Insights

UST Thinking Ahead survey: 82% find AI to be the driving factor for sustainable business transformation

Business leaders are observant of AI's multifaceted utilization, and most believe various areas of the business can benefit from AI and machine learning in the coming years.
Style
Post-info

With the imperative for climate action becoming more pronounced, organizations are moving beyond the strategic stage and navigating the integration of sustainable business practices.

As part of our Thinking Ahead series, we surveyed 700+ business leaders across industries who are integral to the decision-making process for technology solutions to explore their organization's transformation journey. We gathered insights on priorities, roadblocks, future focus areas, and the impact of technology on sustainable business transformation.

An emergent trend was the recognition of AI's pivotal role in shaping the landscape of sustainable transformation. Nearly all organizations prioritize sustainability alongside technology-driven transformation and are optimistic about technology's potential to change the course of future sustainability.

Here, we share the broad themes from the collected perspectives that reflect the state of transformation in reinventing businesses for a sustainable future.

DIVIDER

Key findings

 DIVIDER

Challenges in achieving sustainable transformation goals

The road to transformation is not without obstacles, as most respondents reported. While the strategies for incorporating sustainability and decarbonizing business operations may be in place, the execution part has been challenging for most organizations.

Businesses struggle with various impediments in implementing sustainability initiatives. As the study informs us, organizations will most likely experience insufficient human resources or expertise in sustainability practices. Other common barriers reported include lack of education/training, inadequate data or information, and lack of clear strategic direction, suggesting an overall gap in understanding transformation capabilities and their purposes.

An unsurprising trend observed was that larger organizations, in terms of revenue (5 billion or more), tend to face resistance to change compared to organizations earning less.

DIVIDER

Sustainability decision-making: leadership involvement and technology investment

Experts assess the state of stakeholder buy-in for sustainability initiatives. Three-quarters of organizations reported that their presidents/CEOs (76%) and C-suite executives (72%) are directly involved in driving sustainability implementation discussions. In line with this, nearly all companies believe their executive leadership supports executing sustainability initiatives.

We also wanted to gauge the budgetary allocations for sustainability transformations. Typically, organizations spend between 26 and 75 percent of their IT budget on tech-driven sustainability transformations, and almost all organizations expect this to increase over the next three years.

 DIVIDER

AI-driven sustainable transformation

AI is necessary for businesses because it has broader IT capabilities and data analytics. Our survey shows that 82% of organizations believe AI is vital for driving sustainable transformation efforts. The comparable importance of data and analytics (86%) and IT (87%) underscores the increasing significance of this capability. The survey further found that mid-size organizations earning between $5 and $10 billion are significantly more likely to see AI as an essential driving factor than smaller or larger companies.

AI and IT are at the forefront of sustainable change for businesses. When asked how technology is utilized to create more sustainable supply chains, all organizations responded that they are currently using IT or AI to facilitate sustainability in their supply chains, with almost half of them using all listed methods. Most of them integrate technology in their supply chains to support the implementation of circular economy practices (47%), facilitate better decision-making through data analytics (47%), and enable real-time monitoring of supply chain activities (46%).

A similar trend can be seen in how organizations assess and manage risks related to implementing new technologies. All organizations evaluate and manage risks associated with implementing new technologies, with most methods used by around two-fifths of businesses. Dedicated management software (35%) and seeking external expert advice (33%) are utilized least often.

AI seen as positively impacting operational efficiency in the last five years

AI-powered algorithms can help transform data into insights, extract valuable information, identify patterns, and make predictions. The survey finds that 93% of organizations report improved operational efficiency after adopting AI and new technologies in the past five years.

Business leaders expect the role of AI to evolve in achieving sustainable transformation goals

With AI breaking ground in transforming the business landscape with unparalleled innovation, businesses are optimistic about leveraging technology to pursue sustainability. When asked about the impact of AI on future sustainability, 70 % believed AI would help predict and mitigate sustainability risks in the next five years, and 65% saw the role of AI evolving to enhance data analysis for informed decision-making.

Efficiency and security will benefit most from AI and ML in the future

Business leaders are observant of AI's multifaceted utilization, and most believe various areas of the business can benefit from AI and machine learning in the coming years, most notably increased efficiency and productivity (36%) and enhanced data security and compliance (35%). However, competitive advantage falls to the bottom of the list in terms of areas benefitted, possibly due to the proliferation of the technology that may fail to serve as a unique differentiator.

Implementation of training initiatives for AI use

With AI promising to be a catalyst for transformation efforts, almost all business leaders reported adopting or considering implementing AI training and upskilling programs to effectively use AI to drive sustainability initiatives. 68% report adopting or considering on-the-job training for AI use, while 63% prefer internal courses and webinars as the best way to implement upskilling initiatives.

DIVIDER

Change management and measuring sustainability ROI

While all organizations find operational changes necessary for sustainable transformation, they do not all make the same changes. Organizations are most likely to change their sustainability integration (35%), data-driven decision-making (34%), flexibility and adaptability (33%), and strategic alignment (32%) to incorporate transformation initiatives.

Like operational changes, business leaders are unanimous in measuring the success of their transformation. Organizations continue to use multiple methods to track ROI, employing a variety of KPIs.

Cost savings from efficiency improvements (49%) and revenue generated from new products or services (48%) are the most common methods to determine ROI. While all businesses are looking at KPIs to indicate the success of sustainability initiatives, there is a difference in the prevalence of popular KPIs in use, with employee engagement (34%) being the least common while operational efficiency (41%) being the most common.

DIVIDER

Thinking ahead with intelligence: leverage AI for sustainable growth

The emergent outlook from this survey is AI and its game-changing abilities to drive sustainable growth. The results emphasize the importance of sustainable business transformation and the critical role of technology, especially AI, in driving these initiatives.

Organizations recognize the need to prioritize sustainability goals and harness technology to achieve their objectives. However, as companies embark on a tech-driven transformation, they must critically embrace responsibility while adopting AI, be aware of the undesired ethical implications, and stay vigilant of evolving regulations.

In our Thinking Ahead report, we converse with industry experts and explore the obstacles and opportunities for enterprises committed to sustainability.

You can read the full Thinking Ahead 2024 report here.

DIVIDER

About the Survey

UST conducted a research study to gather insights into sustainable business transformation. The respondents included 751 business leaders and decision-makers across North America and Western Europe, spanning industries including Banking/Finance, Healthcare, Manufacturing, and Retail. The organizations ranged in size in terms of revenue, earning from $1 billion to $10 billion or more.

At UST, our AI experts collaborate with top institutions like MIT CSAIL and Stanford SAIL Labs and translate this knowledge into end-to-end solutions that address your specific challenges and help you achieve sustainable growth. Visit UST AlphaAI to learn more.