In a world hurtling towards a warmer future, sustainability is no longer a peripheral issue but a global imperative. Businesses today are expected to track their carbon footprint, comply with tightening carbon regulations, and demonstrate their commitments to tackling climate change. This is no small order, but the old ways of doing business are already giving way to an eco-friendlier approach.
The focus today has firmly shifted from creating awareness and planning sustainability initiatives to actually executing them. According to recent studies, more than 80% businesses see sustainability as a value creation opportunity and a key component in their decision-making process. Yet, none of the problems of climate change, biodiversity loss, and water scarcity, etc. show any signs of abating. With global efforts under a microscope, carbon regulations, market dynamics, and eco-conscious customers are pushing businesses to reevaluate their strategies for a sustainable future.
This blog discusses the rise of carbon conscious businesses, strategies to address the unique challenges they face in the current business landscape, and how forward-thinking businesses are leading the charge against climate change.
rise of carbon-conscious businesses
Once a mere buzzword, sustainability is now a key determinant in purchasing decisions. Consumers want to know the environmental impact of their products, and clients, investors, and stakeholders increasingly favour businesses that are responsible actors on the world stage. As such, implementing green practices do more than just cast businesses in a favourable light; they create business value and allow businesses to resonate with environmentally aware consumers. It is estimated that 80% of global consumers are willing to pay more for sustainable products.
Technological advancements are playing a crucial role in how businesses approach sustainability. Digitalisation, automation, and advanced technologies like AI and AR are enabling businesses to design products with lower environmental footprint, improve traceability across the supply chain, optimise logistics to reduce emissions, and minimise waste through predictive analysis.
At the same time, businesses face increasing pressure from governments across the world to comply with stricter carbon regulations. To avoid regulatory penalties and continue operating legally, businesses are now required to mandatorily disclose their carbon emissions.
The convergence of these trends is driving businesses to be environmentally responsible and adopt more carbon-conscious practices.
strategies for sustainable commerce
Businesses that seek to prioritise sustainability should implement the following practices:
- tracking carbon footprint: Tracking carbon emissions from direct and indirect sources allow businesses to meet regulatory requirements, identify areas that are carbon intensive, and establish a baseline to track and reduce emissions.
- implementing carbon-responsive pricing: Businesses can highlight the true environmental cost of their products by implementing carbon-responsive pricing. By passing some of the cost of their carbon emissions to consumers, businesses can recoup sustainability costs, promote transparency, and encourage cleaner consumer choices. Carbon-responsive pricing models also allow businesses to mitigate climate-related disruptions and build resilient supply chains.
- sustainable product packaging: Sustainable packaging that uses recycled, compostable, and biodegradable materials such as cloth bags and corrugated boxes is now considered a baseline indicator of a business’s commitment to sustainability. A minimalist approach to product design and packaging further reduces waste while highlighting the brand’s identity.
- storytelling and brand narrative: Green brand narratives and marketing campaigns that illustrate a business’s sustainability journey resonate with eco-conscious consumers, enhance brand reputation, and create a competitive edge. Businesses that weave sustainability into their core storytelling are also better placed to meet environmental regulations, engage audiences, and stand out in the market.
- transparency and authenticity: Wary of ‘greenwashing’, consumers today expect businesses to disclose carbon emissions and display credible sustainability certifications. Businesses need to regularly publish sustainability reports, such as through the PwC CSRD framework, that highlight their climate commitment, build trust with customers and ESG-focused investors, and lower regulatory risks.
closing the sustainability loop: circular economy challenges
The circular economy model of keeping materials in circulation by reusing, refurbishing, and recycling is slowly replacing the linear ‘take-make-dispose’ approach. But the transition is not easy. It requires businesses to rethink the entire product cycle, from product development to disposal and everything in between. According to Forbes global circularity fell from 9.1% in 2018 to 7.2% in 2023 indicating systematic challenges. Some of the most pertinent challenges that businesses face in closing the sustainability loop are as follows:
- high initial costs: Significant upfront investments in energy-efficient equipment and recycling technologies deter some businesses from making the shift. Furthermore, redesigning products and operations, hiring sustainability experts, and educating the workforce about sustainability practices can be hard to justify in the short-term, especially if the returns do not materialise early on.
