Sustainable business is no longer just a marketing slogan. Businesses from Walmart to Herman Miller have embraced sustainability-management of environmental impacts- as good for the bottom line. A 2010 Accenture study conducted for the UN Global Compact on the importance of sustainability found that 96 percent of CEOs surveyed thought that sustainability issues should be fully integrated into the strategy and operations of a company - up from 72 percent in 2007.
A global survey of more than 200 CFOs, which was conducted for Deloitte Touche, found that almost one in three CFOs were rarely involved in sustainability strategy and governance. Yet a 2008 study of 175 CFOs by CFO Research Services and Jones Lang LaSalle found four out of five believed the pressure to adopt sustainable business practices would rise within the next five years.
In a blog post entitled, “7 Sustainability Trends Every CFO Needs to Know,” Paul Baier, vice president of sustainability consulting at Groom Energy, argues that the day has arrived. CFOs need to embrace sustainability as they oversee many areas, such as investor relations, risk management,procurement/supply chain, IT, facilities/real estate, and HR, which affect the ability to achieve sustainable goals. He also notes:
Investors care about sustainability.
During the 2011 proxy season, 40% of the shareholder resolutions were related to environmental sustainability measures. As Baier notes, it’s not just the individual Sierra Club members, either. The Investor Network on Climate Risk represents 100 institutional investors with assets of $10 trillion and works to tackle “policy and governance issues that impede investor progress toward more sustainable capital markets.” Here, managers of some of these large investors explain why they’re pushing for sustainable businesses:
Sustainability metrics are included in financial reports.
Novo Nordisk and Timberland are among brands that include sustainability metrics with their financial numbers, according to Baier. Only 7% of the respondents in the E&Y/Green Biz survey said they don’t currently report on sustainability and have no plans to do so in the future, according to blogger Cindy Mehallow, a communications consultant specializing in sustainability issues.
Financial accounting standard boards are also beginning to support supplementing financial reported information. The International Integrated Reporting Committee (IIRC), an international group composed of leaders from investing, accounting, securities and regulatory sectors, is advocating combining this kind of non-financial data with financial reports.
So what are the obstacles to success?
Canada’s Network for Business Sustainability asked business managers to identify the biggest sustainability-related challenges for 2012, and it found leading companies are “beyond the point of
asking ‘is sustainability important’ and ‘should we do it.’” Instead, they are wrestling with how to “drive profits by making sustainability core to the business.”
Studies have shown several challenges, most of which focus on metrics:
- The difficulty of measuring shareholder value
- The inability to document the effects on fiscal performance
- The tools used to “capture” data are “suboptimal”
This article was originally published on The Build Network.