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Majority of CEOs Agree That Sustainability Holds Value to Businesses, Yet Few Are Measuring ROI

06/04/2018 By

CEOs increasingly agree that sustainability holds value to businesses, but quantifying that value remains a challenge. A slight majority of business professionals believe that sustainability drives both revenue and savings for their businesses, but only 30% measure the ROI of their sustainability initiatives.

These are some of the findings from the Ethical Corporation’s fourth annual Responsible Business Trends report. This year, more than 1,500 global business professionals took part in the survey, the majority based in Europe and North America.

Overall, business professionals are cautiously optimistic about the value of sustainability. For instance, the percentage of respondents who say that sustainability drives revenue has steadily increased over the last several years. In 2018, this figure was 56%, up from 54% in 2017 and 49% in 2015.

The percentage of respondents who do not know whether sustainability drives revenue has fallen, but it remains significant, at 18%. This suggests that sustainability initiatives need improved tracking and metrics.

As for whether sustainability drives savings, the share of respondents who agree has remained around two-thirds since 2015.

But if the opinion of the CEO is any indicator, the perceived importance of sustainability to the business is steadily growing. This year, three-quarters of the respondents say that their CEO is convinced of the value of sustainability, up from 69% in 2015. The share of respondents who are unsure of whether their CEO values sustainability has also fallen, to 16% from 22% in 2016.

Yet another interesting finding from the 2018 report is that the goal of driving sustainable innovation across the business ranks high, with 71% of respondents indicating that it is a “very important” or “extremely important” issue for their business.

Source: Responsible Business Trends Report 2018

The need for better tracking and metrics is further supported by the fact that only 45% of the respondents are confident they are accurately measuring the effect of their sustainability efforts. When it comes to ROI, 58% say that their organizations do not measure for it, whereas 12% are unsure of whether they do.

However, there is some interesting regional variation when it comes to measuring ROI. As the graphic below shows, North America-based respondents are much more likely to report that they measure the ROI of their sustainability initiatives.

Source: Responsible Business Trends Report 2018

Another interesting regional difference arises in the alignment of business strategy with the UN’s Sustainable Development Goals (SDGs). Overall, 69% say that their businesses are integrating the SDGs into their own sustainability strategy, up from 60% in 2017 and 46% in 2016. Broken down by region, 76% of Asia-Pacific-based respondents and 74% of Europe-based respondents say that they are using the SDGs, in contrast to 61% of North America-based respondents.

Among those who are not integrating the SDGs into corporate strategy, about half say they plan to do so in the future, while the rest are uncertain.

The majority of those who are integrating the SDGs either are just starting to map out where the goals fit into their strategy or are in the midst of integrating them. Only 12% say that the SDGs are integrated across departments, with clear goals set.

When it comes to the particular SDG that is most salient to businesses, there is not much geographical variation. Sixty-five percent of respondents across the globe say that their businesses are working towards the SDG on climate action. Other top cited goals are decent work and economic growth (60%); responsible consumption and production (57%); and good health and well-being (57%).

What is worrying, however, is that only 44% of respondents say that their companies are measuring their contributions to the SDGs, with North America-based respondents reporting the lowest rates (64% are not measuring their impact towards the goals). This suggests that companies may be more interested in using SDGs as a marketing tool and are less willing to put in the work to demonstrate that they are truly making progress.