Sustainability Strategy Increasingly Important to the C Suite

Sustainability is seen as increasingly important to overall corporate strategy by company leaders according to a 2014 global survey done by McKinsey & Company: Sustainability’s Strategic Worth.  McKinsey & Co surveyed over 3,300 executives worldwide covering the full spectrum of industries, company sizes, and executive levels.  The survey revealed that 43% of executives say their companies’ primary motivation for pursuing sustainability is alignment with company goals, mission or values.  This is a significant change from the last survey in 2012 where cost cutting was identified as the primary motivation.

McKinsey #1

Though the top three reasons for addressing sustainability have stayed the same since the survey began in 2010 the order has changed.  One reason cited in the McKinsey & Co. report for alignment rising to the top is the increasing likelihood of CEOs to identify sustainability as a top priority.  Between 2012 and 2014 the number of CEOs identifying sustainability as the number one priority more than doubled.

Another explanation for the rise of alignment as a motivator may be that many companies have already pursued, or at least adopted, cost cutting programs and they are looking for the next opportunity to grow company value through sustainability.  This is consistent with another major finding of the survey:

executives see reputation management as having the highest value
creation potential over the next five years

Where cost cutting could reasonably be pursued through delegation to an operational or procurement function; value creation through reputation management requires a deeper integration with corporate mission, goals, marketing, branding, etc., hence the focus on alignment.

Driving home the potential of sustainability reputation management to create corporate value is the findings of a survey commissioned by Gibbs-rbb Strategic Communications and completed by Harris Poll in August of this year.  One of the key findings:

Americans are willing to spend an extra 31% per week on safe and
sustainably produced grocery food

The ability to consistently capture this premium from consumers requires active reputation management and enhancement as the poll also found that consumers are likely to switch from a trusted consumer brand if they learned the company was:

  • Involved in product recalls – 77%
  • Practices that harm animal welfare – 73%
  • Irresponsible labor practices – 72%

The full results of the survey including demographics breakdowns can be found in the Gibbs-rbb 2014 Conscious Consumer Study.