KPMG Study Finds Businesses See Real Benefits from Sustainability Strategies

I recently speculated that the era of Jack Welch is over and, for long enough, have been “banging on” about Sustainability being a win/win/win (People – Planet – Profit) strategy. If you were expecting a different message you will be disappointed. I would reiterate:

Sustainability, like Complexity management, isn’t just “good for business” it’s good for everyone.

Companies with aspirations to participate in supply chains with some of the biggest brands on the planet will already have an understanding of what is required…and the long term benefits. We should all hope that the message cascades AND that the smartest organisations invest in building-in business robustness and resilience for the uncertain times ahead.

Here is even more proof of a sound business strategy:

A new global study by KPMG International reveals that companies are continuing to adopt sustainable business practices.

Results from the survey of 378 large and medium-sized companies spread across 61 countries show that 62 percent already have an active sustainability program in place. Another 11 percent say they are currently developing one.

Why are companies adopting sustainability programs? Survey respondents cited:

  • pressure from regulators,
  • rising concern over the potential for brand and reputational damage, and
  • increasing support for sustainability on operational and commercial grounds once the practical benefits were realized.

And just what are these “practical benefits?” As it turns out, they’re substantial. Specifically, the list includes:

  • significant reductions in energy costs,
  • improved relationships with customers and suppliers,
  • more efficient use of resources, especially water, and
  • enhanced innovation, leading to new product lines and opening up new markets.

Overall, 61 percent of those with sustainability programs found that, despite some increase in investment, the benefits clearly outweighed the drawbacks.  This favourability rating rose to 72 percent among the very largest companies, with revenues above US$5 billion. One respondent with a long-running sustainability program reported payback of US$1.50 to US$2.00 for every US$1.00 spent.

Unfortunately, though, the survey also found that companies continue to struggle with sustainability metrics and how to report to stakeholders on progress. More than one-third (38 percent) of those polled have no plans to report on their sustainability performance. They cited a lack of good data and benchmarks, combined with scepticism among stakeholders about the worth of these reports.

“This scepticism is something we need to change by providing better information,” said Ted Senko, KPMG’s Global Head of Climate Change and Sustainability and a partner in the US firm. “Reporting on sustainability is not just showing good corporate citizenship – it is a route to more efficient and better-run corporations.”

A copy of the preview of A Review of Corporate Sustainability in 2010 is available from KPMG

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