It’s important to track the trends of sustainability to see quite how progress is being made. Recently Ernst & Young LLP, a multinational professional services firm that’s based in London, England, and the GreenBiz Group released a study that showed the six recent trends in corporate sustainability. There is a lot of good news! Here are the primary things revealed by this study.
1. Increased Inquiries from Investors
About 50 percent of the study participants shared that more shareholders and investors have expressed sustainability-related questions and concerns over the past year than ever before. The growing interest from investors is clear even though this trend contradicts previously revealed anecdotal evidence that had the opposite conclusion. Shareholders are expressing interest in a company’s sustainability standards and are more aware of social and environmental factors.
2. Risk Reduction From The Top
A company that’s going to be serious about sustainability needs to have full engagement from both the CEO and its board of directors. More companies that ever are having regular conversations about risks and opportunities that are related to sustainability with their investors.
Sadly, the recent Accenture CEO Study on Sustainability revealed that many CEOs don’t feel that they are yet able to meet the standards of sustainability because customers, investors, and their government don’t support such endeavors. A thousand CEOs from 103 countries were surveyed, and almost half of them felt that other factors like quality and price will always come before sustainability. However, 81 percent of those CEOs do admit that the sustainability reputation of a business is a crucial factor in customer purchasing decisions.
3. Government Involvement is Minimal
Perhaps surprisingly, considering how some improvements have been encouraged through legislation, governments as well as multilateral institutions have not been key players in changes for sustainability. Instead, the instigators of this change seems to be primarily consumers.
4. Unbalanced Corporate Risk Response
The risk response from corporations does not really match the large-scale of existing and expected sustainability challenges. According to the study, almost 80 percent of the companies surveyed indicated that sustainability risks were a part of the enterprise risk framework of their businesses. However, a mere 30 percent of these companies had completed scenario analyses, and only 36 percent had planned to run them.
5. Slowed Integrated Reporting
Integrated reporting about sustainability, although compelling, has been slow to take hold in the corporate world. So integrated reporting on how a company’s sustainability strategies, performance, policies, and prospects develop on a short-term, medium-term or long-term basis is not required, and companies are not too keen on its rapidly becoming the norm. On the other hand, 63 percent of those surveyed for the Ernst & Young LLP/GreenBiz Group study state that a desire for integrated reporting among customers and investors are motivating reasons to implement it.
6. Sustainability and Natural Resources Shortages
While warnings of shortages may have been motivating factors in the past, the reality is that companies now face shortages of natural resources. In fact, 76 percent of participants cited water as being the resource that’s most at risk. Also at risk are energy, rare earth minerals, and forest products.
Tracking trends in sustainability has been very helpful. The results give us an idea of where we are progressing and where there is still room for improvement. It also reveals that we need to study the actual actions of companies and true behaviors of CEOs in the same way that we need to track the actual purchasing habits of consumers. By doing so, we can further understand current trends and changes.
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