Friday, September 20, 2013

CEOs No Longer Think Sustainability Is Key To Business Success

Three years ago, CEOs thought that sustainability would make them lots of money. Today, not so much. The market just isn't rewarding companies enough for being sustainable.
How is the world's quest for environmental sustainability progressing? One way to find out is to ask CEOs of major companies. More than most people, they are acutely aware of the risks and challenges of issues like climate change and rising energy prices. This week, the U.N. Global Compact and Accenture released their third CEO Study on Sustainability (the last one was in 2010)--a look at how nearly 1,000 CEOs across the world view sustainability.
This year, executives representing 27 sectors (including utilities, automative, energy, and mining) and 103 countries responded to the survey. Some of the highlights:
  • In 2010, CEOs had high hopes, believing that social and environmental issues would soon be core parts of all businesses. Now? Not so much. Almost 70% of all respondents didn't think that business is doing everything it can to address sustainability challenges, and only 32% believed that the economy will be able to handle the planet's rapidly growing population while keeping resource and environmental constraints in mind.
  • Still, CEOs are at least somewhat optimistic. Some 76% think that making sustainability a core part of business drives opportunity and growth, and 63% think that sustainability will "transform their industry" in the next five years.
  • The biggest problem they perceive is keeping sustainability at the forefront while also paying heed to market demands (an issue that benefit corporation legislation tries to address). While 54% of CEOs said in 2010 that they thought sustainability would be "very important" to success of their businesses in the future, now only 45% believe in the importance of sustainability. From the report:
    In many cases, business leaders feel that given the structures, incentives and demands of the market, they have taken their companies as far as they can. While a few leading companies are deepening and intensifying their commitments on sustainability,others are growing skeptical that addressing global sustainability challenges will ever become critical to their business success within current economic systems and markets.
  • The biggest short term issue for CEOs--growth and employment, selected by 64% of respondents--is all about economics. Education (40%) and energy (39%) round out the top issues, while climate change is at just 29%. A lowly 14% of respondents believe that water and sanitation is a key issue for their businesses, even though 40% of the world population will deal with water scarcity by 2050.
  • And yet, in spite of all this, 76% of CEOs believe that they are moving quickly and effectively enough to handle sustainability challenges.
These numbers aren't particularly heartening. The bright spot here is that the survey respondents are all members of the U.N. Global Compact, which is basically one giant corporate sustainability initiative developing a framework for policies and best practices. From the report:
...among sustainability leaders, we can see the beginnings of a collaborative, systems approach to sustainability, focused on the impact business can make. These companies are seizing opportunities at speed through building skills, measuring value and performance, and improving the dialogue with consumers, investors and governments. In the innovations of these leaders, we can see the seeds of a new approach to sustainability, with pockets of real innovation beyond the four walls of the firm: collaborating within and across industries and sectors, and working closely with stakeholders to develop the beginnings of transformational change that can unlock the full potential of business in contributing to global priorities.
Now, the U.N. just has to convince all CEOs--compact signers and other companies alike--to understand the urgency of taking action, both for the planet and for their businesses.

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