Corporate Sustainability: a progress report
, which was released in connection with the launch of the accounting and advisory firm’s Global Center of Excellence in Climate Change & Sustainability last month, found that nearly 55 percent of U.S. executives report their organization has a formal sustainability strategy in place. While that is still not as much as their global counterparts [62 percent], U.S. companies have closed the gap. According to the survey, some of the leaders in sustainability strategy and reporting are Procter & Gamble, Anheuser-Busch, InBev and UPS.
Globally, companies have made a lot of progress since 2008, when The Economist Intelligence Unit reported that just more than half of companies had implemented a formal sustainability program. As for the business drivers for setting up such a program, 31 percent told The Economist Intelligence Unit it was profitability compared to the 48 percent in the 2011 KPMG survey who said a sustainability program would boost the bottom line (27 percent said it would cut costs and 21 percent said it would increase profitability).
The KPMG survey found that the key business drivers for implementing sustainability programs are: enhanced brand reputation (37 percent), regulatory or legal compliance (35 percent), reduced costs (34 percent), product or service differentiation (24 percent) and increased profitability and managed sustainability risks (23 percent). The survey, which was conducted in October, polled 378 senior executives, 86 from the United States, across a range of industries from North America, Asia Pacific, Europe, the Middle East, Africa and Latin America.
“These results are encouraging and we see highly focused companies continuing to make progress in developing and implementing sustainability strategies that they say result in greater profitability and efficiency,” said John R. Hickox, head of KPMG’s Climate & Change Sustainability practice in the Americas.
As part of the progress toward more sustainability programs, Matt Arnold, advisory leader of PwC’s U.S. Sustainable Business Solutions, describes two companies his firm has worked with that have begun to integrate sustainability.
“We’ve had the opportunity to work with a chemical company that develops coatings that wind up on tables, LED screens, automobiles, almost everything,” Arnold said in a PwC video briefing
. “They have technology that lets their customers’ customers – the people putting the coating on the end product – to emit less toxic substances, to reduce energy consumption, make it safer for the workers applying the coatings -- a whole range of sustainability environment and social benefits.”
In the case of the chemical company, PwC’s client was the marketing and sales department backed by the sustainability team, which includes engineers and scientists.
Kathy Nieland, a leader in PwC’s U.S. Sustainability Business Solutions practice, explains in another video briefing
that “companies are absolutely leaving money on the table” when it comes to building sustainability programs.
According to the KPMG report, some of the reasons sustainability programs are not adopted on a wider basis is:
- The need for financing solutions that will allow the longer term benefits to compete with other programs with a short-term payback.
- The need for common measures that produce credible information to analyze the impact of sustainability programs.
- The need for a clear and rigorous international framework of regulation within which companies can plan with confidence.
The Conference Board Governance Center in a June 2010 Director Notes report, Sustainability in the Boardroom
, written by Matteo Tonello, director of corporate leadership research for The Conference Board, concluded that while the growing interest in social and environmental issues can be explained by the increased awareness of shareholders and pressure from regulatory bodies, many companies still lack the proper framework to enable proper oversight.
“Despite formal assignment of responsibilities to top corporate leaders, many companies still lack the structural framework to enable proper director oversight. In particular, what appears to be largely missing is access to independent sources of information and detailed procedures for effectively integrating sustainability objectives into daily business activities,” Tonello wrote.
“Most surveyed organizations do not employ any of the widely endorsed standards existing today in many areas of social and environmental concerns; often, these companies resort to their own definition of sustainability, therefore preventing the development of a level playing field for performance assessment by investors and other constituents.”
Three years have definitely made a difference in the world of corporate sustainability programs, according to a recent study by KPMG. Combined with some video briefings from PwC, it is easy to see that U.S. companies are getting more acclimated to integrating a sustainability strategy into their overall corporate strategies.