New data shows financial considerations driving sustainability activities of leading companies
Seventy-six percent of survey respondents anticipate natural resource shortages will impact business, CFOs emerging as key players in sustainability
NEW YORK, MARCH 6, 2012 A new Ernst & Young LLP / GreenBiz Group study – Six growing trends in corporate sustainability – reveals an increasing financial focus on sustainability efforts that impact core business objectives. This focus is, in large part, driven by several developments in sustainability: a majority of leading companies anticipate natural resource shortages, including water, will impact their core business objectives in next 3-5 years, and employees have become a driver of sustainability activities for their companies. As a result, 65 percent of the CFOs in the companies surveyed are now involved in sustainability initiatives.
Conducted in late 2011, the study is based on a comprehensive survey of sustainability executives and explores developments in corporate sustainability programs. The report provides illuminating statistics around six trends:
- Sustainability reporting is growing, but the tools are still developing.
- About one in four use packaged software to handle a portion of their needs; the primary data collection tools remain spreadsheets, emails and phone calls.
- The CFO’s role in sustainability is on the rise.
- 65 percent of respondents stated their CFO has become involved in sustainability.
- 80 percent said new revenue opportunities will be driving sustainability initiatives.
- 74 percent said cost reductions are primary drivers of their sustainability programs.
- 66 percent have seen an increase in inquiries about sustainability-related issues in the past 12 months from investors and shareholders.
- Employees emerge as a key stakeholder group for sustainability programs and reporting.
- Respondents cited employees as a primary driver of their sustainability efforts and audience to their sustainability report, placing it second behind customers.
- Despite regulatory uncertainty, greenhouse gas reporting remains strong and there is growing interest in water.
- 76 percent publicly report their greenhouse gas emissions, another 16 percent plan to do so within 5 years.
- 62 percent publicly report their water usage.
- More than half have a water footprint reduction goal.
- Awareness is on the rise regarding the scarcity of business resources.
- 76 percent of survey respondents anticipate natural resource shortages will affect their core business objectives over the next 3-5 years.
- Rankings and ratings matter to company executives.
- 55 percent view surveys and rankings as primary means of communicating with investors about sustainability performance and initiatives.
- The Dow Jones Sustainability Index and the Carbon Disclosure Project were the most valued rankings to companies currently involved in sustainability efforts.
In addition to these trends, it is notable that 92 percent of respondents expect their funding for sustainability to stay the same or increase in the next three years.
“These findings suggest sustainability efforts are becoming integrated into the corporate fabric of most large companies,” said Steve Starbuck, Ernst & Young LLP Americas Leader of Climate Change & Sustainability Services. “However, sustainability projects may be challenged by the fact that two-thirds of companies require them to meet the same financial payback requirements as other investments. While sustainability initiatives can provide financial returns, their intangible benefits, such as employee retention and reputational advantages should also be factored into the return on investment.”
"Sustainability continues to grow as a strategy for many of the world's largest companies," said Joel Makower, chairman and executive editor of GreenBiz Group. "But as these findings show, companies still have a ways to go in order to harness its full value, such as improved efficiencies, reduced risk, and being seen as an employer of choice. This report uncovers the key challenges and opportunities confronting companies as they seek to align sustainability with business success."
In fall 2011, GreenBiz Group and EY surveyed members of the GreenBiz Intelligence Panel, a group consisting of executives and thought leaders at the forefront of corporate environmental strategy and performance. For the report, results were analyzed from 272 respondents from 24 industry sectors who are employed by companies generating revenue greater than $1 billion. Approximately 85 percent of these respondents are based in the United States.
The full report can be downloaded at www.ey.com/climatechange.
For a more robust discussion of this study, join Ernst & Young LLP for a webinar – Bottom-line benefits of sustainable business practices – on March 19.
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EY refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. This press release is issued by Ernst & Young LLP, a member firm providing services to clients in the US.
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About GreenBiz Group
GreenBiz Group is a media, events, and research company whose mission is to define and accelerate the business of sustainability. It does this through its acclaimed website GreenBiz.com; conferences and events; GreenBiz Intelligence; and the GreenBiz Executive Network, a membership-based peer-to-peer learning forum for sustainability executives. More information: www.greenbiz.com.