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Accenture Outlook Can Business Do Well by Doing Good Sustainability

Accenture Outlook Can Business Do Well by Doing Good Sustainability

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Published by John Whitehurst

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Published by: John Whitehurst on Oct 22, 2010
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The journal of high-performance business
Sustainability
Can business do wellby doing good?
By Bruno Berthon, David J. Abood and Peter Lacy
 Yes, but not until basic sustainability practices are fully integratedinto the way business is done, both strategically and operation-ally. For that to happen, five major obstacles must be overcome.
This article originally appearedin the October 2010 issue of 
 
2
Outlook 2010
Number 3
Today, there probably isn’t a com-pany anywhere in the world thatdoes not at least acknowledge theimportance of sustainability—of do-ing business in an environmentallyand socially responsible way.Indeed, for many companies,sustainability is now as much of astrategic priority as such traditionalbusiness concerns as technology,talent and customers. The commit-ment to sustainability has weatheredthe storm of the downturn well; insome cases, it has even been strength-ened by it. Meanwhile, an emergingbody of research suggests that sus-tainable business practices correlateclosely with high performance.On an operational level, however,sustainability is not yet seamlesslywoven into the fabric of business.Executives still must make, almostdaily, difcult trade-offs betweenpractices that meet short-termbusiness needs and those that willcontribute to sustaining the needsof future generations. A new research study from Accen-ture, in partnership with the UnitedNations, captures the dilemma of the world’s CEOs, who are caughtbetween the long-term perspectiveof sustainability and the near-termpressures of the bottom line.* This conict can be seen on another level as well: Investments insustainability today are seldomreected in next quarter’s earningsannouncement. This misalignment,which is, of course, a function of basic nancial performance analysis,must be reconciled before sus-tainability can be integrated andembedded in operations—that is,before sustainability becomes atruly integral part of what it meansto be a high-performance business. According to the Accenture–UNresearch, 93 percent of CEOssurveyed globally see sustainabilityas important to their companies’future success. Across a number of parameters, corporate commitmentto sustainability has increased sincethe last time a similar CEO surveywas conducted in 2007.
Sustainability and performance
Such commitment is also beingrewarded in terms of businessperformance. Accenture Sustainabil-ity Services, in conjunction withthe company’s Institute for HighPerformance, recently compared thebusiness performance and sustain-ability performance data of a repre-sentative cross-industry group of 275companies from the Fortune Global1,000. The research found that the50 companies ranked highest insustainability leadership (based onexternal factors such as inclusionin commonly used sustainabilityindexes or adherence to voluntarysustainability agreements) alsooutperformed their peers in terms of shareholder returns.Specically, the 50 sustainabilityleaders:
Outperformed the bottom-per-forming 50 companies in three- year total return to shareholdersby 16 percentage points, andoutperformed the middle groupof 50 average sustainability peersby 6 percentage points.
Exceeded their bottom- and mid-dle-50 peers in ve-year share-
* “A New Era of Sustainability: UN Global Compact-Accenture CEO Study 2010.” The United NationsGlobal Compact—a policy platform and a practical framework for companies that are committedto sustainability and responsible business practices—administers a survey of its CEO members every twoyears. The latest report, conducted in collaboration with Accenture, was based on an online survey of 766 Global Compact CEOs and more than 100 in-depth interviews with member executives, civil societyleaders, external experts and UN Global Compact board members.
 
3
Outlook 2010
Number 3
Still, the correlation between sustain-ability investments and performanceis promising, and it shows thatsome companies committed tosustainable business practices arethriving in the marketplace.The global economic downturnhas had a variety of effects onsustainable business practices. Onthe positive side, nancial duresshas actually focused companies moreintensely on the business value of sus-tainability: 74 percent of executivesin the Accenture–UN survey said thatthe downturn has led their companyto align sustainability more closelywith core business goals, such as costreduction and revenue growth. At the same time, however, com-panies must confront the publicperception that business itself isholder returns by an even moreimpressive margin—38 and 21percentage points, respectively.To be sure, these are correlationsrather than clear evidence of causal-ity. In other words, the link betweensustainability and high performancehas not yet been solidly established.This may be due to another facthighlighted by the Accenture–UNresearch: Businesses and nancialanalysts have not yet gured outa standardized way of valuing,in today’s terms, a company’s sus-tainability investments since thosereturns may not be evident for years.Nor are there agreed-to methodsfor valuing products and servicesin such fast-growing sustainability-related areas as clean energy, water conservation or waste management.
Source: United Nations Global Compact CEO Survey 2010 (based on 766 completed responses)
These issues should be fully embedded intothe strategy and operations of a company
96%72%
Boards should discuss and act on these issues
9369
These issues should be fully embedded intothe strategy and operations of subsidiaries
9165
Companies should embed these issues throughtheir global supply chain
8859
Companies should engage in industrycollaborations and multi-stakeholder partnershipsto address development goals
7856
Companies should incorporate these issues intodiscussions with financial analysts
5172
20102007
New mindset
A significant shift in mindset has occurred among CEOs since 2007, with the vast majoritynow believing that sustainability issues should be embedded in core business.
To what extent do you agree with each of the following statementsabout environmental, social and corporate governance issues?Percent of respondents answering “agree” or “strongly agree”

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