Corporate Sustainability: It's All About Survival

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In a world of rising energy prices, increased scarcity of natural resources, rampant changes in our climate, growing competition from emerging economies, and increased consumer concern about the quality of life, health and safety, corporate sustainability is synonymous with corporate survival.

Surprisingly, that message is not getting through to many CEOs.

Only half of the businesses recently polled on a global survey of corporate sustainability reported having a formal sustainability strategy. The survey also showed with such strategies were more focused on improving public perceptions or responding to increased regulation, than meeting broader societal needs or generating revenue opportunities.

More than 75 percent of the respondents said sustainability was an important part of their organization’s corporate strategy, or would become so in the future. But a string of reports indicates companies need to spend less time thinking about sustainability and more time putting it into action.

CEOs made up the majority of respondents of the poll developed by the Vandiver Group, an award-winning strategic communications firm, and sponsored by PR firm Pinnacle Worldwide. This is ironic, because the same study shows that CEOs are the primary drivers of sustainability decisions, with communications and public affairs managers rarely in that role.

Other facts emerging from the survey:

• More than 65 percent of companies do not have dedicated sustainability staff;
• Of those with dedicated staff, nearly half have fewer than five employees working more than half of their time on sustainability;
• "Improving perception of the company" was rated as more important than increasing revenue via sustainability programs.
• Nearly half of companies surveyed have less than $50,000 allocated annually to sustainability-related programs; only 10 percent have more than $50,000 so allocated.

There is a depressing similarity to these findings and those of a 2004 study conducted by the Certified General Accountants Association of Canada. In partnership with the CGA-Canada Research Foundation, this study also found that only half of the companies surveyed provided some coverage of their social or environmental performance. Regulatory requirements (49.5 percent), stakeholder pressure (21.4 percent), and corporate image objectives (12 percent) were the most important factors influencing decisions on corporate sustainability according to that report.

Sustainability Pays Off

However, a more recent report by GMA and PricewaterhouseCoopers (PwC) indicates that companies that employ sustainability practices and share sustainability data generally experience higher gross margins and return on sales, higher return on assets, and stronger cash flow and rising shareholder return.

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