Link Between Sustainability, Business Value Lacking, CEO Study Finds
The majority (63 percent) of CEOs struggle to quantify the business value of sustainability, according to a survey by the UN Global Compact and Accenture.
The poll of 1,000 CEOs found the failure to make a link between sustainability and business value is the fastest rising barrier over the past decade.
In 2007, 18 percent said this deterred them from taking further action, rising to 30 percent in 2010. This year, 37 percent of responding CEOs cited this factor, and just 38 percent believe they can accurately quantify the business value of sustainability, according to The UN Global Compact-Accenture CEO Study on Sustainability 2013: Architects of a Better World.
While the CEO study on sustainability does find evidence that CEOs are strongly committed to embedding sustainability throughout their organizations — and 67 percent believe that business is not doing enough to address global sustainability challenges — the majority now call for action to incentivize and reward sustainability leaders in the private sector.
Some 78 percent of surveyed CEOs see sustainability as a route to growth and innovation, and 79 percent believe that it will lead to competitive advantage in their industry. However, CEOs see the economic climate and a range of competing priorities creating obstacles to embedding sustainability at scale within their companies.
This year, 93 percent of respondents say that environmental, social and governance issues are important to the future of their business, the same proportion as the previous study in 2010. But the proportion describing sustainability as very important has fallen from 54 percent to 45 percent, including only 34 percent of CEOs in Europe.
While 84 percent believe that business should lead the way in addressing sustainability challenges, they point to a number of barriers including a lack of financial resources. This is the leading barrier to advancing sustainability, cited by 51 percent of respondents; 40 percent say that economic conditions have made it difficult to embed sustainability into core business.
Additionally, only 15 percent of responding CEOs think business has made good progress over the last three years in making sustainability a must-have factor for consumers, even though 82 percent think this is critical to harnessing sustainability as a transformative force in the economy. Almost half (46 percent) believe consumers will always consider sustainability as secondary to price, quality and availability.
In a sign of investor ambivalence, although 52 percent of respondents see investor interest as an incentive for them to advance sustainability practices, only 12 percent of respondents see investor pressure as a leading motivator. However, only a small minority of CEOs (15 percent) blame the short-termism of financial markets as a barrier, and 69 percent believe that investor interest will be increasingly important in guiding their approach.
CEOs want greater collaboration between business, governments and policymakers, according to the survey. Forty-two percent of respondents now list governments among their top three stakeholders in sustainability, a rise from 32 percent in 2007. Eighty-three percent of respondents think more efforts by governments to provide the enabling environment will be integral to the private sector’s ability to advance sustainability. Specifically, 85 percent demand clearer policy and market signals to support green growth.
When asked which policy tools should be prioritized, 55 percent point to regulation and standards and 43 percent call for governments to adjust subsidies and incentives. A further 31 percent seek intervention through taxation. Softer measures, such information and voluntary approaches, are supported by only 21 percent of CEOs.
The UN Global Compact launched a stock index of sustainability leaders last week that shows a total investment return of 26.4 percent during the past year, surpassing the general global stock market. Companies listed on the Global Compact 100 have committed to the Global Compact 10 principles, which cover topics including labor, human rights and the environment.
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