Sustainability’s strategic worth

Company leaders are rallying behind sustainability and the majority of executives believe the issue is increasingly important to their companies’ strategy. 

However, as it continues to grow into a core business issue, challenges to capturing its full value lie ahead. 

These findings come from a McKinsey survey, which asked respondents about the actions their companies are taking to address environmental, social, or governance issues, the practices they use to manage sustainability, and the value at stake. 

According to the executives surveyed, sustainability is becoming a more strategic and integral part of their businesses, with 43 per cent saying their companies seek to align sustainability with overall business goals, mission, or values. This is up from 30 per cent in 2012.

However, the study found that as sustainability rises in significance, capturing its full value grows more challenging. This is possibly due to the fact that the more that companies prioritise sustainability, the more it needs to be integrated into, and possibly change, the core business.

Of those companies that are already taking action in terms of sustainability, respondents said execution remains a considerable challenge. Similarly, the absence of performance incentives and the presence of short-term earnings pressure tends to be at odds with the longer-term nature of these issues.

Accountability and reputation management were also cited as major concerns. Thirty four per cent of executives said too few people at their companies are accountable for sustainability and 59 per cent said managing their corporate reputations for sustainability was a priority.

A full copy of the study can be found here.