The Corporate World Is Embracing Sustainability In The Wrong Ways

Businesses need to find a way to make sustainability a strategic imperative, not a feel-good extra.

 

A recent international survey conducted by Accenture revealed some pretty interesting statistics about the state of sustainability in the mindset of corporate leaders. Though a majority see the benefits--namely in reputation and trust (cited by 49% of respondents), improved brand (41%), and lower costs (42%)--only 66% see sustainability as an investment, while 34% see it as a more of a cost.

What struck me in this litany of percentages was that, though 93% of respondents say their company has sustainability initiatives, those initiatives are not comprehensive, but piecemeal: the most common areas for sustainability initiatives are in reducing electricity usage and green IT (51%), talent and skills initiatives (47%) and development of sustainability-based new products (44%). Commendable, yes; transformative, no.

Seeing sustainability as a peripheral is not conducive to the wider acceptance of sustainability as a comprehensive, long-term strategic approach to business. “Only by placing it at the heart of commercial strategy can sustainability be a channel to growth and innovation,” said Bruno Berthon, managing director at Accenture Sustainability Services. Hear, hear to that: sustainability is a strategic imperative, not a feel-good extra.

How can we break down the barriers to this mindset? First, by identifying them: Accenture’s study shows that cost (43 percent), inability to measure sustainability efforts (31 percent), lack of government incentives (30 percent) and the belief that one company can’t make a difference to climate change (29 percent) as the key barriers.

Let’s tackle these:

1.  The true cost of ignoring sustainability. In January 2009, A.T. Kearney published an analysis titled “’Green’ Winners: The performance of sustainability-focused companies during the financial crisis.” The analysis finds that companies committed to corporate sustainability practices are achieving above average performance in the financial markets during this slowdown. In 16 of the 18 industries the report examined, companies recognized as sustainability-focused outperformed their industry peers over both a three and six-month period, and were well protected from value erosion. Over three months, the positive performance differential across the 99 companies in this analysis worked out to 10 percent; over six months, the differential was 15 percent.

2. The new reporting reality. The financial function plays a critical role in supporting sustainability. A company must decide what matters most, determine ways to measure it, and define progress and success. Metrics could include employee retention, customer loyalty, greenhouse gas and waste stream impacts, enterprise risk management (reduced energy, commodity, and resource consumption). It’s crucial to define and develop reporting strategies, processes, and ways to communicate sustainability information accurately and consistently.

3. The need for a more supportive government.
 Governments can influence private-sector sustainability initiatives through tax laws and regulatory requirements, motivating companies to incorporate sustainability into tax planning, risk management, and operational performance assessments. The American Sustainable Business Council is working to support these types of changes to public policy.

4. The belief that business is an instrument of change. Though respondents believe the ability to effect change is a barrier, they also identified business as the entity that should ensure progress is made in a sustainable way. Business is a powerful agent for change--a number of companies have shown us the ability business has to be good and profitable. Let’s follow their lead.

Sustainability and corporate responsibility are not add-ons, or peripherals--they are both strategic approaches that must be woven into a business’ core, its mission and its vision. Only then, can business achieve change that transforms society.

[Image: Flickr user jontintinjordan]

This post originally appeared on Jeffrey Hollender.com

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