Most Companies Hit a Roadblock on the Road to Sustainability – But Transformational Leaders forge ahead
This morning I presented the results of the UN Global Compact – Accenture CEO Study on Sustainability at the UNGC Leaders Summit in New York. It was great to see many old and new friends: business leaders who share the view that sustainable development is not only a priority for the world but also for their business. Georg Kell, UNGC executive director, and his team did a great job once again in organizing the summit, and UN Secretary-General Ban Ki-Moon urged business to collaborate with other entities – from government to civil society – and strengthen their commitment to social and environmental stewardship.
Whether it’s reducing emissions, improving working conditions or using scarce resources more efficiently, it’s clear that corporations will only make progress if their CEOs are committed and show leadership. You might think that, over time, they would become more committed and more confident about their ability to put sustainability at the heart of their business. But as our joint report, ‘Architects of a better world’, shows, life’s not that simple.
Every three years, we survey the attitudes of CEOs on sustainability in partnership with the UN Global Compact, whose principles encourage companies to adopt socially and environmentally sustainable business practices. And you can’t avoid the question of leadership when it comes to this year’s main finding: CEOs are less bullish than three years ago about their ability to drive sustainability further.
Two-thirds of business leaders admit that business is not doing enough to address global sustainability challenges. While the vast majority of CEOs believe environmental, social and governance issues are important for the future of their business, those who view sustainability as very important has dropped percent to under half since in 2010.
What’s the problem? Business as usual is the problem. The CEOs in our study point to familiar barriers they believe are inhibiting their progress, starting with a lack of financial resources. The fastest-rising barrier, however, is their failure to successfully link sustainability to business value. Less than a fifth had that problem in 2007. More than a third do today. And only a small fraction think business has made sustainability as compelling to consumers as price, quality and availability.
As the enthusiasm – or at least, the confidence – for making business a leading force in sustainability has waned, CEOs are calling for more action from the government. Fully 85 percent would like to see clearer policy and market signals from government to support green growth, for example.
Calling for more regulation, subsidies or tax changes is quite a radical step for businesses to take. You could interpret that as a sign that these businesses have hit a brick wall… that they are holding up their hands in defeat. Or you could consider that their demand for more proactive government intervention is an indication of their deep commitment to addressing environmental and social issues. Either way, there is evidence that some businesses feel they can take the lead on sustainability without resorting to a call for government intervention.
Our survey revealed a number of “transformational” companies that not only are leaders in their industry, but that credit their sustainability efforts with enhancing business success. They put sustainability on the front burner, communicate their environmental efforts with all of their stakeholders and measure results.
So rather than succumb to pessimism about the prospects for driving sustainability in business, I’d recommend a deeper look into the report for some strikingly positive conclusions we reached by investigating links between CEO attitudes about sustainability and their companies’ business performance. By cross-referencing in-depth interviews from the UNGC/Accenture study and metrics from Accenture’s long-term High-Performance Business research program, we found that CEOs with the strongest attitudes about sustainability are already using strategies that deliver both value for their companies and a positive impact on global sustainability.
These “transformational” companies – sustainability leaders that are also outperforming their peers on traditional business metrics – have a different approach to sustainability. They are more likely to:
- Believe environmental and social issues are important to the success of their business – for many, even more important than growth and employment
- See sustainability as an opportunity for growth and innovation, not as an element of philanthropy
- Engage with investors on sustainability, with over half our respondents certain their company’s share price already includes value directly attributable to sustainability initiatives
- Believe in the transformational potential of partnerships with NGOs –a third of them see NGOs as an important stakeholder
- Measure and reward sustainability in employee performance assessments and remuneration
These approaches largely depend on vision, commitment and communication from top leaders in business. And the role of the CEO in taking that leadership on sustainability is crucial. Without the CEO, the multiple functions and middle managers who must all play a part in making their business goals and processes more sustainable will be less likely to make the effort. I agree with the statement in today’s Bloomberg report on our study that, today, the environmental movement is not in the streets, it’s in the boardroom. Some years ago, I took the opportunity to found Accenture’s Sustainability Services practice well before the issue was high on the minds of our clients. And I used to lead our Resources business, helping CEOs and leaders of some of the world’s largest energy and resources companies, many of whom are pioneers in tackling these challenges. I therefore have a good view of transformational companies and the actions they’ve taken to embed sustainability into their corporate DNA. Their example should be a guide for other high-performing companies that want to make sustainable business good business.