On the Verge of a Sustainability 'Tipping Point'

On the Verge of a Sustainability 'Tipping Point'

Image CC licensed by Flickr user Jonny Cakes

I am in New York this week to launch the largest CEO study of its kind on corporate sustainability to date, conducted by the United Nations Global Compact and Accenture Sustainability Services. Nearly 1,000 CEOs, business and civil society leaders contributed to this landmark study.

Our survey finds that commitment to environmental, social and governance issues is becoming exceptionally strong: 93 percent of CEOs see sustainability as critical to their company’s success. It is clear that there has been a fundamental shift in mindsets since the last survey in 2007. Then, sustainability was starting to reshape the rules of global business. Now, it is truly a strategic priority for executives around the world.

CEOs believe that a new era of sustainability is beginning to come into view, with 80 percent envisaging a ‘tipping point’ occurring within 15 years -- a point at which sustainability will be fully embedded in the core business strategies of the majority of companies globally. Not long ago, such optimism from executives would have been impossible to imagine.

There is a real sense that the internal business case and external drivers are starting to make a sustainable economy a realistic proposition. However, CEOs believe that if we are to reach an era where sustainability is fully integrated into business, we will experience a profoundly different operating environment to today. Based on their insights, we can start to piece together a picture of what that business environment might look like:

A broader focus on business and societal value creation, which will be characterized by a shift away from focusing solely on financial profit and loss to a broader, longer-term understanding of value creation that accounts for both the positive and negative impacts that a business has on society and the environment. Business will increasingly move away from viewing themselves as operating within a discrete part of the value chain toward taking greater responsibility for an entire system of inputs and outputs. This shift has already begun. For example, The Timberland Company’s new range of Earthkeepers 2.0 boots are conceived with “cradle-to-cradle” principles in mind, and designed to be disassembled for recycling at the end of their useful life.

New kinds of collaboration and partnerships with suppliers and distributors, civil society organizations and governments to drive sustainability outcomes. Such collaboration may not be between traditional business partners. For example, when the German utility company RWE was looking to diversify revenue sources by entering the market for electric vehicles in Germany, they entered into a joint project with Daimler to effectively enter the complex value chain of the motor industry.

More effective use of technology to drive transparency, resource efficiency and a transition to clean energy infrastructure. However, the potential of technology may not yet be fully understood. As René Obermann, CEO of Deutsche Telekom AG told us, “The industry always tends to overestimate the short-term impacts and underestimate the long-term impact of new technologies.”

More effective business practices when operating in emerging markets to tackle different consumer and citizen needs and alternative distribution channels. As consumption levels in emerging markets continue to rise, it is crucial that new sustainable business models and approaches are adopted.

Sustainability leadership and culture that embeds sustainability issues into the way executives and employees think about strategy and execution. The new generation of business leaders will need to be bolder and take a more proactive position on the global stage -- a form of leadership that looks beyond traditional organizational boundaries, and articulates a vision for the sustainable future of the industry and wider society.

The journey to a new business environment and an era where sustainability is fully integrated into core business will certainly be challenging, but CEOs can already see this new era on the horizon. There is optimism, but there are still many challenges and unknowns.

What is certain, though, is that the transition to a new era will require both leadership and urgency. As Idar Kreutzer, Group CEO of financial services company Storebrand ASA, warned: “The risk of inaction is the greatest risk facing business.” The one critical imperative is the need to act -- and act now.

Peter Lacy is managing director of Accenture Sustainability Services for Europe, Africa, Middle East, and Latin America. He is the Accenture Global CEO Study lead.

Image CC licensed by Flickr user Jonny Cakes.