Corporate Sustainablity Driven by the Bottom Line

The sustainability activities of leading companies are increasingly driven by financial considerations and other core business objectives, according to a recent survey of corporate sustainability leaders by Ernst & Young and GreenBiz Group. Environmentalists have long posited that being green and being economic are not mutually exclusive. Now it seems as if businesses are now coming around to that view as well.

The report, Six growing trends in corporate sustainability, discusses this and several other developments in sustainability.

In keeping with sustainability’s new focus on the bottom line, chief financial officers are playing increasing roles in their companies’ sustainability efforts.

• 65 percent of CFOs are now directly involved in company sustainability efforts
• 80 percent of respondents see revenue opportunities in sustainability
• 74 percent said cost reductions are the primary drivers of their sustainability programs
• 66 percent have seen an increase in inquiries about sustainability in the past 12 months from investors and shareholders

Business leaders are growing more aware of the potential scarcity of the natural resources their companies require.

Seventy-six percent of survey respondents said they anticipate that core business objectives will be affected by such shortages — including water — over the next three to five years.

Sustainability reporting is growing, but the tools are still developing.

About one in four survey respondents use packaged software to track sustainability efforts, but most still use spreadsheets, emails, and phone calls.

Employees are a key audience for sustainability programs and reporting.

Respondents said that, after their customers, employees are the primary driver of their sustainability efforts and audience for their sustainability report. That is because many top employees want to work for a company they can feel good about.

Despite regulatory uncertainty, especially in the United States, most companies report their greenhouse gas emissions, and more companies are recognizing the importance of measuring and their managing water usage.

• 76 percent publicly report their greenhouse gas emissions
• An additional 16 percent plan to do so within five years
• 62 percent publicly report their water usage
• More than 50 percent have a water-reduction goal

Rankings and ratings matter to company executives.

Fifty-five percent of respondents said surveys and rankings are their primary means of communicating sustainability performance and initiatives to investors. For this purpose, they value the Dow Jones Sustainability Index and the Carbon Disclosure Project most highly.

Conducted in late 2011, the survey collected responses from 272 sustainability executives in 24 industry sectors who employed by companies with annual revenue greater than $1 billion. Approximately 85 percent of them are based in the United States. The respondents are from companies that are just beginning to engage in sustainability as well as those that have been engaged for years.

The report concludes:

These trends suggest that sustainability efforts are now well integrated into the corporate fabric of a growing number of large and mid-sized companies. But the effectiveness of such efforts may be limited by internal systems that don’t allow companies to effectively measure, track, and optimize their sustainability impacts or to understand and manage the risks of insufficient action. To do so will require new levels of engagement by the C-suite and more sophisticated methods of sustainability reporting and assurance.