Just in time for the BSR conference running this week in San Francisco, BSR and GlobeScan published their fifth annual State of Sustainable Business Survey report. One of the world’s largest annual surveys of corporate sustainability executives, this report provides an interesting look into the state of sustainability in business.
The survey’s comprehensive exploration of companies’ attitudes and behavior generated a balanced presentation, showing both the achievements and challenges of companies in embedding sustainability into business. Add to it the ability to compare the results to past surveys and you get a valuable tool to check the pulse of sustainability in business.
The survey is full of interesting findings and lessons. Here are four of the more important lessons I learned:
The climate change paradox
According to the survey, respondents predict climate change and water management will be the most significant sustainability developments in 2014. At the same time, when looking at the respondents’ replies about their companies’ sustainability priorities in the next 12 months you can see that while climate change remains one of the highest priorities for business, its prioritization has steadily declined since 2009.
This is an interesting contradiction – on one hand companies believe climate change will become more important next year, but on the other hand, the priority they give to climate change is systematically declining. How can that be?
One reason might be found in the barriers to integrating sustainability into business. According to the report, convincing leadership of the value of integrating sustainability and changing management mentality are the most commonly mentioned barriers. So it looks like many CEOs and boards are still not convinced of the value of taking steps to reduce their companies’ exposure to climate change risks, no matter how likely these risks seem to be. In other words, for many companies, climate change is still not a material issue.
Another reason seems to be that companies believe that substantial progress on climate change can take place only through collaborations. As the report notes, the problem is that while government is seen as a key player in this issue, respondents find government to be the most difficult stakeholder group to collaborate with. So if companies believe that they can move forward on climate change mainly through collaborations, where government will have an important role, but they don’t really trust the government when it comes to collaborations, is it any wonder companies have little incentive to do anything at all?
Where’s Hurricane Sandy?
One of the questions asked in the survey was “Over the past 12 months, what has been the most significant development, event, or other news related to CSR and sustainability?” The most common answer was the factory collapse in Bangladesh, followed by workers’ rights awareness and safety issues in developing countries, climate change policy and Obama’s speech on climate change.
I was surprised that one big event wasn’t even on the list – Hurricane Sandy. Even though this event was considered to be almost a game changer when it comes to climate change awareness by both the public and policy makers, it didn’t make the list. One can only wonder if this is an indication of business’ suppression of the fact that climate change is already here or just of the short memory banks of respondents.
Calculating ROI on sustainability remains a challenge
One of the best ways to make the business case for sustainability in business is to measure the ROI of sustainability efforts. As the report shows, the number of companies that measure the ROI of their CSR and sustainability efforts or plan to do so hasn’t changed much from 2009 and is around 60 percent. The percentage of companies that don’t measure ROI and apparently don’t have any plans to do so fell from 37 percent in 2009 to 31 percent in 2012.
The most frequent reasons given currently for not measuring ROI were that it’s too complicated or difficult to measure (24 percent), lack of methodology, tools, metrics, or data (20 percent), not a priority or not relevant to company (14 percent), and limited resources (10 percent).
You can see how calculating the ROI on sustainability has remained a challenge also from the fact that when companies actually measure the ROI, it’s mostly in terms of energy reduction (23 percent). Maybe once companies have a better way to comprehensively measure the ROI on sustainability, the rest of the pieces will fall in place – from convincing the c-suite of the value of sustainability to integrating it into the core of the business.
CSR functions are still not mastering their communication skills
When we think about sustainability in the context of communication we tend to think of it mainly as an external challenge (company vs. stakeholders), but the report shows that it might be an even greater challenge inside the organization. “External-facing corporate functions have high levels of engagement with sustainability function, but others are much less engaged,” the report explains. Communications and policy functions continue to be the areas where engagement is highest with 75 and 66 percent of the respondents reporting on engagement with these functions.
At the bottom of the list you can find marketing (28 percent), strategic planning (28 percent) and finance (16 percent). As the report notes, the ongoing disengagement between the finance and sustainability functions can be a major barrier to the long-term planning needs of corporate sustainability.
Interestingly, the findings show decline or no change in the levels of engagement with all functions of the company comparing to 2011. It might suggest that CSR departments are not mastering yet what Tim Mohin called in his book, Changing Business from the Inside Out: A Treehugger’s Guide to Working in Corporations, the most important skill they need in order to succeed – communication. As Mohin wrote, CSR managers need to master this skill because they “lead a function where you have broad responsibility for issues that you have almost no authority to control.”
Raz Godelnik is the co-founder of Eco-Libris and an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and Parsons The New School for Design, teaching courses in green business, sustainable design and new product development. You can follow Raz on Twitter.