RESEARCH REPORT

In brief

In brief

  • New value exists at the intersection of digital technologies and sustainability.
  • The companies leveraging it—we call them Twin Transformers—are 2.5X more likely to be among tomorrow’s strongest-performing businesses than others.
  • European companies are well-positioned to join this group, if they are willing to act on the opportunity.
  • Strategic steps include approaching sustainability as a business opportunity as well as a societal mandate.


A twin strategy that will strengthen competitiveness

Why the combination of sustainability and digital technologies is key to igniting future competitiveness for European countries.

2021: The year of the Twin Transformation

Success in uncertain times is increasingly dependent on a company's ability to execute a “Twin Transformation”—to find new sources of value at the intersection of digital technologies and sustainability.

Accenture's recent global research study found that companies pursuing this approach are 2.5X more likely to be among tomorrow’s strongest-performing businesses.

European companies' early lead in sustainability should make them natural candidates for Twin Transformations. Yet few are pursuing this path, despite concerns about their economic outlooks.

How can European companies see this opportunity and seize it?

They need to fully understand its potential, apply successful Twin Transformers’ fundamental strategies and empower and nurture talent to sustain the transformation.

The time for a Twin Transformation is now.

Pandemic-related challenges persist

Global GDP is expected to lift 4.2% in 2021, according to OEDC, boosted by COVID-19 vaccination campaigns, concerted health policies and government financial support. However, Accenture’s survey of 4,050 C-level executives in large companies worldwide reveals concern over the pace of the economic recovery.

Indeed, while APAC respondents anticipate a relatively quick rebound, executives in Europe and North America foresee a U-curve recovery that may take up to 18 months. They expressed mixed levels of confidence in their ability to meet growth targets.

In Europe, only four industries anticipate being back on their pre-COVID-19 profitable growth trend within 12 months: Health, Pharmaceuticals, Software & Platforms and Communication, Media & Entertainment. Further, many European C-levels believe their organizations lost ground against their APAC peers between May 2020 and November 2020.

Performance trajectories diverge; clear winners emerge

The COVID-19 crisis has resulted in a divergence in growth and expected growth: Some companies saw their revenues plummet and don't expect a return to growth even in 12 months’ time, while others expect to sustain and build.

Just a third (32%) of European respondents expect to deliver profitable growth in the next phase of recovery, on pace with North America but behind APAC (41%). These companies are “Tomorrow’s Leaders”1. Some gained an advantage as a result of their industry—an “industry boost”—but we found companies positioned to be leaders in all sectors.

At the opposite end of the spectrum, 19% of European companies in our study are currently “Falling Angels,” struggling to recover from damage to their business suffered as a result of the crisis. Of the three regions, Europe has the largest share of Falling Angels.

Companies with the strongest potential for profitable future growth are the ones that have been able to maintain agility over the course of the pandemic, even improving in some dimensions, such as speed of decision-making.

European businesses are perfectly positioned

Businesses across Europe are well-positioned to join the ranks of the Twin Transformers, leading the way by linking digital and sustainable evolutions:

  • European companies already prioritize sustainability and tech in their strategies for short-term rebound and mid-term competitiveness.
  • Approaches to technology and sustainability are top of mind for both European executives and investors. In 2020, 47% of European companies within the 2,000 largest companies worldwide discussed sustainability-related topics in earnings calls, up from 27% in 2018. In the same year, 53% of those companies also discussed technology-related topics in earnings calls.
  • On sustainability, European companies have been ahead of the curve in taking action to implement energy efficiency measures, including in the IT space and applying sustainability criteria to sourcing.
  • On technology adoption, Europe has lagged behind, but is closing the gap. Today we see that close to 40% of European respondents are making large investments in AI and Cloud technologies.
"Europe believes it has a technological advantage in the green technologies. It needs and it wants to preserve that. The green movement is definitely going to be a winner from this [crisis]."

— Neil Richardson, Investment Director – Aberdeen Standard

Tech-powered sustainability isn’t just good; it’s good business

Companies have diverse motivations for pursuing sustainability agendas, from customer demand to regulatory and investor influence.

Our research found that European companies are frequently motivated by personal convictions and societal pressures and are less likely than their peers in North America and APAC to cite the business opportunities presented by sustainability, such as launching new products and services.

In addition, few European companies are focusing on the power of digital technologies to drive a sustainability agenda.

While sustainability and technology topics are discussed in the earnings calls of around 50% of Europe’s largest companies,2 only 5% of companies address the two in tandem.

Even those companies that do recognize the opportunity inherent in Twin Transformation face barriers at different stages of the journey, including defining a viable business model around sustainable practices and products, freeing up resources and mobilizing the organization and overcoming challenges around scaling.

How to execute a Twin Transformation

Accenture has identified the strategic steps a company must take to overcome these obstacles and execute a successful Twin Transformation:

  • Foster business models driven by sustainability and enabled by technology: Most Twin Transformers (61%) already generate more than 10% of their revenues this way and nearly 80% expect to do so in three years' time.
  • Combine resources to scale technology applications to sustainable practices: Twin Transformers invest more in innovation across the board, with 45% investing more than 10% of their annual revenue pre-COVID-19, jumping up to 57% in their rebound phase over the next year. They also recognize that sustainability and technology aren’t separate priorities.
  • Create ownership throughout the organization: Twin Transformers assign KPIs that go beyond financial results. Examples include KPIs that relate to progress on emissions reduction, the share of products with positive societal impact and the share of resources procured from sustainable sources.
  • Align partners for sustainable product lifecycles and improved traceability: Twin Transformers actively engage suppliers in their sustainability journey by embedding relevant criteria into the screening process and offering training to raise the sustainability of the overall value chain.
  • Lead, empower and nurture talent: Twin Transformers are acutely aware of the importance of the human factor of transformation and the challenge it presents.

A bold new path forward

Europe’s business leaders need to move boldly and at speed to meet this moment. Currently, they stand at risk of missing the value play—and with it, the potential to shape the outlines of the post-pandemic world.

Success requires diverging from well-trodden strategic and operational paths. It requires commitment to advanced technologies and to innovations applied with purpose to enable sustainability solutions—traditional European strengths. It also requires confidence in the power of ecosystems to effect positive competitive and social/environmental change.

The intersection of digital technologies and sustainability holds tremendous value for Twin Transformers, not only for accelerating recovery from the economic effects of the pandemic, but also for positioning for future growth.

It’s time for Europe to embrace this opportunity for renewed resilience and greater growth—and a financially sound future.

1Accenture CEO Survey, All respondents (N=4050), North America (N=1450), Europe (N=1300), APAC (N=1300)

2Accenture Research analysis of earning calls of largest 2000 companies in terms of revenues

Jean-Marc Ollagnier

CEO – EUROPE

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