Firms don't want to invest in sustainability: McKinsey
By siliconindia   |   Friday, 09 April 2010, 15:32 IST   |    3 Comments
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Firms don't want to invest in sustainability: McKinsey
Bangalore: Over 50 percent executives believe that sustainability - the management of environmental is extremely important for any company to build new-product development and overall corporate strategy, but companies are yet to take a proactive approach to manage sustainability. Currently only 30 percent of executives say their companies actively seek opportunities to invest in sustainability or embed it in their business practices. The survey done by McKinsey explored how companies define sustainability, how they manage it, why they engage in activities related to sustainability, and how they assess as well as communicate this engagement. Companies are defined as being most engaged with sustainability if their executives say that sustainability is a top-three priority in their CEOs' agendas, that it is formally embedded in business practices, and that their companies are extremely effective at managing it. Many companies don't actively address sustainability despite the attention paid to it by the media and some consumers and investors is that many have no clear definition of it. Overall, 20 percent of executives say their companies don't. Among those that do, the definition varies: 55 percent define sustainability as the management of issues related to the environment. In addition, 48 percent say it includes the management of governance issues, and 41 percent say it includes the management of social issues. Fifty-six percent of all the respondents define sustainability in two or more ways. Given that reasoning, it makes sense that most respondents report their companies incorporate sustainability in reputation-building efforts. But companies consider sustainability in a wide range of other business activities as well. Around 60 percent consider sustainability important to overall corporate strategy. Given sustainability's importance, it's surprising that only 27 percent of respondents say their CEOs or other C-level executives run their companies' sustainability initiatives on a day-to-day basis. Thirty-one percent say business units or functional managers take on this responsibility, and 25 percent say their corporate social responsibility departments do so. Seventy-six percent of executives say engaging in sustainability contributes positively to shareholder value in the long term. Companies that manage sustainability proactively are much likelier to seek and find value creation opportunities. Companies where sustainability is a top item in their CEOs' agendas are twice as likely as others to integrate sustainability into their companies' business practices. This suggests that senior executives who want to reap the benefits of incorporating sustainability into their companies' overall strategies must take an active role in the effort.

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