McKinsey Survey Shows Most CEOs View Sustainability as a Useful Buzzword for PR

Published: Mar 31, 2010

Topics: CSR       

What if a significantly tiny, unintentional piece of misinformation was behind an industry-wide disconnect? A recent survey conducted by McKinsey reveals that it might be the lack of a fully defined and unilaterally agreed upon definition of sustainability that is discouraging executives from making it a conscious focus at companies. It might also be the singular reason behind the few that report initiatives in sustainability, but lack any real credibility.

While no mind-blowing revelation, the survey does a good job pointing out key indicators that are bound to be helpful for CSR and Sustainability professionals to take cognizance of when establishing guidelines and reporting indexes at their organizations. Of the 1,946 executives surveyed, the survey shows that over 50% considered sustainability "'very' or 'extremely' important in a wide range of areas, including new-product development, reputation building, and overall corporate strategy."

However, as the answers get more granular, confusion surrounding the issue emerges. Keep in mind the "over 50%" number stated above as you continue reading.

 "Overall, 20% of executives say their companies don't [have a clear definition of sustainability]. Among those that do, the definition varies: 55% define sustainability as the management of issues related to the environment (for example, greenhouse gas emissions, energy efficiency, waste management, green-product development, and water conservation). Another 48% say it includes the management of governance issues (such as complying with regulations, maintaining ethical practices, and meeting accepted industry standards), and 41% say it includes the management of social issues (for instance, working conditions and labor standards)."

Another noteworthy section of the survey deals with the respondents' top reasons for addressing sustainability. The No. 1 spot: Maintaining or improving corporate reputation (36%). A mere 14% picked "personal interest of leadership" and an additional 11% chose "Attracting, motivating and retaining talented employees." Some would see this statistic as worrying, but most will view it as belaboring a well-established point. With an economy that continues to outrun supply of talented candidates than demand, most companies remain focused on re-energizing their bottom line before allocating resources to employee retention. (With the exception of Wall Street, of course, constantly in the news for their tug of war and talent poaching.)

And as the survey goes on to acknowledge, given this fact, most companies report their sustainability efforts in reputation-building terms. The survey is certainly rich in its findings so here succinctly are some of the more tempting statistics highlighted:

Sustainability in Business Strategy

CEOs or other C-level executives run the company's sustainability initiatives on a day-to-day basis: 27%
"No one" coordinates initiatives on a daily basis: 11%
Unsure: 5%
Sustainability is among the top-three priority on CEOs' agendas: 25%

Influencers of Sustainability Regulation

Company actively seeks opportunities to invest in sustainability: 28%
Sustainability is integrated into company's business practices: 29%
Company [attempts to] actively shape relevant regulation: 16%

Responsible Businesses

(Six percent of respondents)

Company actively seeks opportunities to invest in sustainability: 88%
Am aware of whether company measures its carbon footprint: 84%

Interestingly, these 84%, who comprise of "engaged companies" are far more likely to be tracking relevant sustainability indicators such as waste, energy and water use, and labor standards for their suppliers and consumers; and more prone to reporting on their initiatives externally.

The future of Sustainable Business Practices

Believe engaging in sustainability contributes positively to shareholder value in the long term: 76%


What do you think of these findings? Worrying, boring, old news or enough motivation to begin looking into sustainable business practices and nudging senior management to adopt them? Every executive I have spoken to has emphasized that numbers speak stronger than verbalizing ideologies. Now we have the numbers to not only prove the business case for adopting corporate sustainability but to also show where your company is beginning to lag behind competition in accepting the long term value of a triple bottom line.

And as far as a working, cohesive and relevant definition of corporate sustainability goes, the debate remains open. Any volunteers?

Join the discussion (all it takes is a free login!) and leave a comment or email In Good Company. And, of course, if you'd rather tweet, connect with me on Twitter @VaultCSR!

See the complete survey published in the McKinsey Quarterly.