Six out of 10 companies have a sustainability strategy

Apr 21 2011 by Brian Amble Print This Article

Corporate sustainability programs are increasingly commonplace, yet almost a third of businesses globally still have no strategy in place for sustainable growth, according to a survey from KPMG's global Climate Change and Sustainability practice.

The study, "Corporate Sustainability: A Progress Report," quizzed 378 senior executives, including 86 from the U.S. It found that more than six out of 10 (62 per cent) of companies currently have a working strategy for corporate sustainability - up from just over half polled in a similar survey in 2008.

Larger, publicly listed companies are far more likely to have adopted a strategy than their smaller, privately held counterparts. Nearly eight out of 10 of the large companies polled have a strategy, compared with just under half of smaller businesses.

Of those that do not have a strategy, seven out of 10 expect to do so within one to five years and a quarter said they had no specific timeframe. Yet almost half the executives surveyed believe that implementing sustainability programs will contribute to the bottom line, either through cost reduction or increased profitability.

"We are finding that most companies understand what they need to do strategically," said Ted Senko, global head of Climate Change and Sustainability at KPMG, "but they need help in building the strategic models and information systems to establish how effective they really are at reducing carbon, benchmarking their plans against the standards of their competitors, and optimizing their businesses to manage the challenges of a changing regulatory environment.

"A business sustainability strategy based on good measurement and analysis is very important in order to assess the financial payback when regulations on emissions and energy use could increase."

Two-thirds of those polled believe that a new set of rules is either very important or critical, and there is widespread support for tougher international regulations if these would reduce the complexity and cost of complying with widely differing national and local rules.

The main obstacles to the progress of sustainability identified in the survey are measurement, finance and inconsistent regulation.

  • A lack of common set metrics and tools - and information systems- for measurement and analysis of the impact of sustainability programs
  • A lack of available financing that will put sustainability on par with operational programs that have a higher short-term return on investment (ROI)
  • A lack of a clear and rigorous international framework of regulation within which companies can plan with confidence.

The findings also showed that U.S. companies are still playing catch-up compared to their colleagues elsewhere, with half (55 percent) of U.S. executives saying their organization has a formal sustainability strategy in place.

More than four out of 10 of the U.S. respondents also said that it was difficult to overcome organizational focus on other programs that provide more readily measureable short-term financial benefits.

Nevertheless, John R. Hickox, who leads KPMG's Climate Change & Sustainability practice in the America, said that the figures were encouraging.

"We see highly focused companies continuing to make progress in developing and implementing sustainability strategies that they say result in greater profitability and efficiency," he said.

"Many others remain challenged, however, as to what issues or measures they should use for reporting their environmental health, safety and corporate social responsibility program results to stakeholders Ė and how to utilize those metrics to transform their business operations."