Sustainability is a word that is frequently bandied about but it’s definition can be problematic. An example is highlighted in a recent survey published by McKinsey & Company on How companies manage sustainability.
Conducted in February this year amongst executives from a wide range of industries and regions, the survey found that while many consider sustainability very or extremely important to a range of business areas, few were actively doing much about it. Sustainability is regarded as important in areas such as new product development, reputation building and corporate strategy but only a third of respondents said their organisation was actively seeking opportunities to invest in sustainability or make it integral to business practices.
A key problem area came down to the definition of sustainability – seen by authors of the report as “the management of environmental, social and governance issues”. One fifth said their companies didn’t have a definition, while those that did vary from the management of issues relating to the environment, the management of governance issues or managing social issues. Over half of respondents defined sustainability in two or more ways.
What is clear is that despite this variance many see sustainability creating real value to the business, particularly with building the company’s reputation, improving efficiencies and lowering costs, meeting consumer expectations and identifying new growth opportunities.
In environmental matters the companies that have demonstrated the most progress in recent years are being led from the top, with the chief executive and other key senior figures driving the policies forward. In this survey only a quarter stated that sustainability was a top-three priority for their chief executive and this lack of interest at the top filters down with just under a third indicating sustainability was integral to shaping business strategy.
Respondents’ communication methods in reporting their sustainability activities were poor – many unaware of their specific reporting practices. Despite this over half kept track of the value created by sustainability in relation to reputation and cost savings. Those that are proactive, communicate more effectively but are in the minority.
One wonders why those who see the value in adopting more sustainable practices are not doing more about it, particularly at present where a company’s reputation and need for cost-effective policies is essential. Is this a case of more organisations paying lip service to the green agenda, bolting on the odd policy, rather than integrating sustainability into the business strategy? The evidence suggests that those that engage in sustainability reap value in reputation, cost savings and growth opportunities – something all organisations would welcome in the current climate.