Many Companies See Opportunity in Sustainability, But Few Have Strategies, Says Report

Many Companies See Opportunity in Sustainability, But Few Have Strategies, Says Report

A majority of big companies concerned with corporate responsibility issues acknowledge that they lack an active strategy to develop new business opportunities based on those concerns, according to a new report by The Conference Board.

The report is based on a new survey of 198 medium to large multinational companies. It is the first report issued by The Center for Corporate Citizenship & Sustainability, just launched by The Conference Board, to help senior executives seize opportunities and avert risks stemming from corporate social responsibility issues.

Nearly half (46%) of the responding companies say that corporate citizenship and sustainability are major sources of business opportunity and not only sources of business risk alone. When added to the 44% who see these issues as sources of both risk and opportunity, a total of 90% of participating companies say their company's approach to corporate citizenship and sustainability issues reflects at least some belief in the potential rewards.

"This mixed perspective of a glass more than half full of market awareness and nearly half empty of product response demonstrates that there is work to be done in bringing corporate citizenship, sustainability, or 'CSR’ programs to the forefront of top executives’ minds," says David J. Vidal, Research Director, Global Corporate Citizenship, The Conference Board.

Two-thirds of survey participants say that corporate citizenship and sustainability issues are of growing importance for their businesses. But the absence of a link between an awareness of these issues and a verifiable means of extracting a business benefit from them was further underscored in survey respondents’ choices of the three greatest challenges currently facing citizenship programs: measuring results (cited by 75%); coping with limited financial and staffing resources (58%); and aligning with business objectives (57%).

While the majority of companies say they are not active in citizenship and sustainability-related business product development, a majority (62 percent) have formal programs to manage their corporate citizenship and sustainability practice. Another 35 percent lack a formal program but conduct regular reviews of these activities.

The top three activities that are the focus of current citizenship and sustainability attention are community and stakeholder involvement (64%), corporate giving to worthy causes (55%), and environmental sustainability/climate change (52%).

Ninety-two percent of companies surveyed cite “enhancing corporate reputation and brand” as an “extremely important” (55%) or “very important” (37%) internal driver of their corporate citizenship programs. No other choice came close in importance. Twenty-six percent say that “managing corporate reputation and brand” is one of the top three challenges they face today.

Recruiting and retaining talent is second in importance with a combined rating of 78% (42% “very important” and 36% “extremely important”); reducing risk is third (64% total: 36% “very important” and 28% “extremely important”); and developing innovative products and services fourth at 60% (31% “very important” and 29% “extremely important”).

Survey participants named the C-suite board of directors and employees as the two major internal stakeholder groups with the most influence on corporate citizenship and sustainability issues.

The C-suite and the board earn a 76% mention (27% “extremely important” and 49% “very important”) and employees 71% (22% “extremely important” and 49% “very important”).

“This indicates that the migration of these issues up the corporate authority chain is well under way, and that the internalization of these issues by employee groups is also significant,” says Vidal.??Boards of directors are routinely engaged in reviewing citizenship and sustainability activities at 49% of responding companies, while another 40% say that their boards do this only from time to time. Only 11% indicate no board review involvement at all on these issues.

Among purely or largely external stakeholder groups, the order of influence on company citizenship policies is local communities at 70% (25% “extremely important” and 45% “very important”); customers and consumers at 65% (25% extremely important” and 40% “very important”); and shareholders at 52% (23% “extremely important” and 29% “very important”).

The influence of shareholders is considered roughly equal to that of governments—51% (19% “extremely important” and 32% “very important”). The measure of influence of financial institutions and investors on corporate citizenship and sustainability policies is recognized by 43% of respondents (16% “extremely important” and 27% “very important”).

Non-governmental organizations (NGOs) and the media, once important forces in designing corporate citizenship policies, now rank last (37% and 27% respectively).

Most companies surveyed (71%) report publicly on citizenship and sustainability performance. A total of 52% do so in self-standing annual corporate citizenship/social responsibility reports apart from their annual financial reports. A substantial 40% reference these matters in their annual reports.