Leadership
Report:
Sustainability Leaders Gaining Ground in Global Boardrooms

Sustainability leaders have increasing influence over decision-making, strategy and budgets in boardrooms worldwide, according to a new report by analyst firm Verdantix.

The report, Global Survey 2014: Sustainability Budgets And Priorities, is based on interviews with senior sustainability decision-makers and budget-holders from 260 firms with revenues between $250 million and over $20 billion. The heads of sustainability were from 13 territories: Australia, Brazil, Canada, China, France, Germany, India, Mexico, the Middle East, Russia, South Africa, the U.K. and the U.S. Respondents’ firms spanned 21 industries covering business and financial services, consumer services, energy and basic resources, manufacturing, and retail and consumer products.

CEOs increasingly recognize sustainability impacts financial performance, the report shows. Some 28 percent of CEOs consider sustainability as factors that already impact quarterly and annual financial performance. As many as 92 percent of sustainability leaders report directly to the CEO or another member of the executive committee.

Although few sustainability leaders point to large budget increases, the report reveals sustainability spending across entire organizations is typically up to ten times larger than the sustainability team’s budget, with over two-thirds expecting corporate-wide spending growth. Chief Sustainability Officers (CSO) work with dramatically different budgets; some 65 percent own budgets of up to $2.5 million, 26 percent have budgets between $2.5 million and $15 million and 5 percent have over $15 million. Four percent have no budget at all.

Firms favor spending sustainability dollars on employees, with 28 percent of budgets invested in them. Improving EH&S, energy and sustainability reporting are also top priorities—over 90 percent of respondents cite improvements in health and safety, energy and environmental management as “very important” or “important”.

Notably, 80 percent of firms already publish sustainability reports, but only 39 percent pay for external assurance of their entire sustainability or integrated report.

The Verdantix report meshes with a separate report released recently by The Weinreb Group, which found CSOs have expanded their responsibilities from internal program managers to strategic lynchpins who guide corporate strategy, identify product innovation opportunities, and orchestrate sustainability initiatives both inside and outside the company.

Although there are encouraging pockets of sustainability leadership in the U.S. business community, far too many companies are only taking small, incremental steps to address pressing sustainability issues that could impact their bottom lines and the future of our planet and economy, according to a report released earlier this year by Ceres and Sustainalytics. Chief among these sustainability issues are climate change and human rights.

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