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Executive Survey: Sustainability Important, But More Needs to Be Done

Sustainability chartExecutives increasingly see sustainability as an important aspect of their business, but implementing it as a priority throughout their organizations represents a challenge for many, according to a survey by McKinsey & Company.

When asked about their companies’ reasons for pursuing sustainability in previous surveys, executives cited cost cutting or reputation management most often. Now 43 percent indicate their companies are looking to align sustainability with their overall business goals, mission or values, which is an increase of 30 percent from those who said this in 2012.

However, execution is clearly a challenge for many companies. Respondents noted that a lack of performance incentives and short-term earnings pressure often run at odds with the sustainability agenda, and 34 percent of executives (up from 23 percent in 2011) say that too few people at their companies are accountable for sustainability.

When asked about 13 core sustainability activities, the survey revealed that management of corporate reputation for sustainability is becoming increasingly important to executives, and it was listed as having the highest value-creation potential for their industries over the next five years. This is not surprising, as recent research shows that a primary driver of public confidence in a company hinges on its efforts to communicate and deliver on corporate sustainability goals.

However, there is a definite lack of clarity around the idea of reputation management as opposed to much more concrete and easily defined concepts such as reaching new markets with sustainable products, something that has been noted by other industry analysts.

When asked what actions companies were taking to manage reputations, the answer given the most by executives on average was communicating their activities to consumers and maintaining stakeholder relationships. However, these answers varied by industry, indicating that companies understand and value reputation in different ways.

When asked which activities maximize financial value, executives most often cited customer communications. However, while there was general agreement on that item as a first priority, there was not much agreement after that point, revealing that the reputation-management activities viewed as most important are not necessarily the most pursued.

The survey also listed traits present in organizations that are leaders in sustainability. Those included setting aggressive external sustainability targets or goals, having a unified sustainability strategy, setting aggressive internal targets or goals, involving a broad leadership coalition, and making certain that the financial benefits of sustainability are clearly understood across the organization.

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