Sustainability is inching up chief executive priority lists, or so they say

Sustainability is inching up chief executive priority lists, or so they sayChief executives have an unenviable job. Hit on all sides, they must steer long-term strategy while delivering short-term goals. They must please shareholders while appeasing regulators. In the melee of present day pressure, it is unsurprising that a “soft” issue such as sustainability has traditionally lost out.

That appears to be changing, and fast. A recently published report – A New Era of Sustainability – from Global Compact and Accenture finds that more than nine in ten chief executives believe sustainability is “critical” to their future success.

The finding is remarkable for several reasons. First, it demonstrates a massive turnaround. When the same study was conducted in 2007, just over seven in ten believed sustainability should be fully integrated into corporate strategy. Around half thought the same was true for their supply chains. Those figures now stand at 96% and 88% respectively. Second, the finding comes in the wake of a global recession and a heightened attention to business fundamentals.

Counter-intuitive though it may sound, the recession partly explains the boost for sustainability. In an environment of intense cost-cutting, the sustainability movement was able to prove its mettle. The fact that the hardest hit sectors give the highest rating to sustainability’s importance gives extra credence to this idea.

“CEOs are now seeing signs of sustainability becoming real business in terms of revenue growth or cost or risk or tangible contribution to brand,” says Peter Lacy, managing director of Accenture sustainability services and the report’s project leader.

Accelerating importance

The sudden enthusiasm of chief executives for sustainability does not end here. They see its importance continuing – indeed, accelerating – into the future. And they are even prepared to set a timetable. Give it 15 years and four out of five chief executives predict sustainability will be fully integrated into their business operations.

Lacy admits the finding seems “incredible” by current standards. On the other hand, he concedes that perceptions influence reality. He says: “Whether it’s true or not is less interesting than that CEOs believe it’s going to happen.” He’s right. People act differently when the boss gives the nod.

Is this pie-in-the-sky thinking by corporate leaders? Other market research experts suggest not. Changing customer demands, the war for talent, climate change and the “very anti-business climate out there” are all pushing sustainability up the agenda, according to Leslie Gaines-Ross, chief reputation strategist at public relations firm Weber Shandwick.

“There’s a sense among CEOs that the train has left the station and companies need to be on board,” she adds.

Clear value

For chief executives more Echo Boomer (or X Generation) than Baby Boomer in age, these drivers come more intuitively. They have cut their teeth in a business environment in which sustainability is centre stage, not left field as in times past.

That said, the value of embedding sustainable business practices is evident to all corporate leaders, “regardless of age”, Gaines-Ross maintains. Here lies the chief novelty. Chief executives are at last getting concrete about achieving – not just espousing – their aspirations. Goodwill won’t get them there alone. Internal changes are critical, obviously. But shaping the external environment in favour of sustainability is also essential.

The survey’s executive-level respondents specify five steps required to bring sustainability into the business mainstream: reshape consumer expectations; educate future business leaders; change the short-term focus of investors; improve internal measurement matrices; and reframe regulation. Success or failure on these will determine whether the 2025 target turns out to be a pipedream or not.

None of the steps will be easy. Take consumers. Modern consumption patterns appear to defy chief executives’ conviction that consumers will drive sustainability. Hence the need for companies to take the initiative. Some already are. Nearly one third of Siemens’ revenue, for example, is now generated from products and services related to sustainability.

Upbeat as the survey is, it leaves one lurking fear. The average tenure of chief executives is three or four years. Sustainability is unlikely to deliver significantly under their watch. Will they sacrifice the demands of today for the imperatives of tomorrow? Leaders of batch 2010, please stand up.

See also David Grayson’s essay on the future of capitalism=.

A New Era of Sustainability – the core findings

  • 93% say that sustainability will be critical to the future success of their companies. 
  • 80% say the downturn has raised the importance of sustainability.
  • 72% identify one of brand, trust or reputation as the primary considerations for acting on sustainability.
  • 83% say the economic crisis elevated the role of sustainability and ethics in building trust in business.
  • 58% see consumers as the most important stakeholder group in terms of impacting the way they manage societal expectations.
  • 72% identify education as the most important development issue for the future success of their business, followed by climate change at 66%.
  • 91% say their companies would employ new technologies (eg renewable energy, energy efficiency) to address sustainability issues over the next five years.

In each case, % of CEOs surveyed by Accenture and Global Compact.

c-suite  csr leaders 

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