Executives Place More Worth on Strategic Sustainability – Survey
Wednesday, 13th August 2014 at 11:38 am
Sustainability is becoming a more strategic and integral part of business, executive leaders have said in a survey by McKinsey & Company Global.
The global online survey, Sustainability’s Strategic Worth, drew on the responses of 3344 executives representing a full range of regions, industries, company sizes, functional specialties and tenures.
It revealed that 43 per cent of executives surveyed seek to align sustainability with their overall business goals, missions or values – up from 30 per cent in 2012.
According to McKinsey & Company, in past surveys, when asked about their companies’ reasons for pursuing sustainability, respondents most often cited cost cutting or reputation management.
“One reason for the shift may be that company leaders themselves believe the issue is more important. CEOs are twice as likely as they were in 2012 to say sustainability is their top priority,” McKinsey’s Sheila Bonini and Anne-Titia Bové wrote in an analysis of the survey results.
“Larger shares of all other executives also count sustainability as a top three item on their CEOs’ agendas.”
Bonini and Bové said as sustainability rose in significance, capturing its full value grew more challenging—perhaps because the more that companies prioritised sustainability, the more it needed to be integrated into (and even change) the core business.
“At companies that are already taking action, respondents most often cite challenges related to execution: the absence of performance incentives and the presence of short-term earnings pressure that’s at odds with the longer-term nature of these issues. Accountability is an increasing concern: 34 percent of executives (compared with 23 percent in 2011) say too few people at their companies are accountable for sustainability,” they said.
“At companies that aren’t pursuing sustainability activities, respondents continue to cite a lack of leadership prioritization as the top challenge to taking action.”
The survey showed that of the 13 core sustainability activities listed, executives most often said their companies were reducing energy use in operations (64 per cent), reducing waste (63 per cent), and managing their corporate reputations for sustainability (59 per cent).
“These actions were cited most often in 2011 and 2012, and a growing share of executives now identifies reputation management as a core activity,” Bonini and Bové said.
“They are also most likely to say that among these activities, reputation management has the highest value-creation potential for their industries over the next five years.
“Yet there’s a lack of clarity around reputation management, compared with other, better-defined activities, such as reaching new markets with sustainable products.
“We asked executives what actions the companies they work for take to manage their reputations, and, on average, companies most frequently communicate their activities to consumers and maintain stakeholder relationships.”
Bonini and Bové said that by looking at the individual practices of respondents they had identified four distinct approaches to the sustainability organisation: leader supported, execution focused, externally oriented, and deeply integrated.
“The first approach is characterized by actively engaged leaders across the company, employee encouragement, and clear strategy; the second by clear structure, accountability, and middle-manager engagement; the third by the use of external ideas, networks, and relationships, as well as top-leader and middle-manager engagement; and the fourth by employee incentives for sustainability work, a focus on talent, and even engagement on sustainability at all levels of tenure,” they said.
“Our sustainability leaders are represented in each of these four approaches, confirming that there’s no single formula for sustainability success.”
To view the full analysis of the survey, click here.