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CEOs Say They Need Help Linking Sustainability and the Bottom Line

  • Date: February 19, 2014
  • Author: Brigid Milligan, WWF
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CEOs don’t need to be convinced that sustainability is important; they need to be convinced that now is the time to act. As the recent 2013 UN Global Compact-Accenture CEO Study on Sustainability found, the majority -- 84 percent -- of CEOs believe that business should lead efforts to define and deliver sustainable development goals. An overwhelming majority -- 93 percent-- view sustainability as important to the success of their business.

The study surveyed 1,000 CEOs across 103 countries and found that business leaders view sustainability as vital for their business’ growth, success and development. Additionally, more than three-fourths see sustainability as an opportunity for innovation and growth.

Despite accepting the importance of sustainability, many of these business leaders are challenged by a slew of obstacles that they believe prevents them from integrating sustainability into their business models.

“These leaders who are achieving both sustainability gains and business performance, in a traditional economic sense, are approaching sustainability differently: as an opportunity for growth and differentiation; as a chance to access new markets; and as an incentive to align their growth strategies with innovations that can directly address some of the world’s most pressing challenges.”

Peter Lacy
Managing Director, Accenture Sustainability and Strategy Services

Lack of financial resources was cited as the leading barrier to implementation of sustainable practices, which is not very surprising. What is more concerning is the growing trend of CEOs stating the inability to link sustainability and business value. In 2007, 18 percent of respondents cited this factor; in 2013 37 percent cited it.

We asked Peter Lacy, the study lead and managing director, Accenture Sustainability and Strategy Services, Asia Pacific, why this is:

“There’s a clear recognition this year that sustainability leadership is not necessarily being rewarded by the market: CEOs acknowledge challenges in their dialogue with investors on sustainability, as they try to demonstrate the business value of sustainability; in their relationship with consumers, as they try to quantify and track the impact of sustainability on their brand; and with policymakers, in ensuring that industry peers are operating on a level playing field.”

Additionally, Lacy told us about a notable subset – termed “Transformational Leaders” – who are committed to sustainability while also outperforming their peers on metrics such as returns to shareholders and profitability. Lacy told us:

“These leaders who are achieving both sustainability gains and business performance, in a traditional economic sense, are approaching sustainability differently: as an opportunity for growth and differentiation; as a chance to access new markets; and as an incentive to align their growth strategies with innovations that can directly address some of the world’s most pressing challenges.”

This is especially interesting as it confirms that environmental responsibility and sustainable practices can directly impact the bottom line for the better. Our 3% Solution Report, for example, demonstrates how the private sector can realize cost-savings of up to $190 billion in 2020 by boosting energy-efficiency measures and transitioning to low-carbon energy sources.

Much of the difficulty in making the connection between sustainability and profits is due to the way businesses account for their assets. Nature takes the long-view; balance sheets tend to focus on the short term. Initiatives like the Natural Capital Project will help provide the tools for CEOs to make these links by quantifying the value of natural resources on which all businesses depend, and building the continued availability of those resources into the balance sheet.

In the meantime, we have to do a better job at communicating the fact that sustainability not only makes fiscal sense but is imperative to long-term prosperity. This is the responsibility of environmental groups like WWF, but also of our partners in industry who have seen these results first-hand.

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