Why harnessing sustainability makes good business senseFollow @PwC_LLP
Balancing immediate business needs with longer-term strategy can be tricky. Often the short-term issues take precedence, with decision making for the future postponed to less challenging times.
We see this in the results of the latest Global CEO Survey, where concern about climate change is less prominent than in previous years, seemingly overshadowed by more pressing short-term economic issues. Just 17% of CEOs feel that addressing the risks of climate change and protecting biodiversity should be ‘a top-three government priority’.
So, how does this short-term mindset impact on clients and shareholders? Surely too much focus on today’s management structures and demands, at the expense of tomorrow’s strategy, means new business models are overlooked, stifling innovation and growth and ultimately jeopardising the business.
This short-term focus is apparent in the way business - and society at large - has treated our planet’s natural capital for a long time. Until recently, resources have largely been treated as infinite and ‘free’. But as we continue to push the planet’s boundaries, this is clearly a false assumption. A fundamental shift is required in today’s business models to properly account for the use of these finite resources. And those companies that recognise this need and react first will gain competitive advantage through innovation.
So, the fact that 48% of CEOs plan to increase efforts to reduce their company's environmental impacts is very encouraging and shows real foresight. Business has a complex relationship with the environment - and with society and the economy, for that matter - so it’s good to see more companies taking an active interest not only in measuring their impact, but in reducing it too.
At PwC, we sense greater recognition from some CEOs of the important role that business can play in addressing environmental impact, social challenges and improving national outcomes. Slowly it’s becoming the way to do business – for instance, thinking about ways to reduce reliance on scarce resources through investment in R&D, collaboration across industries, and developing new products or materials. It leads to greater transparency too which can only be a good thing – especially as companies have growing numbers of stakeholders to consider, each with increasing levels of influence thanks to the social media revolution.
CEOs recognise the need to rebuild public trust and maintain the bridges between business and society. Thinking longer-term, understanding the impact that your company has on the environment, society and the economy, makes good business sense.
Global Sustainability Leader
Email: Malcolm Preston
Malcolm Preston is global head of sustainability services for PwC, and leads a team of some 700 sustainability and climate change experts. Malcolm specialises in all aspects of sustainability reporting, including the measurement and valuation of environmental, social and economic impacts.