- supply chain complexities: Coordinating with suppliers along a multi-tiered supply chain can be challenging if the suppliers are not aligned with sustainability goals. Without strong collaboration, transparent carbon accounting, and infrastructural capability to support sustainable practices, transitioning to a circular economy model can be both costly and operationally risky.
- fear of losing customers and brand identity: Businesses hesitate to move towards circular economy practices for fear of losing their brand identity, especially if it is built around exclusivity, convenience, affordability, or innovative design. Circular practices often involve changes in product design and pricing models that businesses worry will change customer perception and dilute their brand image.
- missing business model for circular economy: Current businesses models are not designed for resource use and circularity. Even when businesses are willing to make the structural changes necessary to implement circular economy practices, they are hindered by the lack of regulations, environmental laws, and local governance around waste management systems which further exacerbates the issue and make it hard to close the ‘give-take-reuse-and-recycle’ loop.
- challenges in tracking Scope 1, 2, and 3 emissions: Tracking Scope 2 and 3 emissions – which rely on third-party supplier data – can be challenging due to inconsistent and unreliable reporting. While Scope 1 (direct emissions) are relatively easier to measure, varying regional standards and data quality issues continue to prevent businesses from seeing the full picture of their environmental impact.
While challenges can hinder sustainability efforts, businesses around the world are implementing innovative and often ingenious solutions to reduce the environmental impact of their business operations.
how businesses are navigating the sustainability challenge
Here are a few examples of how forward-thinking businesses are navigating the sustainability challenge:
- transitioning to renewable energy: Driven by technological innovations, renewables are fast becoming a viable energy alternative to fossil fuels. As wind and solar energy gets cheaper, businesses like Google and Amazon are increasingly transitioning to clean sources of energy like wind and solar to power their data centers which are outpacing coal as the leading source of elsectricity.
- implementing regenerative practices: Several big food brands like PepsiCo and General Mills are implementing regenerative practices to enhance the sustainability of the agricultural side of their supply chains. From reducing soil damage through low-till farming to replacing pesticides with natural pest control methods, big businesses are doing their bit to build sustainable supply chains and limit their environmental footprint.
- carbon compensation: Several businesses, especially in the tech sector, are offsetting their emissions by buying carbon removal credits and/or investing in waste management systems, renewable energy, reforestation drives, and technologies that remove carbon emissions from the atmosphere. Microsoft, for instance, recently announced the purchase of 3.7 million metric tons of carbon removal credits from CO280, a small but important step toward their goal of being carbon negative by 2030.
- investing in Carbon Capture and Storage (CSS): CSS is an innovative solution that captures carbon from industrial processes and stores it deep underground. Norway’s Northern Lights project – a joint venture between Shell, Equinor, and TotalEnergies – the world’s first high profile CSS project, has officially begun operations. With big oil and gas companies leading the way for CSS solutions globally, Northern Lights demonstrates the profitability and scalability of CSS projects.
- investing in AI: Given the rising energy footprint of AI data centres, investing in AI may seem counterintuitive at first. But AI’s application in energy optimisation, renewable energy forecasting, smart climate modelling, and real-time carbon removal monitoring is driving innovate solutions. For instance, AI algorithms can optimise energy consumption in manufacturing facilities, reducing both costs and carbon emissions. These advancements are enabling carbon-conscious businesses to fast-track their transition to sustainable practices and circular economy models.
conclusion
The rise of carbon-conscious commerce offers hope for reversing climate damage. Sustainability is now a core business priority, driven by technology, regulation, and consumer demand. While challenges persist, especially in circular economy adoption and Scope 3 tracking, innovative solutions and collaborative efforts are paving the way for a greener future.
Capitalism is not the antithesis of sustainability; it is adaptable. Businesses that integrate renewable energy, circular models, and AI-driven efficiencies will not only survive but thrive in this new era.
At Infosys BPM, we are enabling businesses to build sustainable operations, reduce emissions, and embrace circular economy models. For instance, by implementing advanced carbon-footprint analytics for a leading CPG firm, we helped them optimize logistics operations, and achieving over 90% fleet utilization and reducing annual greenhouse gas emissions globally by approximately 6%. This demonstrates how technology-led transformation can drive both operational efficiency and environmental impact.
Read the full success story here: Distributing green: How analytics helped cut down on logistics and distribution emissions | Infosys BPM
Partner with us to translate sustainability ambitions measurable outcomes and navigate your next sustainably.
