7 October 2013

Survey: Business Challenges of Sustainability May be Self-Imposed

By Gerard Farrell, Senior Account Supervisor, H+K Strategies

​Conventional wisdom holds that companies that adopt sustainable practices will perform better, in the long run, than their competitors. Do the right thing for the environment, your employees and the larger community, the thinking goes, and you’ll be recognized and rewarded for it by consumers, investors and other stakeholders.
In reality, however, the line from sustainable values to business value isn’t that clearly drawn, with sustainability efforts hindered as a consequence. According to the recent CEO Study on Sustainability 2013 by the UN Global Compact and the consulting firm Accenture, more than a third (37 percent) of CEOs say the inability to clearly connect sustainability to business value is delaying progress toward sustainability goals. That’s more than double the 18 percent who felt that way just six years ago.

And what do they think is needed to regain lost momentum?

Surprisingly, a wide majority say they expect – and want – more action by government. According to the survey:
  • 83 percent see increased governmental and policymaking efforts as “integral to advancing sustainability,”
  • 85 percent “demand clearer policy and market signals to support green growth,” and  
  • 81 percent “emphasize the need” for economic development policies that address global environmental and resource concerns.
The survey report states:

“The transition toward companies promoting sustainability through the business case promised a new era of market solutions to global challenges, but in the face of limited progress business leaders are beginning to express doubts over the potential for greater scale and speed without active government intervention.”

Governments, it seems, are willing to uphold their end of this particular bargain. According to the latest  Carrots and Sticks report by KPMG, Centre for Corporate Governance in Africa, GRI and UNEP, 45 countries now have some form of mandatory sustainability reporting, up from 19 just six years ago.

Not all of these, naturally, are governmental standards – stock markets, for example, increasingly require sustainability reporting as a criterion for listing a company. “[P]olicy makers and regulators have intensified their cooperation with the private sector,” the report notes. “Our economic, social and environmental challenges have confirmed that ‘business as usual’ is not an option. An active role for business is widely considered to be part of the solution.”

Perhaps, then, CEOs should view this as an opportunity to help redefine business value within the context of sustainability, instead of looking for a traditional bottom-line boost that may or may not offset the long-term costs of failing to adjust to emerging priorities among regulators, the marketplace and consumers.

Gerard Farrell is a Senior Account Supervisor with H+K Strategies in New York. His client service portfolio includes crisis communications and issues management; media relations and training; and research and analysis.