A new survey by Ernst & Young and GreenBiz Group has found that sustainability activities are being driven by financial considerations and other business objectives. Many companies are starting to realize that being green and being economic can go hand-in-hand. The report, Six Growing Trends in Sustainability, addresses this concept and more.
Trend 1: Sustainability is growing, but the tools are still developing: Since CorporateRegister.com began tracking corporate responsibility reports in 1992, the number has grown from 26 to 5,593 in 2010. As the demands for accountability have increased, customers, employers, investors, shareholders, policymakers, activists, analysts and suppliers each have taken an interest in a company’s sustainability matters.
The study found that 66% of the respondents of the survey reported an increase of inquiries over the past 12 months from shareholders and investors about sustainability-related issues. To meet this demand, companies are creating sustainability reports. The majority of these reports are basic spreadsheets that include life-cycle information.
Trend 2: The CFO’s Role in Sustainability is on the Rise: The report focused on three key areas in which the CFOs are playing an increased role: investor relations, external reporting and assurance, as well as operational controllership and financial risk management.
The survey found that 65% of respondents have CFOs who have taken on an increased role in sustainability. Cost reductions and managing risks are the two key drivers of their company’s sustainability agenda.
CFOs are also more involved because of the growing scrutiny of company sustainability issues by equity analysts. Eighty percent of companies identified new revenue opportunities as a means to drive sustainability initiatives. Sixty-six percent of those surveyed have seen an increase in requests for information regarding sustainability-related issues from their investors and shareholders.
80 percent said new revenue opportunities will be driving sustainability initiatives. And 66 percent have seen an increase in inquiries about sustainability-related issues in the past 12 months from investors and shareholders. We discussed this trend in an earlier blog post.
Trend 3: Employees emerge as a key stakeholder group for sustainability programs and reporting: An interesting finding of this survey is that employees ranked ahead of shareholders and investors as the second greatest stakeholder in driving a company’s sustainability initiatives. As companies continue to engage employees on sustainability, they achieve increased attraction and retention, improved operational efficiencies; strengthened customer relations, increased innovation and strengthened community ties.
It has also been found that companies that distribute their sustainability reports among their employees see this information shared with other external parties by their employee. Employees have a strong voice in the sustainability initiatives of their company employer.
Trend 4: Despite regulatory uncertainty, greenhouse gas reporting remains strong, with growing interest in water: Three-fourths of those surveyed have set greenhouse gas reduction goals, with 60% reporting them publicly. Companies look to release these numbers because of their reputation, their customer expectations and their efficiency goals.
The mining, oil and gas, chemicals, agriculture, power and utilities and food and beverage industries have an increased interest in reporting on water. Sixty-two percent of respondents to the survey publicly report water usage and one in six have their water footprints verified by an independent third-party.
Trend 5: Awareness is on the rise regarding the scarcity of business resources:
Companies are already recognizing resource constraints. Seventy-six percent of respondents anticipate that their core business objectives will be affected by natural resource shortages in the next three to five years. This availability is becoming a reporting requirement for companies, as many respondents have been asked about the sustainable sourcing and procurement of raw materials. Other concerns include conflict minerals, palm oil and rare earths.
Trend 6: Rankings and ratings matter to company executives: Respondents conveyed that filling out surveys and questionnaires regarding sustainability are important. Fifty-five percent of respondents believe these responses are a primary means of communicating with investors about their performance and initiatives in this area. These respondents believe that they can make a difference at their level and look upon the following ratings and ranking with high regard: The Dow Jones Sustainability Index, The Carbon Disclosure Project’s leadership rankings, Fortune magazine’s “Most Admired Companies” list, The 100 Best Corporate Citizen, named by Corporate Responsibility magazine and Newsweek magazine’s Green Rankings.
This joint survey was conducted in late 2011, with responses from 272 sustainability executives in 24 sectors who were employed by companies with annual revenues that exceeded $1 billion. According to Forbes, about 85 percent are based in the United States.