The Economist Intelligence Unit Survey finds mixed results in a poll of 202 executives in the financial and corporate social responsibility sectors. Many executives believe that sustainability practices will have a significant effect on their company’s bottom line in the long run. However, short term results are less optimistic. Executives report the main roadblocks to sustainable practices as the lack of participation in reporting firms, as well as low cash incentives.
by Nicholas Varilone, Green Economy Post
An recent Economist Intelligence Unit survey shows that only 24% of executives polled believe that in the short term (1-2 years) there is a strong correlation between the commitment of sustainable business practices and the financial performance of the firm. Less than half of companies even report their environmental and sustainability goals.
While sustainable business practices may not have a significant impact in the minds of executives in the short run, over the period of 5-10 years 69% of executives polled believe that there is a strong link between sustainability and profit. Companies worldwide are redeveloping their core business practices to meet sustainable goals in every aspect from supply chain to energy use policy.
This survey sponsored by Enel, of over 200 finance and corporate social responsibility executives explores the process by which executives are incorporating sustainability into their everyday business practices. The study defines sustainability as, “operating in a way that preserves the long-term productive capacity of the natural and social environments.
Results of the Survey
According to this Survey, 34% of executives polled said that their firm’s immediate financial goals were of more importance than practicing sustainability. This is the cause of the major roadblock between corporate profit and sustainable business practices.
Executives believe that in the long run, integrating sustainable business practices into their firms, will allow them to operate more efficiently and increase profit margins. 87% of executives agree that sustainability will become more important over the next three years. Executives report including sustainability into every facet of business operations, including supply chain relationships (29%), improving energy efficiency (38%), educating employees on sustainability (32%), and engaging employees in sustainability related activities (30%). Fifty-four percent say sustainability efforts have been led by top management, which is the reason sustainable practices have been growing at such a high rate.
The survey produced five key findings
The poor business climate is an obstacle to pursuing sustainability.
Thirty-four percent of respondents said their firms’ immediate financial goals were a more pressing priority than sustainability. Not surprisingly, this represents the leading obstacle to embracing sustainability. Lack of consensus and clarity are also obstacles.
Executives increasingly see opportunity in sustainability.
Eighty-seven percent agree that sustainability will become more important in the coming three years. Of these, 46% strongly agreed. While sustainability represents a risk for some, others see opportunity.
Companies are embedding sustainability into various corporate functions.
Executives report including sustainability into a variety of corporate functions, including supply chain relationships (29%), improving energy efficiency (38%), educating employees on sustainability (32%), and engaging employees in sustainability related activities (30%). Fifty-four percent say sustainability efforts have been led by top management, which may explain the wide reach of such initiatives.
But only around half of companies report their progress on sustainability.
Just 49% of respondents said they report progress in meeting their environmental sustainability goals. Slightly over half (53%) report their progress on meeting social sustainability goals. Nonetheless, executives say that stating goals and reporting progress towards those goals are essential in embracing sustainability.
Cash incentives are not widespread—but are growing.
Employee recognition programmes are the most widespread employee incentive, cited by 38% of respondents. Just 18% of firms link pay to sustainability indicators, but anecdotal evidence suggests this practice is growing among leading companies.
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