Key challenges for businesses in the year ahead  

It’s safe to say that businesses face significant challenges right now. A year ago, businesses were optimistic about post-Covid growth opportunities, and consumer sentiment was positive as the economy opened up. Fast-forward to the end of 2022, and the impacts of inflation remain strong, along with mounting economic headwinds, geopolitical events and an ongoing cost-of-living and energy crisis.

Progress in decarbonisation, sustainability and ESG issues has grown, but many businesses risk delaying further momentum; however, now is exactly the time to act. Progressing the sustainability agenda can better equip companies to weather a downturn and build a future-proofed strategy. 

Inflation and the energy crisis are impacting the energy transition in multi-faceted ways. We are seeing renewed efforts on energy efficiency and other levers that aid decarbonisation efforts. The recent backlash against net zero is mainly targeted at greenwashing, which needs to be tackled; however, the underlying facts remain true. We need to decarbonise and reduce our emissions, and this is an urgent matter.  

Climate resilience and adaptation are critical issues. Until recently, many people believed that these issues were years away from relevancy, but we face them today. Temperature rises drive behavioural changes: where we live, how we heat and cool our homes, the transport choices we make, what we wear – so much of our working and leisure time is impacted by climate change, and companies must prepare for this.  

Speaking broadly, businesses have faced huge change and turmoil over the past few years, with potentially more strife on the horizon. Clearly, a reactive approach doesn’t work, as we observe previous pandemic winners currently struggling. It’s possible in some cases that unsustainable growth was pursued according to trends that have since dissipated. There can be a lot of noise, but it’s critical to identify the underlying trends that will persist long-term and do the right thing to address them.  

ESG can mean a lot of different things, but beneath it all sit some compelling principles about future-proofing businesses. What are the right levels of consumption, what are the right levels of growth and how can businesses ensure they are positioned appropriately for success?  

Now more than ever, clients need to understand and articulate their purpose — why they exist and why they are in business. Purpose is a helpful anchor for long-term planning and future-proofing; if businesses continually reflect on how they can have positively impact their stakeholders, they will start aligning their sustainability, strategic and financial goals. 

“As inflation bites and the focus on cost savings intensifies, it would be far too easy to miss the long-term opportunities that sustainability presents.”   

Rebecca Scottorn, Partner, London

How we are helping clients 

We fundamentally believe that sustainability needs to be tackled from a commercial perspective.  

We are helping businesses make trade-offs based on a robust commercial assessment of the impact, benefits and investment required.  

Our clients face financial pressures while also wanting to progress their ESG agendas. We do not believe these should be two separate conversations. As inflation bites and the focus on cost savings intensifies, it would be far too easy to miss the long-term opportunities that sustainability presents. 

A lot of the work we do is about turning sustainability goals into action. For some clients, targets may have already been set. For them the big question is, ‘now what?’ Other companies may have detailed a long list of initiatives, but still need to elevate their thinking to ensure they have an overarching strategy that will achieve their vision.  

Why L.E.K. Consulting? 

We are able to look at issues from multiple perspectives.

Inside businesses, individuals often own separate agendas such as finance, sustainability, sales or operational efficiency. We recognise that sustainability strategy needs to be commercially robust, and that it also must be embedded in a company’s overall strategy. 

This is incredibly challenging. Circumstances evolve quickly, and the macroeconomic environment is uncertain. We provide expertise and an ability to help navigate tough decision-making.

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