Sustainable business even more important in a down economy

Published Tuesday, 22nd June 2010

An overwhelming majority of corporate CEOs — 93 per cent — believe sustainability will be critical to the future success of their companies, according to a survey released today by the United Nations Global Compact and Accenture.

The largest-ever study on executives views about sustainability, the survey questioned 766 CEOs around the globe. Fifty of the top CEOs also participated in more extensive interviews for the research.

The global economic downturn has apparently done little to dampen corporate commitment to sustainability, according to the study, “A New Era of Sustainability: UN Global Compact-Accenture CEO Study 2010.” In fact, 80 per cent of the CEOs surveyed say the downturn has raised the importance of sustainability as a means of boosting cost efficiency and revenue growth.

Just three years ago, a similar survey found that only half of CEOs said sustainability issues were part of their company’s strategy and operations. Today, that figure stands at 81 per cent.

Before sustainability can be fully integrated into a company’s core business, though, CEOs say several actions need to take place:

Shaping consumer tastes to build a stronger market for sustainable products.
Training management, employees and the next generation of leaders to deal with sustainability issues.
Communicating with investors to create a better understanding of the impact of sustainability.
Measuring performance on sustainability — and explaining the value of business in society.
Working with governments to shape clearer regulation and create a level playing field.

Fewer than 50 per cent of the executives surveyed who work for publicly traded companies indicated that sustainability informs their discussions with financial analysts. Even though CEOs overwhelmingly believe their sustainability activities have a positive impact on their company’s valuation — in terms of revenue growth, lower costs, reduced risks and enhanced brand reputation — quantifying that value with traditional metrics such as cost reduction and revenue growth has been elusive.

“Achieving greater environmental and social sustainability takes time, effort and a sincere leadership commitment,” said Georg Kell, executive director of the UN Global Compact.

Warming investors to the notion that sustainability is good for the bottom line is critical, the survey finds.

“CEOs told us they have by necessity been on the defensive during the downturn, but that they feel now is the time to get on the front foot in aligning sustainability with core business strategy and execution,” said Mark Foster, Accenture’s group chief executive for management consulting and global markets. “Business leaders recognise they are going to have to take a real lead, for example, holding the line on sustainability in their business models; tackling the roadblocks with diligence in tough to crack areas like supply chain and performance management; and working hard to respond to and shape customer demands that turn sustainability into an opportunity for growth and innovation.”

According to the survey findings, three corporate attributes — brand, trust and reputation — were by far the primary considerations CEOs cited for acting on sustainability, with 72 per cent naming them as one of their biggest motivators. Other reasons to support sustainability included the potential for revenue growth and cost reduction (cited by 44 per cent), personal motivation (42 per cent), consumer and customer demand (39 per cent) and employee engagement and retention (31 per cent).

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