Most Indian Companies Still View Sustainability as Cost

A new study (March 2024) by global management consultancy Kearney has found that 72% of the Indian respondents view sustainability as a cost to business rather than an opportunity. This perception could be hindering the full integration of sustainability into business operations. More than half of the businesses in India (52%) view sustainability trends as a risk rather than an opportunity.

The primary cause for this perception is clearly the poor buy-in from the boards. The study found that only 37% of respondents strongly agreed that sustainability trends are well understood by their board members and executive teams.

Kate Hart, Partner and APAC Sustainability Co-lead, Kearney said that the perception of sustainability as a cost instead of an opportunity is unfortunately a short-term business focus which hinders the full integration of sustainability into operations. Closing this gap requires strong leadership, innovation, and a resilient culture which demands more than just sustainability; it requires embracing regenerative principles.

The Kearney study, titled “Regenerate: an Asia Pacific Study on Sustainability and Beyond”, surveyed nearly 1,000 business leaders across diverse industry sectors in nine Asia Pacific (APAC) countries: India, Australia, China, Indonesia, Japan, Malaysia, the Philippines, Singapore, and Thailand. The report aimed to capture regional business executives’ views on sustainability initiatives within their organizations, covering target setting, decarbonization pathways, and hurdles impeding progress.

Highlights

• Less than one-third of businesses in the Asia Pacific region have decarbonization plans acutely aligned with the Paris Agreement. India (52%) is most aligned with the global objectives and decarbonization goals.
• Most Indian businesses surveyed (91%) have set targets to reach net zero, with 51% of them viewing these targets as highly achievable.
• The majority view sustainability as a cost to business rather than an opportunity (72%), hindering the full integration of sustainability into business operations.
• 52% of organizations in India are taking a regenerative approach to sustainability with an aim to achieve their goals in the next 1-3 years.

Indian respondents said the 2030 deadline the country has set for itself seems unrealistic. The results of the study revealed that to achieve progress on the sustainability front, Indian companies need to adjust strategies and set achievable timelines.

The comprehensive report comes at a time when closing the gap between ambition and action is imperative, as businesses urgently need to align their sustainability goals with tangible measures to mitigate environmental impact.

In India, the pursuit of broader sustainability objectives also experiences hurdles such as complexities in overcoming technical challenges (65%), limited capabilities including the quality and quantity of resources (63%¹), and businesses frequently grappling with the challenges of cross-team collaboration (57%¹). 

Businesses across APAC are actively setting target dates for achieving net zero. A significant 85% of companies perceive the decarbonization targets set by their organizations as attainable, with over one-third (37%) indicating they are highly achievable. This optimistic outlook is most held by leaders in Thailand and India, where 56% and 51%, respectively, say their targets are highly achievable.

The majority of businesses in India (71%) believe that enhanced technologies would accelerate their decarbonization initiatives, with the highest in Thailand (76%) and Malaysia (73%). Additionally, over half (57%) consider support from the government crucial for expediting decarbonization efforts, with the Philippines ranking the highest (63%) followed by Singapore (58%) and India (57%). India had the highest number of leaders (69%) suggesting the need for a better ability to measure emissions.

Good and the Bad of Greenwashing Fears

It is interesting that concerns about greenwashing are prompting companies to invest more in sustainability. 86% said that greenwashing concerns have motivated their organization to increase investment in sustainability resources and capabilities. However, the study also found that 78% say it has made their organization more hesitant to discuss sustainability plans publicly.

87% of leadership in India has expressed concerns about greenwashing. To tackle this issue, business leaders in India are motivated to change their approach towards a more conscious supplier and partner arrangements (92%), more cautious in emissions management plans/target setting (92%) and tighten sustainability policies and processes (91%).

In addition, almost three-quarters (72%) of companies continue to view sustainability efforts as a cost to business rather than a value-creating opportunity. This sentiment is particularly strong in India (78%), followed by Australia and Indonesia (77%). More than half of the businesses in India (52%) view sustainability trends as a risk rather than an opportunity. This leads to companies adopting short-term sustainability plans (61%) and most (81%) having sustainability ambitions influenced by meeting societal expectations and keeping up with competition.

Regenerative Practices

Asia remains especially vulnerable to climate impacts and as growth continues to surge, there is an urgent need for the region to transition towards development that is not only carbon-neutral but also climate-resilient. Regenerative businesses are at the forefront of adopting this transformative approach. More than 40% of surveyed companies perceive themselves as embracing regenerative practices, led by companies in Indonesia (57%), India (54%) and Thailand (54%). 

Notably, among the 54% of companies across India acknowledging the potential for regenerative practices to improve profit and long-term growth, 52% aspires to achieve regenerative practices within the next 1-3 years. By integrating their business systems with broader environmental and social systems, these companies are shifting away from viewing sustainability solely as a risk or cost, and instead, actively aim to contribute positively to the world. This strategic shift prioritizes long-term value creation, advancing sustainable and profitable growth across the region.

Arun Unni, Partner and APAC Sustainability Co-lead, Kearney, said: “In India, where sustainability is an increasing focus, businesses are exploring creative ways to achieve their decarbonization goals. By leveraging clean energy technologies supported by government interventions, Indian businesses are using immediately available greening opportunities to reduce their footprint.” 

India is ranked fourth in the world for its renewable energy installed capacity, and Improved technology, better ability to measure emissions, and increased government support will fuel momentum in driving investments in energy efficiency, expanding renewable energy generation, as well as the use of green hydrogen for energy storage.

Kate Hart said collaborative efforts and shared learning across businesses in the region can help bridge the knowledge gaps that we see and accelerate the overall transition towards regenerative sustainability.

Key India highlights and the link to the APAC report