A recent survey found that the majority of corporate sustainability leaders believe that their sustainability initiatives have significant strategic value for their organizations, but also feel that measurement for these initiatives are lacking.
by Aysu Katun, Green Economy Post
A recent survey, co-sponsored by Crowe Horwath LLP, one of the largest public accounting and consulting firms in the U.S., and the Center for Business Excellence (CBE) at Miami University’s Farmer School of Business, found that the majority of corporate sustainability leaders believe that their sustainability initiatives have significant strategic value for their organizations, but also feel that measurement for these initiatives are lacking, which makes communicating the outcomes of their efforts more challenging.
The survey’s 178 respondents represent companies with revenues ranging from less than $75 million to more than $10 billion. Of those responding, 50 percent were from public companies, 33 percent were from privately held companies, and the remainder were from not-for-profit and government entities. Nearly half of the respondents “own” the sustainability initiatives within their organization, while the other half are involved in one or more specific initiatives.
72 percent of the respondents believed that boards of directors place a high priority on sustainability and 74 percent say their organizations link their sustainability initiatives to company strategy. However, more than half of the respondents also said they thought measurement for the initiatives was lacking.
“While executives and boards understand that sustainability initiatives offer opportunities for long-term value, supporting those initiatives is difficult if they are unable to convey to shareholders and stakeholders exactly how the initiatives create such value,” said Brian Ballou, co-director of the CBE.
The survey identified multiple challenges in sustainability reporting, including:
- Inability to sufficiently measure sustainability initiatives
- Insufficient resources
- Inconsistent or unclear definitions
- Lack of a standard verification process
- Unclear reporting guidelines
Even with these challenges, more than eight out of 10 survey respondents issue sustainability reports designed to enhance their reputations with the public, customers, employees and suppliers. Nearly seven out of 10 organizations report their sustainability initiatives publicly. 51 percent of respondents indicated that they adhere to the Global Reporting Initiative (GRI) sustainability reporting guidelines.
More than 50 percent of the respondents said their sustainability initiatives have led to operational efficiencies, but only 12 percent said that sustainability is fully embedded in the strategic actions and decision-making processes of the organization. “The survey shows us that many organizations have real opportunities to strengthen the ties between sustainability initiatives and the overall governance of the organization,” said Gregg Anderson, a director with Crowe Horwath.
“Reporting sustainability measures and issuing qualitative disclosures without a sufficient link to how these activities lead to long-term value creates a risk of efforts being perceived as ‘greenwashing’,” added CBE co-director Dan Heitger. Some companies, Heitger said, may focus more on the marketing of “green” activities rather than implementing business strategy and practices that improve the long-term viability of the environment and society.
Greenwashing is a serious problem. A survey conducted by McKinsey, the global management consultancy, in 2008 had found that consumers were becoming increasingly cynical and that the repercussions for companies that greenwash could be very serious.
Exacerbating the greenwashing risk is the finding that 48 percent of organizations do not have an independent review of the information presented in their sustainability reports. “Without an independent review, stakeholders may be skeptical about the relevance and reliability of the information provided, making them unwilling to use the information for decision making,” said Anderson.
It was encouraging to see that even with the economic downturn, nearly seven out of 10 organizations do not expect a decrease in annual spending on sustainability initiatives. “An increased emphasis on understanding how these initiatives tie to the overall corporate strategy could lead to enhanced long-term value to shareholders and stakeholders,” added Anderson.
This survey is part of the work that The Center has been doing on behalf of the American Institute of Certified Accountants (AICPA). They are representing the U.S. accounting body on the Accounting for Sustainability Project. The Accounting for Sustainability Project is a global effort involving major accounting bodies around the world and organizations that wish to see sustainability initiatives become more incorporated into strategy and financial reporting. They are developing practical tools to enable environmental and social performance to be better integrated into organizations’ core strategy and financial performance. Currently, the Project is piloting the “Connected Reporting Framework” and the A4S Decision-Making tool with key public, private and third sector partners. Read their new report, Connected Reporting in Practice, which includes case studies of organizations who have used the Connected Reporting Framework or visit the Connected Reporting microsite.
