquisitions.
That said, technology, which is seen as a key piece to successful sustainability objectives, is among the last the respondents say they will cut and 45% say they would eliminate digital investments last. Technology investments for improved efficiency in operations are also the least likely first cut, with 23% of the business leaders feeling that way.
Gartner says even with upfront costs, digital investments such as blockchain, the Internet of Things, and digital twin technologies improve efficiencies and operations. Such tools have helped businesses with energy improvements and supply chain operations as well.
On that end, Gartner also recently surveyed 320 supply chain leaders on climate risk assessment to identify their most significant risks. Of those who responded, 27% say they have conducted an assessment to identify the most critical supply chain risks.
Additionally, 19% say they are using digital technology to better understand those risks. Although those supply chain managers are using those tools, which include technology like artificial intelligence, 85% are using predictive analysis.
Gartner says using technology is important to analyzing risks and adjusting to different scenarios, and supply chain operators who are not taking advantage of digital tools should attempt to close that information gap.
Technology such as tracking tools helps supply chains manage risks, and as disruptions become more of a problem are almost a necessity for organizations, according to Planet Tracker. Overall investment in technology and supply chain management is booming.
The supply chain survey also shows that limits on planning for climate-related risks include short-term decision-making (57% of respondents) and the inability to put together the cause and the investment benefits (57%). Gartner says sustainability adaptation needs to be included in supply chain investments, including the impacts of potential natural events or greenhouse gas emissions on operations.
“Investments in climate adaptation require a certain level of foresight,” says Heather Wheatley, senior director analyst with the Gartner supply chain practice. “An increasingly popular tool is the shadow carbon price, which applies a notional cost to greenhouse gas emissions, effectively translating a future risk into a present-day operational cost that attracts the attention of business leaders.”