Executives See a Strategic Role for Sustainability

“Company leaders are rallying behind sustainability, and executives overall believe the issue is increasingly important to their companies’ strategy,” according to a new McKinsey Global Survey.

“But as it continues to grow into a core business issue, challenges to capturing its full value lie ahead. These are among the key findings from our most recent McKinsey survey on the topic,1 which asked respondents about the actions their companies are taking to address environmental, social, or governance issues, the practices they use to manage sustainability, and the value at stake. One such challenge is reputation management. Year over year, large shares of executives cite reputation as a top reason their companies address sustainability; of the 13 core activities we asked about, they say reputation has the most value potential for their industries. However, many of this year’s respondents say their companies are not pursuing the reputation-building activities that would maximize that financial value.”

Key finding: “According to executives, sustainability is becoming a more strategic and integral part of their businesses. In past surveys, when asked about their companies’ reasons for pursuing sustainability, respondents most often cited cost cutting or reputation management. Now 43 percent (and the largest share) say their companies seek to align sustainability with their overall business goals, mission, or values2 —up from 30 percent who said so in 2012.”

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Also important: “Of 13 core sustainability activities we asked about, executives most often say their companies are reducing energy use in operations (64 percent), reducing waste (63 percent), and managing their corporate reputations for sustainability (59 percent). These actions were cited most often in 2011 and 2012, and a growing share of executives now identifies reputation management as a core activity.”