Cost is Top Challenge to Achieving Enterprise Sustainability, ISG Study Finds

New survey research from leading global technology research and advisory firm Information Services Group (ISG) (Nasdaq: III) finds cost is the biggest barrier to achieving enterprise sustainability goals, with more money spent on reporting and compliance than on digital programs that drive actual business benefits.

The ISG Market Lens Digital Sustainability Study asked more than 200 leaders worldwide to rank their organization’s top sustainability challenges. Cost is the top challenge, cited by 45 percent of respondents, followed by integrating sustainability into business metrics (34 percent), and prioritizing sustainability investments (31 percent).

Large enterprises are spending, on average, about 0.2 percent of revenues on sustainability initiatives, the study found. Half of that spending is on environmental initiatives and the remaining half is split almost equally between social and governance programs.

Digital sustainability—the use of information technology and associated services to improve the environmental and/or social sustainability of an organization—accounts for 35 percent of general enterprise sustainability spending, the study found.

Within the digital sustainability budget, 60 percent of respondents say spending on data and reporting solutions will account for the greatest proportion of their spending in 2024, followed by digital sustainability strategy services (51 percent) and industrial and operational optimization solutions (46 percent). The latter includes a broad array of digital, data-led solutions, ranging from software to sensors, that enterprises use to support informed decision-making and to prioritize sustainability investments.

“Companies plan to spend more on reporting and compliance this year than on any other area of digital sustainability,” said Michael Dornan, principal analyst and co-author of the study. “As with so many business domains, sustainability progress is limited by the ability to collect and analyze data. Enterprises need technology and business services providers to help report on their progress and benchmark their sustainability performance against others.”

The biggest reporting challenge, respondents say, is the accuracy of data, particularly for scope-three emissions (those produced by others in a company’s value chain). Compliance with climate-related financial disclosures is the greatest perceived enterprise reporting risk, the study shows.

Eighty-five percent of enterprises have engaged managed services providers to support overall sustainability programs, the study found, and 39 percent are using providers to run ESG-specific programs. The remainder are building sustainability goals into new and existing programs with providers or holding them accountable for meeting sustainability goals.