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CEO survey is gloomy reading for the corporate sustainability movement

 
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World’s largest CEO sustainability study makes bleak reading with evidence that business transformation has ground to a halt. Photograph: Piyal Adhikary/EPA

 

Powered by Guardian.co.ukThis article titled “CEO survey is gloomy reading for the corporate sustainability movement” was written by Jo Confino, for theguardian.com on Friday 20th September 2013 04.00 UTC

The results of the world’s largest CEO sustainability study make bleak reading with strong evidence that the journey towards business transformation has ground to a halt.

The survey, released to coincide with the United Nations Global Compact (UNGC) leaders summit in New York, shows that despite the recognition the world is in grave danger, business leaders do not believe the conditions are in place for them to meet the challenge.

CEOs admit they are still struggling to make the business case for long-term investments, while key influencers such as consumers, governments and investors are failing to provide the incentives. For example, just one third of those running public companies believe their share price currently includes value directly attributable to sustainability initiatives and performance.

Lack of progress on challenges

The study, of more than 1,000 top executives from 27 industries across 103 countries, comes hard on the heels of depressing results from two other recent surveys, one from the UNGC and the other from the global NGO CDP, which also provide concrete evidence of the lack of corporate progress.

What is perhaps most worrying about the study is that it shows the majority of the world’s most powerful corporate leaders feel powerless to respond to the multiple challenges of climate change, resource scarcity, poverty and environmental degradation.

They clearly recognise the enormity of the risks with only a third believing the global economy is on track to meet the demands of a growing population within planetary boundaries. Two-thirds also recognise business is not doing enough to meet these challenges.

But the optimism shown when the last survey was carried out three years ago in the business sector’s ability to lead from the front has collapsed like a soufflé taken out of the oven too early.

“Pilot paralysis”

As the study concludes: “CEOs see business caught in a cycle of “pilot paralysis” — individual, small-scale projects, programmes and business units with an incremental impact on sustainability metrics — and while they see a role for business in promoting sustainable development, their responsibilities to the more traditional fundamentals of business success, and to the expectations of markets and stakeholders, are preventing greater scale, speed and impact.”

In fact, only 45% of CEOs believe that sustainability will be “very important” to the future success of their business, compared with 54% in the last survey carried out in 2010.

“This drop is striking in the context of intensifying global challenges,” says the report. “A decline in the perceived importance of sustainability among global business leaders is not encouraging for those working to align business with sustainable development.”

Barriers to change

The reason for the drop is because short-term pressures caused by the economic downturn mean sustainability is being put on the back burner to await another day. Growth and employment were the most important issues identified by CEOs, while issues more closely tied to social and environmental development, such as climate change, poverty, water and health, slipped down the agenda.

Perhaps the most shocking statistic is that CEOs are finding it progressively harder to justify the business case for sustainability. In fact, this was identified by the respondents as the fastest-rising barrier to change. In 2007, just 18% said they were unable to trace a link between sustainability and business value. In 2010, this rose to 30%, and this year it has gone up again to 37%.

Could this have something to do with the fact that discussions with CEOs showed that many business leaders starting to act on sustainability still do not have a clue what the term actually represents, confusing it with philanthropy and charity?

The report says: “The more adept companies become at measuring and tracking their own sustainability performance, the more their frustration grows at an apparent inability to tie performance improvements and industry leadership to the fundamentals of business value beyond incremental gains.”

 

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