Role Of Investors In Driving Sustainability Is Poor: Study

A study surveying over 1000 CEOs from over 100 countries and more than 25 industries, shows businesses to be more responsible towards United Nations Sustainable Development Goals (SDGs). But role of investors in the process seems to be low.

Only 10% of chief executive officers (CEOs) cite pressure from investors as a top three factor driving them to take action on sustainability, stated a new study by the UN Global Compact. While 88% of CEOs believe that greater integration of sustainability issues will be essential to make progress on sustainability.

Among CEOs of the world’s largest companies, those with annual revenues in excess of US$1 billion, commitment and action is even more pronounced with 76% of them engaging investors on the value of sustainability to their business. Similarly, 80% believe they have the skills and capabilities to take action on the SDGs.

The study named- ‘United Nations Global Compact-Accenture Strategy CEO Study 2016, Agenda 2030: A Window of Opportunity’ states that 87% CEOs say the UN SDGs represent an essential opportunity to rethink approaches to sustainability, and nearly half (49%) believe that business will be the single most important actor in delivering the SDGs.

The study represents more than a decade of research on sustainable business. It traces the development of corporate motivations in engaging with environmental, social and governance issues in their core business. The study includes in-depth conversations with the world’s leading CEOs, 250 of which have participated in one-to-one interviews since 2007, and a survey of UN Global Compact participant companies across more than 150 countries and 30 industry sectors.

About 73% CEOs believe that business should develop common indicators to measure and communicate impact on the SDGs.  Nearly all (95%) feel a personal responsibility to ensure their company has a core purpose and role in society, and 80% believe that demonstrating a commitment to societal purpose is a differentiator in their industry.

“The adoption of the Sustainable Development Goals gives companies a clear and universal roadmap to make global goals, local business. CEOs are accepting a mandate for radical action, and see a window of opportunity for transformation,” said Lise Kingo, Executive Director, United Nations Global Compact.

To accelerate progress, CEOs identify three critical requirements. First, an urgent need to expand coalitions and partnerships across business, government and civil society to drive greater ambition and achievement on key sustainability issues, including human rights, labour standards, the environment, and anti-corruption. Second, more action at the local level, working with national governments to develop and implement action plans to achieve the SDGs. And third, innovation in new digital technologies and new business models that can enable business to have a greater impact on global challenges.

“We need to act now. The tone and focus has changed- not it’s all about action, delivery and real impact,” said Paul Polman, CEO, Unilever

Making global goals, local business

This year’s results mark a sea change from the results of the 2013 CEO Study, when respondents expressed a sense of frustrated ambition in their efforts to become more sustainable. Although CEOs emphasise the need to overcome significant challenges, the study finds business leaders making progress in embedding sustainability across their business.

More than two-thirds of the UN Global Compact CEOs surveyed (69%) report that sustainability issues are already part of board-level discussions, and 64% say these issues play a central role in their strategic planning and business development. A majority of CEOs (59%) also report that their company can accurately quantify the business value of their sustainability initiatives, up from 38 % in 2013. Looking beyond their own companies, the CEOs say progress is being replicated across their industries, and 89% say commitment to sustainability is translating into a real impact on their industry.

Reshaping global markets

Despite strong progress in embedding sustainability into corporate strategy and operations, executives still see significant challenges in bringing about the changes that can reshape global markets for sustainability. In particular, business leaders find it difficult to align market incentives to accelerate action.

As CEOs prioritize critical actions to accelerate the achievement of the SDGs, 86% of them say standardized metrics are needed so companies can measure and track their impact on global goals; and 85% identify the importance of partnerships with governments, NGOs and international organizations that connect businesses with local communities. Similarly, 84% call for more local collaboration with national governments on SDG Action Plans that include clear incentives and accountability frameworks for business.

While industrialisation is an ongoing process at rapid speed and high scales, sustainability check remains a topic of utmost importance. It is good to see CEOs and industry leaders talking and working towards the needed solutions. Agenda 2030 and its subsequent goals are tough to achieve and businesses across the globe would certainly play an important role in achieving them.

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The CSR Journal Team