As environmental and market pressures converge, forward-thinking executives are discovering that better operational integration may be their most powerful transformation tool, according to Flavio Pietrocola and Mike Snape, Partners at Oliver Wight.
The marriage of profitability and environmental stewardship represents the defining challenge for business leaders in 2025, which looks likely to be a highly volatile and unpredictable year as new governments settle and geopolitical tensions rise following a record number of elections.
As highlighted in a new white paper we co-authored, titled Using Integrated Business Planning (IBP) to bring your sustainability strategy to life, the business case for sustainability has become impossible to ignore.
Research reveals that 61% of business leaders expect climate change to significantly impact their operations over the next three years, while companies failing to meet basic sustainability requirements are seeing their cost of capital increase by an average of 0.5%. Meanwhile, the circular economy will generate $4.5 trillion in additional economic output by 2030.
The business benefits extend far beyond direct environmental impact and risk mitigation. About 69% of employed adults want their companies to invest more heavily in sustainability efforts, making it a crucial factor in talent attraction and retention. This employee activism is particularly potent; more than half of business leaders acknowledge that their increased sustainability investments were directly encouraged by workforce demands.
The customer imperative is equally compelling: 60% of consumers report their climate change concerns have increased over the past two years, while 75% of business leaders see sustainability technologies as essential for creating new revenue streams and business models. Companies that successfully integrate environmental, social, and governance (ESG) priorities into their growth strategies are twice as likely to generate a 10% revenue increase compared to their peers.
Yet despite these clear market signals, more than 60% of businesses remain off track to meet their sustainability goals. While 71% of C-suite leaders anticipate growing significance of ESG in corporate performance, only 34% of organizations report being highly aware of their environmental impacts, and fewer still are actively addressing them.
Fixing the strategic disconnection
This strategic disconnect points to a critical gap in how organizations operationalize their environmental commitments. The solution lies not in treating sustainability as a separate initiative, but in embedding it within core business processes through IBP.
Traditional planning approaches, often siloed and predominantly focused on short-term financial metrics, are proving inadequate for managing the complexity of sustainability transformation. IBP provides a structured framework for embedding sustainability across three vital planning horizons: portfolio, demand, and supply.
In portfolio planning, sustainability criteria becomes a guiding principle in new product development. By factoring in environmental impact and resource efficiency early in the design phase, businesses can ensure that the products or services they introduce to the market contribute positively to their sustainability goals.
Furthermore, existing products and services should be routinely evaluated against these criteria, allowing for continuous improvement in areas such as energy use, material consumption, and waste reduction. This evaluation opens the door for innovation, enabling organizations to redesign offerings with sustainability in mind.
By assessing the lifecycle impacts of products or services, businesses can explore circular economy principles, creating opportunities to extend product life, recover resources, and reduce environmental footprints.
The demand planning perspective requires organizations to analyze and respond to evolving market preferences. As consumer preferences increasingly shift toward eco-friendly alternatives, organizations must analyze market trends to forecast demand for these products and services more accurately.
Consumer research indicates that 72% of Gen Z consumers and 68% of boomers are highly concerned about environmental issues. This cross-generational consensus is reshaping market dynamics, forcing organizations to forecast and shape demand for sustainable products and services accurately.
By understanding the evolving landscape, businesses can adjust their marketing strategies to highlight the sustainability attributes that resonate with today's conscientious consumers.
Realizing the supply planning opportunity
Supply planning represents perhaps the most immediate opportunity for tangible impact, as the environmental performance of suppliers becomes a crucial factor in decision-making.
Organizations must carefully assess their supply chains, ensuring that partners adhere to sustainability standards that align with their own values. A fundamental shift in buyer behavior – with 36% of B2B customers willing to change suppliers immediately if sustainability needs aren't met – is forcing organizations to reevaluate their entire supply networks through an environmental lens.
Optimizing logistics to minimize transportation emissions is another critical step in reducing an organization's overall carbon footprint. Additionally, companies should explore opportunities to redefine their networks with circular-economy principles in mind.
Sustainable sourcing practices, including the consideration of local suppliers and the integration of environmental impact into total cost of ownership calculations, offer a pathway to both operational efficiency and environmental responsibility. Identifying and mitigating environmental risks in the supply chain further strengthens resilience and long-term sustainability.
For CEOs and their teams, implementing this integrated approach demands fundamental change. Leaders must break free from traditional, outdated ways of leading where personality, rigidity and instinct are too heavily relied upon.
Today's best leaders have a clear-eyed view and – most crucially – the courage to trust in technology to revamp operating processes and make smarter decisions for a better tomorrow.
While gut instinct and influential colleagues still matter, the information surfaced by a robust IBP process is grounded in truth, empowering leaders to make more informed decisions and freeing everyone in the organization to focus on efficiency rather than chasing the elusive – and never attainable – perfect plan.
A roadmap to sustainable success
The pathway to success involves several critical steps. First, organizations need to establish a sustainability scorecard with clear, measurable metrics that align with their overall business strategy. These might include carbon emissions, water usage, waste reduction, percentage of sustainable materials used in products, and a circular network. This integration ensures sustainability data is incorporated into IBP data sets and reports.
Organizations must also enhance their scenario planning capabilities to include sustainability factors and potential environmental risks. This could involve modeling the impact of carbon pricing, seasonal trends and extreme weather events, or shifts in consumer preferences towards more sustainable and circular products.
Engaging both internal and external stakeholders in the sustainability aspects of the IBP process is crucial, including suppliers, customers, employees, and local communities.
The monthly IBP cycle provides the perfect cadence for reviewing progress on sustainability goals and making necessary adjustments. This regular review ensures that sustainability remains a priority and allows for quick course corrections when needed. Development of a long-term sustainability roadmap that aligns with business strategy and IBP process helps outline key milestones, initiatives, and targets over a multi-year horizon.
Most importantly, organizations need to foster a culture of sustainability throughout their operations. Using the IBP process to encourage innovation and ideas from all company levels helps drive continuous improvement in sustainability performance.
By integrating sustainability principles across portfolio, demand, and supply planning, organizations ensure that environmental factors are not siloed but consistently considered in decision-making at all levels of the business.
As we look to the future, it's clear that sustainability will only become more critical to business success. Companies that use IBP to drive their sustainability efforts will be well-positioned to thrive in this new reality, achieving true business excellence that creates value for all stakeholders – shareholders, employees, customers, and the environment.
By integrating sustainability into IBP, companies can turn environmental challenges into opportunities for innovation, efficiency, and growth, paving the way for a more sustainable and successful future. In the complex business landscape in 2025, IBP emerges not just as a planning tool, but as the bridge between environmental ambition and operational excellence.
For more expert insights on sustainability and IBP, download Oliver Wight’s new white paper here.
