CEOs Prioritise Supply Chain Worries Over Other Concerns
Research from Bain & Company has revealed that CEOs are more concerned with navigating challenges such as AI advancements, inflationary pressures and geopolitical supply chain risks rather than addressing climate change.
This comes as consumers, particularly in regions experiencing extreme weather, demand more action on sustainability.
A survey of 19,000 consumers across 10 countries showed that 61% are more worried about climate change than they were two years ago, with countries like Brazil, Indonesia and Italy feeling the effects of rising temperatures.
In fact, 76% of global consumers believe sustainable lifestyles are crucial, with that figure reaching 90% in Brazil and Indonesia.
Interestingly, this shift in consumer attitude extends to corporate buyers too.
Bain’s survey of 500 B2B buyers found that 36% would drop suppliers that fail to meet sustainability expectations. In three years, that number could rise to 60%.
The hidden costs of inaction
By neglecting sustainability goals, are CEOs risking more than they realise?
Bain’s analysis suggests that a 2°C temperature rise could shave off US$6tn from the S&P 500’s value. Beyond financial losses, this would have significant environmental and social ramifications.
Currently, nearly a third of companies disclosing their carbon data are behind on emissions targets related to their operations and energy consumption.
Even more concerning is that nearly half are falling behind on their broader Scope 3 emissions - those created by their supply chain.
“The transition to a sustainable world is following a familiar cycle," Jean-Charles van den Branden, Bain’s Global Sustainability Leader, explains.
"What began a few years ago as boundless excitement has given way to pragmatic realism. As the challenge of meeting bold commitments becomes clear, many companies are rethinking what is achievable and on what timeline.”
Supply chain challenges dominate CEO concerns
Amid these shifting priorities, supply chain management has become a top worry for CEOs.
"A staggering 86% of CEOs are focused on supply chain risks, including carbon emissions, human rights issues and the increasing complexity of global supply chains," according to Proxima’s Supply Chain Barometer.
Proxima also found that in sectors such as utilities (78%), manufacturing (77%) and retail (75%), the fear of human rights violations within the supply chain is particularly high.
However, when it comes to reducing carbon emissions in supply chains, business leaders face a myriad of challenges.
According to Bain’s findings, CEOs are divided on the most significant hurdles, with 29% citing decarbonisation complexity as the biggest issue. Cost, lack of skills and limited access to data are also major concerns.
The buzz around AI is another factor shaping these discussions, though its impact remains limited for now. Although 99% of CEOs are considering AI for supply chain improvements and 82% are launching new AI initiatives, only 22% expect it to make a real difference in the next year.
Simon Geale, Executive Vice President at Proxima, another Bain company, comments: “It’s fair to say that the complexities of global supply chains continue to have CEOs around the world scratching their heads.
"Business leaders are spending more and more time tackling supply chain challenges, reflecting the multiple challenges to address.”
As CEOs grapple with these competing priorities, the tension between managing supply chain disruptions and delivering on sustainability promises grows sharper. The road ahead demands balance, as ignoring either could carry significant risks for businesses.
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