Regenerative approach essential to align sustainability ambition and action in India’s growing economy: Kearney – EQ

• 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.

• The vast majority of 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

India : A new study launched by global management consultancy Kearney finds that more than half (52%) of the businesses surveyed in India have decarbonization plans that are acutely aligned with the Paris Agreement, and the majority of them (92%) believe that the targets are attainable. This report indicates the country’s relatively healthier pace of progress towards global net zero targets when compared with other APAC countries surveyed.

On the path to meet their goal to achieve net zero emissions by 2070, 91% of Indian businesses have set targets to reach net zero, however, 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 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.

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. This is particularly true in APAC, where climate change presents an existential threat amid high exposure to extreme weather events, such as flooding, heatwaves, and droughts, which have the potential to disrupt decades of economic progress.

While Asia-Pacific businesses are optimistic about achieving their decarbonization targets, India is at the forefront of leading the region towards achieving net zero

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 commonly held by leaders in Thailand and India, where 56% and 51%, respectively, say their targets are highly achievable.

However, decarbonization goals often fail to align with the Paris Agreement, signaling a mismatch between the pace of company aspirations and global objectives aimed at limiting global warming to 1.5°C. 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.

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).

To overcome these obstacles, there is a clear need for improved understanding by Board members; only 37% of respondents strongly agree that sustainability trends are well understood by their Board members and executive teams.

Arun Unni, Partner and APAC Sustainability Co-lead, Kearney, said: “Energy transition is not just a challenge but presents one of the greatest investment opportunities in the coming decades. It is positive to see businesses across the Asia Pacific actively setting targets for achieving net zero. However, these targets need to be aligned with global standards, even if the approach is highly local. If timed right, not only can they harness the full benefits of clean energy technologies and energy-efficient practices, but they can also add significantly to their bottom-lines and valuations.”

Greenwashing fears fuel sustainability investment, but sustainability is still seen as a business cost rather than an opportunity

Concerns about greenwashing are prompting companies to invest more in sustainability, 86% say 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: 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.

Kate Hart, Partner and APAC Sustainability Co-lead, Kearney, said: “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.”

Regenerative practices are needed to mitigate adverse climate impact in Asia

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.

Further adding, 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: “Beyond financial returns, companies that prioritize sustainability are often better positioned to manage risks, bolster long-term resilience, and foster positive relationships with stakeholders. 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.”

About the Report

Kearney’s “Regenerate: an Asia Pacific study on sustainability and beyond” report serves as a pulse check of APAC boards of directors, executive teams, and business leaders (CEO, CEO-1, CEO-2 in roles of sustainability, operations and strategy) to identify the points of intersection between sustainability ambition, execution and impact. The survey aims to understand how the region is faring in its sustainability efforts and explore the trajectory of sustainability in the region.

The study, undertaken between November and December 2023, surveyed a total of 975 executives across nine countries in Asia Pacific, including Australia, China, India, Indonesia, Japan, Malaysia, the Philippines, Singapore and Thailand, across a broad range of industry sectors.

Our study evaluates business leaders’ perspectives about the status of their sustainability initiatives. This included examining their positions along the sustainability journey, the establishment of targets such as pathways for decarbonization, and the challenges that are impeding their progress.

The study gauges whether executives believe their targets are attainable and delves into aspects such as greenwashing and management incentives. It also considers perspectives on regenerative sustainability, investigating whether businesses are elevating sustainable thinking to the next level.

About Kearney

Kearney is a leading global management consulting firm with deep-rooted expertise in strategic transformation. We work with more than three-quarters of the Fortune Global 500, as well as with government bodies and nonprofit organizations. As a global consulting partnership in more than 40 countries, our people make us who we are. We’re individuals who take as much joy from those we work with as the work itself. Driven to be the difference between a big idea and making it happen, we work alongside our clients to regenerate their businesses to create a future that works for everyone.