Peter Lacy
Corporate sustainability has survived the downturn
By Peter Lacy | Published: 28 July, 2010
As we begin to look beyond the economic downturn to recovery and global growth, it has perhaps never been more timely to examine the state of corporate sustainability. Despite the downturn, we see corporate commitment to environmental, social, and governance issues remaining exceptionally strong: 93 percent of CEOs in our recent survey see sustainability as critical to their company’s future success.
A New Era of Sustainability, released last month by the UN Global Compact and Accenture Sustainability Services, is the largest-ever CEO study on sustainability. Nearly 1,000 CEOs, senior business executives and civil society leaders have contributed to this study, and our findings suggest that business commitment to sustainability is stronger than ever before, as social and environmental issues move from a question of corporate social responsibility to an integral part of core business strategies.
This belief in the importance of sustainability is particularly strong in emerging markets: 97 percent of CEOs in Africa, and 98 percent of those in Asia, believe sustainability will be critical to the future success of their business. This reflects the close engagement with social and environmental issues displayed by many CEOs in these regions, and illustrates the importance of engaging with local development to secure the right environments for business to prosper.
This belief signals a fundamental shift in mindset. For example, companies are increasingly responding to climate change not only as a means of managing risk but also an opportunity for growth. Eskom Holdings, the South African utilities company, is shifting its energy generation mix toward renewables in response to the pressures brought about by climate change and future resource constraints, but also as a significant opportunity to lead in a growing market. Traditionally a coal-dominated utility, Eskom is aiming to reduce the amount of coal in its generation mix from the current 88 percent to 70 percent by 2025.
Businesses are starting to examine how their sustainability activities deliver core business value, measured in terms such as cost reduction and revenue growth, while also making a positive contribution to society. This appears to be of particular importance in emerging economies, where businesses’ approach to sustainability often has a more direct impact on the communities in which they operate, and can be critical in securing a licence to operate. For example, Natura Cosmeticos, a $2.3bn revenue São Paulo-based cosmetics and beauty products company, has social and environmental issues at the core of its strategy and operations. For example, 80 percent of the materials in their products come from renewable sources.
With this shift in mindsets, and concrete action towards integrating sustainability at the heart of core business, CEOs believe that a new era of sustainability is beginning to come into view, with 80 percent envisaging a “tipping point” occurring within 15 years – a point at which sustainability will be fully embedded in the core business strategies of the majority of companies globally. Not long ago, such optimism from executives would have been impossible to imagine.
Despite this positive outlook and recent progress, it is clear businesses are still facing many challenges. Internally, CEOs note that there is currently an execution gap in meeting their desire to fully integrate sustainability within their organizations, particularly through their supply chains and subsidiaries. Externally, too, CEOs are starting to understand their role in taking a lead in creating the right conditions for sustainability, through initiatives in five key areas:
• Developing and harnessing new skills, knowledge, and attitudes such that managers have the right capabilities to manage strategies for sustainability.
• Shaping consumer attitudes to shape the market for sustainable products and services.
• Integrating concepts of value and performance management that account for both the positive and negative effects of business on society.
• Engaging proactively with the investor community to communicate the impact of sustainability activities on core business metrics.
• Creating a more transparent and positive regulatory environment for sustainability.
It is clear that there has been a fundamental shift in the corporate stance toward sustainability, with the majority of CEOs taking a positive view in believing that this new era is on the horizon. The journey will certainly not be easy, and will demand immediate and sustained action by CEOs, but today’s business leaders are more committed than ever to positioning their businesses to compete on the journey to a new era of sustainability.
Peter Lacy is managing director of Accenture Sustainability Services Europe, Africa, Middle East and Latin America
