It’s fair to say the sustainability services space is not mature—if it exists at all. Sustainability consulting prowess lies with the likes of McKinsey, but you’ve got to do some real digging through traditional service providers to find any mention of sustainability beyond their own corporate social responsibility (CSR) initiatives.

HFS recently published a call to action in the manufacturing space: Sustainability services are providers’ least mature offering, and their clients must push them to improve—given the dire need (and business value on offer) of reducing emissions, energy use, and resource consumption. However, this extends far beyond manufacturing. We think it’s high time service providers start shouldering some of the responsibility, if not for the philanthropy then for the rapidly growing business opportunity.

Traditional services firms must develop sustainability services instead of leaving them to blue-sky consultancies

In a recent briefing, a leading service provider confirmed what is clear to see–traditional services firms are missing a trick when it comes to developing sustainability as a distinct business line.

Leading consultancies (McKinsey, Bain, BCG, et al.) rave about sustainability. We can find it throughout their insight and service offerings. However, traditional BPO players, alongside IT and various other forms of service providers, do not share the same passion. They may have a CSR front and sustainable business practices, but often when we peel the onion, “sustainability” turns out to be a thinly veiled marketing and compliance activity at best. When it comes to helping their clients be more sustainable, there’s nothing to be found.

The reality is, providers must realize that sustainability will matter more and more, and it’s rapidly moving beyond pledges to shareholders and government bodies and into client discussions.

Elected officials and business leaders are pushing aside shareholder supremacy in favor of ethical business—sustainable environmental, social, and economic practices.

In many ways, the modern enterprise is facing a watershed moment, and while we could continue to labor the point we’ve covered in previous reports about regulatory compliance and customer demand, there seems to be much more at play. In August 2019, The Business Roundtable, a group of chief executive officers from leading US firms, declared an end to shareholder supremacy. Until now, the focus for most of these firms has been to deliver consistent returns to shareholders; however, the Business Roundtable argued that the modern enterprise has a greater responsibility than satisfying the fiduciary demands of investors.

A statement signed by the CEOs advised, “While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders…We commit to deliver value to all of them, for the future success of our companies, our communities, and our country.” While this statement is broad in its intent and covers a raft of ethical business concerns, it’s hard to imagine sustainability not sitting high on the list.

This broader push from enterprise leaders to refocus is in keeping with changes in the market broadly. In previous reports, we’ve discussed the uncanny ability of media personalities and change champions to tap into the zeitgeist of our time—our environment is in trouble, and we all have a role to play in reversing the damage we’ve caused. From Greta Thunberg to the rising popularity of green political parties, it’s hard to avoid the compelling narrative that individuals and businesses alike must do more, whether that’s recycling, only shopping with companies and suppliers with green credentials or, in the case of traditional providers, leveraging their deep business-process knowledge to advise and inform their clients.

Traditional service providers must wake up and smell the sustainably sourced coffee—and rise to play a necessary role in global change

It’s the heritage of understanding the lifeblood of the modern enterprise—from IT to business processes—that places most service providers in prime position to advise and consult with their clients about how they boost sustainability. For many, the traditional narrative of driving down cost and boosting efficiency goes hand-in-hand with fiscal optimization, which, when well-informed, can go hand-in-hand with all other forms of sustainability. Of course, there’s room for blue-sky-thinking consultants, drawing up new logos with trees and grass in plain sight—but the real sustainability services need to come from the old guard, who knows how businesses operate. They can help clients draw up green cloud initiatives and prevent harmful waste of resources across business processes, and what’s more, they can do so while growing their business. If a room full of the world’s leading CEOs are telling us sustainability is big business, it would be foolish not to rise to meet the growing demand.

Sustainability might not be a differentiator for service providers now, but they can’t keep kicking the can down the road… you can find our more detailed assessment of a new wave of environmental lawsuits here, fueled by evolving climate change science and changing legal contexts.

The Bottom Line: Sustainability is going to be a major growth area in the services economy. Smart providers will invest now to meet future demand.

The reality is that sustainability is quickly moving from a skin-deep marketing ploy to a C-Suite directive. With C-Suite directives comes the burning need to bring in talent and capability to help drive change. The smart providers will be building out capability now to cater to the rapidly growing list of the G2000 that are breaking away from shareholder-primacy to refocus on what’s important for all of their stakeholders.

We could happily list the multitude of providers that missed the bus on recent market shifts—whether that’s the stalwarts arguing cloud was a fad or that automation would never really impact the offshore market. We’re now in the middle of a new shift, but this one doesn’t focus on technology—it’s gearing up to change the way enterprises view success. Providers must come well-armed to play in this changing battleground, and they don’t have long left to prepare.