Corporate sustainability growing but no link to profits yet, report finds

The report has also confirmed that the adverse economic climate is discouraging companies from embracing sustainability.

The report, entitled 'Managing for Sustainability', surveyed just over 200 finance and corporate social responsibility (CSR) executives from companies around the world – a quarter from Western Europe – with revenues of more than $500 million (£320 million). The report defines sustainability as “operating in a way that preserves the long-term productive capacity of the natural and social environments”.

It found that 86 per cent of executives surveyed agreed that operating sustainable environmental and employment practices were important with 47 per cent saying that sustainability was “very important” to their firms – although in Western Europe the figure was lower (39 per cent) than in North America (46 per cent) and Asia-Pacific (50 per cent).

However, just 24 per cent of executives thought there was a strong link in the short-term (one to two years) between financial performance and commitment to sustainability. That figure rose sharply over the longer term though – 69 per cent said they saw a “strong” link over the next five to 10 years.

The main reason given for promoting sustainability policies currently was that it was “the right thing to do” (56 per cent). Complying with laws and regulations and improving a company’s image were also cited.

Economic climate an obstacle to corporate sustainability

Difficult economic conditions were cited as the biggest obstacle to investing in policies and practices that would improve a firm’s sustainability performance. More than a third (34 per cent) of respondents said their company’ immediate financial goals were a more pressing priority than sustainability. A lack of consensus and clarity were also cited as obstacles.

Only 49 per cent of respondents said they currently report their progress on environmental sustainability goals. However, they agreed that reporting progress was an important part of embracing sustainability, while the vast majority (87 per cent) said sustainability would become an important part of their corporate functions within the next three years – with 46 per cent strongly agreeing.

Sustainability being driven by top management

The survey found that where sustainability principles were being embedded they were mostly (54 per cent) being driven by top management and covered corporate functions such as supply chain relationships (29 per cent), energy efficiency (38 per cent), educating employees on sustainability (32 per cent), and engaging employees in sustainability-related activities (30 per cent).

“Today’s executives understand more than ever before the long-term economic value of embracing sustainability – and are increasingly moving on from merely cultivating a socially responsible image,” the report concludes.

The Economist Intelligence Unit is the business–to–business arm of The Economist Group, which publishes The Economist newspaper.

The interviews for the report were conducted between December 2009 and January 2010.

Managing for Sustainability is available free of charge.

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