Sustainability Benefits Exceed Expectations
An Accenture survey of 247 top business decision makers in the US, UK and China, reveals that 72% think the benefits of their sustainability initiatives exceeded expectations. Business leaders identify the main benefits as reputation and trust, lower costs and an improved brand. In all, 93% of companies surveyed currently have sustainability initiatives in place. Most focus on reducing the amount of electricity used and green IT (both cited by 51%), followed by sustainability talent and skills initiatives (47%) and the development of sustainability-based new products and services (44%).
CSR Wire Report (25 May 2011):
The majority of businesses say that the benefits resulting from their sustainability initiatives have exceeded expectations, according to an international survey by Accenture (NYSE: ACN). But a hard core minority of businesses does not see sustainability as a critical or strategic investment.
The survey of 247 C-suite decision makers in the US, UK and China, reveals that 72 percent think the benefits of their sustainability initiatives exceeded expectations. Only four percent failed to meet expectations. Business leaders identify the main benefits as reputation and trust (cited by 49 percent of respondents), lower costs (42 percent) and an improved brand (41 percent).
Although two thirds (68 percent) of senior business decision makers see sustainability as an integrated part of their business, a hard core of 32 percent say it is peripheral. While 66 percent see sustainability as an investment, 34 percent see it as more of a cost. And although 60 percent believe their company is investing the right level in sustainability initiatives, 28 percent say their business invests too much or far too much. The same proportion state that businesses in general are doing too much to make their working practices more sustainable.
93 percent of respondents say their company currently has sustainability initiatives. The most common focus areas are reducing the amount of electricity used and green IT (both cited by 51 percent), followed by sustainability talent and skills initiatives (47 percent) and the development of sustainability based new products and services (44 percent).
“The good news is that companies are already seeing sustainability investments generate returns in terms of market success and cost performance,” said Bruno Berthon, managing director, Accenture Sustainability Services. “The irony is that the hardcore third of businesses who don’t enjoy these benefits are likely the ones who think sustainability is peripheral to their business. Only by placing it at the heart of commercial strategy can sustainability be a channel to growth and innovation.”
Drivers and Barriers
There is a disparity between assumed and actual drivers of sustainability initiatives. Companies expect that business in general will be driven by three key external factors: investment pressure, regulations and customer expectations. In reality, however, the top motivations are a genuine concern for the environment and society (cited by 53 percent) and reducing energy and material costs (50 percent). Also important are customer expectations (47 percent) and an opportunity for higher margins and business growth (45 percent).
Cost is the most significant barrier to sustainability initiatives, with 43 percent of respondents identifying it. Other key barriers include the inability to measure sustainability initiatives (31 percent), the lack of government / local government incentives (30 percent) and the belief that one company can’t make a difference to global warming (29 percent).
“It’s clear that sustainability is no longer merely a matter of compliance, but a proactive way to energize commercial strategy,” said Bruno Berthon. “Measuring sustainability performance and results is the first practical step business leaders need to make, but requires new skills and proven methodologies. Get it right and sustainability champions can form a business case, galvanize internal support and actively secure shareholder support.”
The Role of Government and the Financial Sector
When asked who should be more responsible for ensuring progress is made in a sustainable way, 41 percent say businesses should, versus 36 percent who think government should be more responsible and 23 percent who identify individuals. Almost half (47 percent) of respondents think that business is doing the most to promote sustainable progress, against only 28 percent who think governments are and 26 percent who identify individuals.
Although many business leaders may want more government incentives to encourage them to act, they are satisfied with the support from the financial sector. 45 percent say that the financial sector is, itself, investing the right amount in sustainability initiatives, although 28 percent say it invests too little and 26 percent too much. Meanwhile, 75% of C-suite decision makers have confidence in the financial sector to provide funding for sustainability initiatives.
An Inside Look at How CEOs View Sustainability
By Peter Lacy and Arnaud Haines Green Biz (25 May 2011):
Many business leaders have approached us giving markedly different assessments of the opportunities they see and the challenges they face since last year’s CEO study on sustainability by the United Nations Global Compact (UNGC) and Accenture.
It is clear that there is no unified view of sustainability, let alone a single snapshot of progress. There are real differences in attitudes, approaches and obstacles from sector to sector. What is clear, however, is that CEOs believe environmental, social and governance issues are becoming increasingly material to business performance and future success, and a growing number of companies are looking at the growth and innovation opportunity it might promise.
Today, Georg Kell, UNGC executive director, joins me and Sander van ‘t Noordende, Accenture’s group chief executive of management consulting, as we unveil seven industry deep-dive studies based on the most comprehensive CEO survey on sustainability in business to date, spanning 766 CEOs across the globe.
We are launching these studies on Sustainability 24, a global online experience which brings together hundreds of leaders from the private and public sectors for a series of debates and discussions on business and sustainable development.
There’s no surprise that, at this relatively early stage for more commercially driven sustainability at scale, most industries see the main opportunity in enhanced trust, brand and reputation. Fully 85 percent of banking CEOs, and 75 percent of those in consumer goods, report that enhanced brand, trust and reputation will be an important opportunity presented by sustainability over the next five years.
Significantly, we are also beginning to see sustainability issues reshaping demand across industries, leading CEOs to perceive their response to these challenges as a core part of their growth and innovation agenda. Seventy-nine percent of consumer goods CEOs, for example, see the consumer as a primary stakeholder in driving their action on sustainability: Consumer electronics companies Philips and Siemens now view a significant proportion of their revenues driven by products and services which help consumers address their own environmental impact.
Similarly, 67 percent of automotive CEOs, and 61 percent of those in banking, report an important role for the consumer in shaping their response to sustainability challenges: For the automotive sector, consumer demand for new mobility solutions will provide new waves of growth, and banks’ response to sustainability challenges will play an integral role in rebuilding public trust in business.
Our industry analysis suggests that some sectors may be ahead of the pack when it comes to integrating sustainability into core business. Eighty percent of utilities CEOs, for example, report their company has embedded metrics to track sustainability performance, ahead of the cross-industry average of 64 percent. Similarly, 83 percent of CEOs in the energy sector and 81 percent of those in infrastructure say their company measures both positive and negative impacts of their activities on sustainability outcomes, a finding which suggests sustainability performance management capabilities are beginning to take root in leading industries.
Perhaps most interesting is the clear performance gap that has opened up between ambition and execution in the integration of sustainability. For example, while many CEOs recognize that a true commercially driven approach to sustainability can only be achieved by instilling the right knowledge, skills, attitudes and behavior at every level of the organization, companies are not meeting their ambition with practical action. Ninety-five percent of automotive executives believe that companies should invest in enhanced training of managers to integrate sustainability into strategy and operations, but just 52 percent report that their company already does so.
What can we conclude from this rich seam of data? A growing number of CEOs indicate that sustainability is becoming part of their innovation and growth agenda.
And while most CEOs are placing sustainability at the core of their strategies, many are struggling with execution. As we demonstrate today with the participants in Sustainability 24, cross-industry conversations are more common in sustainability than in most other business areas, and we believe that executives in every sector can learn from others as they turn ambition into action on the journey to a new era of sustainability.