There is wide-spread and growing acceptance of the increasing value that sustainability programs have in the private sector today, yet over 30 percent of businesses do not have a strategy for sustainable growth in place, according to a survey from KPMG’s global Climate Change and Sustainability (CC&S) practice.
Just over 60 percent of companies surveyed said that they currently have a working strategy for corporate sustainability – up from just over half polled in a similar survey in 2008. Of those that do not have a strategy, over 70 percent expect to do so within one to five years and 25 percent indicated they had no specific time-frame. Yet, nearly 50 percent of all executives surveyed believe that implementing sustainability programs will contribute to the bottom line, either by cost reduction or increased profitability.
These figures come from “Corporate Sustainability: A Progress Report”, a survey of 378 senior executives representing a range of industries evenly split between the US and Canada, Asia Pacific and Europe, with contributions from the Middle East, Africa and Latin America.
The survey captured three main reasons for slow progress on sustainability:
- 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
Larger, publicly listed companies are much more likely to have adopted a strategy than their smaller, privately held counterparts. Nearly 8 in 10 of the large companies polled have a strategy, compared with just under half of the smaller businesses.
Of those that do have strategies in place, only one in three have issued a public report on their progress.
“We are finding that most companies understand what they need to do strategically,” said Ted Senko, Global Head of Climate Change and Sustainability (CC&S) at KPMG and a partner in the US firm, “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 wide-spread support for tougher international regulations if these would reduce the complexity and cost of complying with widely differing national and state rules.
Yvo de Boer, Special Global Adviser for KPMG’s Climate Change and Sustainability practice and the former Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC), asserts that the upcoming climate change talks [1] in Durban, South Africa, later this year must result in approvals that will enable the creation of new market-based methods to help businesses meet sustainability targets.
“We must work to empower the private sector to make an impact on sustainability goals, but to do so, requires leadership in the private sector, and strong support from governments. This is vital if we are to mobilize the very large private financial flows necessary to bring climate goals within reach,” Mr. de Boer said.
Nevertheless, most large, public companies are pressing ahead with developing their own solutions.
On the issue of financing sustainability initiatives, the survey revealed some innovative new methods, where energy producers, for example, are using financing methods to promote efficiency, and bundling up projects with longer and shorter payback cycles into a basket of investments that will meet the firm’s payback requirements.
As the report cites, in task forces within the Global Reporting Initiative (GRI) and the International Integrated Reporting Committee (IIRC), progressive companies are already at work developing common standards for measurement and benchmarking and technology exchange.
“These are excellent examples of the progressive thinking that delivers the real value of a sustainability initiative within the entirety of a company’s activities,” Mr. Senko said. “But again, it needs good quality information and analysis, and clear government commitment before businesses can broadly make these commitments with confidence.”
Check the following link to read/download complete report:
http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Pages/corporate-sustainability.aspx
Notes:
[1] The 17th Conference of Parties (COP17) of the United Nations Framework Convention on Climate Change will be held in Durban, South Africa, November 28 – December 9, 2011.
About the Report
‘Corporate Sustainability: A Progress Report’ is a KPMG research paper, conducted in co-operation with the Economist Intelligence Unit. Its initial conclusions were previewed at the climate change talks in Cancun, Mexico, at the end of 2010. The full report is being released to mark the establishment of a KPMG global center of excellence in climate change and sustainability in the Netherlands.
The report reviews the importance of sustainability within business today and executive attitudes towards this issue. For the purposes of this report, corporate sustainability is defined as: “adopting business strategies that meet the needs of the enterprise and its stakeholders today while sustaining the resources, both human and natural, which will be needed in the future.”
The report is based on the following inputs:
- A global survey of 378 senior executives, encompassing a range of industries, and evenly split between the US and Canada, Asia-Pacific and Europe, with a smaller representation from the Middle East, Africa, and Latin America. Organizations of all sizes were represented: 40% of respondents worked for firms with revenues of at least US $ 1 billion, whereas 47% were from firms with revenues of US $ 500 million or less. The respondent base was very senior: 26% were CEOs, presidents or managing directors of their firms; half represented the C-suite or board; and all respondents were in a management position. The survey was conducted in October 2010.
- To complement this, and provide specific context, the Economist Intelligence Unit conducted extensive desk research and in-depth interviews with numerous corporate sustainability executives and experts.
About KPMG Climate Change & Sustainability Services
KPMG CCS is a global team comprised of over 700 professionals who work in the field of climate change and sustainability – offering advisory, tax and assurance services to both public and private sector organizations.
KPMG’s Global Center of Excellence for Climate Change & Sustainability, based in Amsterdam, leverages the services and talent provided by its global network of member firms and brings together KPMG’s core competencies in risk and control, process analysis, global tax, assurance, and regulatory and compliance to serve clients in energy, transport, consumer markets, and financial services.
About KPMG
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. It operates in 150 countries and has 138,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such. For more information, visit www.kpmg.com.
About the Economist Intelligence Unit
The Economist Intelligence Unit (EIU) is the world’s leading resource for economic and business research, forecasting and analysis. It provides accurate and impartial intelligence for companies, government agencies, financial institutions and academic organizations around the globe, inspiring business leaders to act with confidence since 1946. EIU products include its flagship Country Reports service, providing political and economic analysis for 195 countries, and a portfolio of subscription-based data and forecasting services. The company also undertakes bespoke research and analysis projects on individual markets and business sectors.
The EIU is headquartered in London, UK, with offices in more than 40 cities and a network of some 650 country experts and analysts worldwide. It operates independently as the business-to-business arm of The Economist Group, the leading source of analysis on international business and world affairs. For more information, visit www.eiu.com.
Source: KPMG Press Release dated April 18, 2011.
