Sustainability is important in every sphere of live and more so in business but it is seen that many businesses are not taking active steps to manage sustainability even when their executives have the opinion that sustainability is important for various corporate activities. On the other hand, those companies who are paying importance to sustainability are getting benefits out of it, both for themselves as well as for the society.
McKinsey Survey on Sustainability
According to a recent survey by McKinsey, around fifty percent of the executives think that sustainability is important for a company. It has its importance in reputation building, corporate strategy development and development of new products.
However, the companies are still not proactive, when it comes to taking steps to manage sustainability properly and just about thirty percent executives say that their company is investing properly in sustainability measures.
Companies Addressing Sustainability
Many companies still do not address sustainability with proper seriousness, as many of them not have a clear definition of sustainability. According to the survey, around twenty percent of the executives believe that their companies do not follow sustainability practices, while fifty five percent think of sustainability as something related to managing issues linked with environment and forty eight percent consider it managing issues related to governance. Thus, about 56% of the people defined sustainability in many different ways.
Few positives that came out of the survey were the replies by almost seventy-six percent executives who believed that sustainability has a positive effect on value shareholders get over longer period and fifty percent think that sustainability can help in value creation over short term as well. Seventy two percent of executive believed that corporate reputation could be managed better by using sustainability, while thirty-six percent of respondents think that sustainability is to be addressed for building company reputation.
CEOs, Managers and Sustainability
Even though many agree that sustainability is important for their company, it is surprising that just about twenty-seven percent of all said that company’s CEO looks over sustainability efforts of the company on daily basis. Similarly, 31% said that functional managers undertake this responsibility while twenty five percent of people said that there is separate department, which does the job.
Despite its importance, just about a quarter of those who were surveyed said that sustainability is part of CEO top three priorities. Similarly, twenty-eight percent people mentioned that their company is looking for scope for investing in sustainability initiatives while twenty-nine percent mentioned that sustainability is already part of business practice in their company.
Sustainability in Energy Sector
On the other hand, in the energy industry, the senior executives were taking active steps to manage sustainability efforts, most probably due to concerns regarding regulations and constraints of natural resources. It was seen that ten percent of executives from the energy sector said that managing sustainability was one of the top priorities for CEO of their company as compared to three percent overall figure.
At the same time thirty one percent of these executives mentioned that sustainability was one of the top three priorities for the company as compared to twenty-two percent overall figure. Furthermore, energy forty percent executives mentioned that the management was more eager to look for options for investment in sustainability projects as compared to the overall figure of twenty eight percent.
Forty three percent of executives believed that the company was interested in integrating sustainability into business practices, which was also higher than overall figure of twenty-nine percent.
Sustainability and Reporting Practices
One fact about energy companies was that they are not utilizing better reporting practices considering the amount of initiatives they are taking to build sustainability measures. This is particularly important since these companies are not taking active steps to communicate their sustainability efforts to external agencies.
It was seen that sixty two percent of all respondents said that their organizations are not communicating sustainability metrics to their investors and they are also unaware of the reporting practices their organization has for sustainability measure it takes.
The positive thing is that about fifty percent of the executives are aware of the value sustainability is able to create in context of cost as well as organization’s reputation in the market.
Incorporating Sustainability in Regulatory Practices
Some of the other figures about the energy sector that came out from the survey included the fact that seventy four percent of businesses were incorporating sustainability measures while developing regulatory policies in comparison to overall figure of fifty three percent.
Likewise, fifty-four percent of the executives told that their companies are including information about sustainability while communicating with investors, which is higher than overall figure of thirty five percent.
Finally, we can summarize the finding of the survey by saying that those companies that work proactively to improve sustainability initiatives are more likely to find opportunities of value creation. In addition to it, if a company wants to get recognition for its activities related to sustainability, then it should communicate such activities properly to stakeholders and investors.