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The Growing Importance of CFOs and Employees in Sustainability

March 26, 2012

A new study entitled Six Growing Trends in Corporate Sustainability has recently been released by GreenBiz Group and Ernst & Young. Some of the trends outlined in the report are not new (see my blog on Current Trends and Predictions in CSR, January 30, 2012), but two trends from this study are worth highlighting: CFOs are emerging as key players in sustainability, and employees are second only to customers as drivers of corporate sustainability efforts.

The study consisted of a survey that was distributed to almost 3,000 members of the GreenBiz Intelligence Panel, which consists of corporate executives and thought leaders in the area of corporate environmental strategy and sustainability. 272 executives from 24 industry sectors responded.

Overall, the report suggests that sustainability efforts are now well-integrated into the operations of many large and mid-sized companies, but the effectiveness of these efforts may be limited by internal systems that don’t allow the companies to effectively measure and track the impact of their programs.

The six growing trends discussed in the report are:

  1. Sustainability reporting is growing, but the tools are still developing. The UK-based website, which aggregates corporate responsibility reports worldwide, counted 5,593 reports in 2010 compared to 26 in 1992, the first year it began tracking. But, the study asserts that the tools that companies are using to track information are rudimentary compared to those used for financial reporting.
  2. The CFO’s role in sustainability is on the rise. A key reason cited for this increase in interest among CFOs is the growing scrutiny of company sustainability issues by equity analysts. Another is the growing number of companies that are integrating corporate responsibility reports with financial reports.
  3. Employees emerge as a key stakeholder group for sustainability programs and reporting. When asked to rank the top three stakeholder groups driving their company’s sustainability efforts, survey respondents ranked customers first (37%), employees second (22%) and shareholders third (15%).
  4. Greenhouse gas reporting remains strong and there is a growing interest in water. Three-fourths of respondents have set greenhouse gas reduction goals and 60% report these publicly. But, there is a growing interest in reporting on water use with about one in six having their “water footprint” verified by independent third parties and 22% saying that they planned to do so within five years.
  5. Awareness is on the rise regarding the scarcity of natural resources. 76% of respondents said that they anticipate their company’s core business objectives to be affected by natural resource shortages in the next three to five years.
  6. Rankings and ratings matter to company executives. Despite complaints about the barrage of surveys and questionnaires from customers, NGOs, investor groups, analysts and the media – as many as 300 a year according to a GreenBiz survey – 55% of respondents said that actively responding to ratings questionnaires -- like the Carbon Disclosure Project – is a primary means of communicating with stakeholders about their sustainability efforts.

The report goes on to recommend six action steps that can be taken to address these trends.

If you have any ideas of how companies can capitalize on these trends, let me know here.

P.S. Did you know that American Express committed to reducing our carbon footprint by 10% over the five year period between 2006 and 2012? Check out our Corporate Responsibility Update for 2011 [pdf] to track our results through 2010.


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