Lack of Incentives, Engagement Hinder Sustainability: ERM

A new survey by ERM revealed that progress on corporate sustainability goals is being held back by a lack of financial incentives tied to sustainability performance, limited engagement from critical business functions, and poor integration of sustainability objectives into operations. 

The ERM Sustainability Transformation Survey, which gathered insights from C-suite executives and operational managers across industries, found that 48% of respondents identified the lack of financial incentives as the top barrier to sustainability progress, followed by 43% citing the high cost or unavailability of technology and 41% highlighting weak regulatory frameworks.

The survey highlighted a gap between leadership and managers, with 56% of C-suite respondents reporting significant progress on sustainability compared to only 48% of managers. Managers were more likely to cite operational challenges, with 37% pointing to a lack of integration of sustainability goals into business plans compared to 28% of executives. 

Furthermore, employees in operations and infrastructure functions, essential for embedding sustainability into business processes, reported the lowest levels of engagement, with just 42% involved in sustainability initiatives.  

The survey also revealed variations across industries and focus areas. While companies reported up to 57% progress in addressing equity and social issues, efforts on climate and nature goals lagged, with only 47% and 45% of respondents, respectively, rating their progress as significant. Sector-specific trends showed that 79% of respondents in the mining industry reported high progress on sustainability overall, compared to just 42% in the finance sector.  

ERM recommends several solutions to accelerate progress, including linking a significant portion of compensation for executives and managers to sustainability performance, enhancing training programs for leadership and operational teams, and equipping managers with tools and data to embed sustainability goals into their operations. These measures aim to bridge engagement gaps and enable companies to address sustainability challenges more effectively.  

Sabine Hoefnagel, ERM’s Global Leader of Sustainability and Risk, noted that companies must overcome these barriers to fully integrate sustainability into their operations and achieve commercial benefits. “Those that accelerate their progress on sustainability will be well-positioned to seize new opportunities and enhance business resilience,” she said.