Does Global Business Really Care About Sustainability?
This post, written by Robert J. Bowman, originally appeared in the SupplyChainBrain THINK TANK blog and is reposted with permission from SupplyChainBrain.
It’s easy for a top executive who’s concerned about corporate image to profess a solid commitment to sustainability. When it comes to gauging actual progress toward that goal, however, the reality is one of mixed messages.
A study by Accenture, released in the spring of 2011, highlights the dilemma. The firm reached out to 247 C-suite executives in the U.S., U.K. and China. Ninety-three percent said they had sustainability initiatives in place. Seventy-two percent declared that the benefits from those efforts – in the form of enhanced corporate reputation and trust, lower cost and improved brands – had exceeded expectations. And 68 percent viewed sustainability as an integral part of their business.
Seems like a pretty encouraging picture, but being a glass-half-empty kind of guy, I need to point out that a solid one-third of respondents to the Accenture survey saw sustainability as peripheral to their operations. Slightly more, 34 percent, considered it more of a cost than an investment, and 28 percent believed their companies were already spending too much in that area.
In fact, cost continues to be the biggest barrier to achieving corporate sustainability, as specified by 41 percent of the respondents. Other obstacles cited included an inability to measure the results of sustainability initiatives (31 percent), lack of government incentives (30 percent), and a belief that one company can’t make much of a difference in the effort to combat global warming (29 percent).
Turn now to a more positive study, this one by BSR, a global network of more than 250 businesses dedicated to implementing corporate policies that promote sustainability, accountability and human rights. Conducted in tandem with the research consultancy GlobeScan, the survey polled 498 executives from more two-thirds of BSR’s member companies. Eighty-four percent said they were optimistic that global businesses would embrace sustainability and corporate social responsibility as part of their core strategies within the next five years.
Commented BSR president and chief executive officer Aron Cramer: “Recession or not, it seems very clear that companies are maintaining if not extending their commitments to sustainability.” Positive signs include the rise of the chief sustainability officer and increasing attention being paid to the topic by corporate boards. Speaking at a press conference at BSR’s annual conference in San Francisco, Cramer said companies are realizing that sustainability has intrinsic value. They are coming to see it as “one way to future-proof their strategies.”
I’ll buy that to an extent, while noting the self-selecting nature of a group of companies already devoted to achieving sustainability by way of membership in the same organization that’s polling their interest in that very subject. And BSR’s portrait wasn’t all roses. It identified a serious shortfall in efforts to integrate sustainability into core business functions.
More than two-thirds of respondents said their corporate communications and public affairs departments were the most engaged functions in sustainability and CSR. (No surprise there – what else are corporate communications and public affairs for? Can you say “greenwashing”?) But the numbers slide precipitously when it comes to areas such as marketing (42 percent), research and development (41 percent), human resources (37 percent) and finance (18 percent). In fact, the biggest surprise to the 2011 study’s authors was “the level of engagement of sustainability across the enterprise and how little connectivity there is,” said GlobeScan senior vice president Chris Coulter. “The disconnection is really a challenge.”
Former Vice President Al Gore, now the world’s most high-profile cheerleader in the fight to reverse global warming, was the BSR conference’s keynote speaker. He said efforts by CEOs to integrate sustainability into their operations have become “a global movement.” At the same time, he acknowledged a persistent tendency by companies to focus on the short term. Investors are the chief culprits, pressuring businesses to show ever-rising profits on a quarter-to-quarter basis. Such a mentality, Gore said, “is a terribly debilitating force in the market.” Demands from the investment community supply a “constant headwind” for executives struggling to look beyond the next reporting period.
So we’re faced with plenty of good intentions, some progress and an institutional aversion to the kind of long-term thinking that is crucial to the success of any corporate sustainability effort. BSR seems to feel that this attitude is changing rather quickly. And Gore’s message was positive on balance, even though he continues to deride the kind of “magical thinking” that denies the reality of global warming.
It would appear that true progress toward sustainable supply chains won’t be made until all businesses come to see the issue not solely as one of corporate beneficence but of self-interest. Considering the positive impact of efforts such as economizing on fuel, cutting back on packaging, shortening supply lines and making better use of finite resources, that should be an easy case to make.