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October 16, 2013

High-Profile CEO Survey Signals a Shift in Sustainability Strategy

Climatographer Team

This blog post was originally published by Dr. Mark C. Trexler in Greenbiz.com, Oct. 09, 2013.

The U.N. Global Compact and Accenture have just released their third CEO Study on Sustainability. Several blogs and headlines have zeroed in one statement in the report: “CEOs are unequivocal in their belief that the global economy is not on the right track — and that business is not doing enough to address global sustainability challenges.”

That is probably what one would expect to hear from a self-selected group of CEOs that already seems on board with a sustainability agenda by virtue of having signed the U.N. Global Compact. So is the 2013 CEO Survey, released Sept. 19, just another rallying cry to do better? Not at all.

When you dig into the report, the situation is more complex:

  • Only 10 percent of CEOs “strongly disagreed” with the statement that the global economy is on the right path, although 47 percent “disagreed or strongly disagreed.” I’m not sure that’s “unequivocal,” although admittedly only 32 percent “agreed or strongly agreed.” A full 21 percent had no opinion. Perhaps we should ask them why they signed the U.N. Global Compact?
  • Thirty-three percent agreed or strongly agreed with the statement that global business is doing enough to address sustainability issues, and 29 percent had no opinion. Only 5 percent strongly disagreed.

The report is full of numbers; my point is that it’s difficult to come away from the numbers with a sense that the CEOs are unequivocal about almost anything.

The report puts forward a lot of confusing and counterintuitive conclusions. For example:

  • “Growth” consistently was identified as the biggest sustainability challenge facing CEOs around the world, inevitably raising the question of what they had in mind for the meaning of “sustainability.”
  • Investors are almost insignificant in pushing corporate sustainability (not a conclusion you’d pick up from the investor relations literature).
  • “Short-termism” among investors and financial markets is supposedly not a significant barrier to corporate sustainability efforts. I find this a striking conclusion; if you asked most people in the environmental and climate change space, I think they would identify short-termism as one of the biggest barriers.

One can’t read too much into these assertions without better understanding what the CEOs understood sustainability to mean, among other questions; they are striking assertions nonetheless. But the report’s real importance can be summarized in this paragraph:

There is strong and vocal support among CEOs for governments to play a leading role in shaping the landscape for sustainability at global, national and local levels: 83 percent of CEOs see an increase in efforts by governments and policymakers to provide an enabling environment for the private sector as integral to advancing sustainability. … Business leaders believe that only with greater government intervention — at global, national and local levels — can sustainability move from sporadic incremental advances to a collective and transformative impact. … The transition toward companies promoting sustainability through the business case promised a new era of market solutions to global challenges, but in the face of limited progress business leaders are beginning to express doubts over the potential for greater scale and speed without active government intervention.

If true, this conclusion appears to signal the demise of the dominant sustainability paradigm we’ve been living with for many years. We’ve been bombarded with the notion that “if governments won’t solve the problem, it’s up to business,” and flooded with inspiring but anecdotal corporate stories about how much progress they’re making, how much money they’re saving with energy efficiency and how strong the business case for sustainability is to them.

What the Global Compact CEOs seem to be saying is that they increasingly realize that they can’t really influence global outcomes given their current business environment. No matter how much they might be trying, how much progress they believe they’re making at the company level and how much money they’re saving from efficiency measures, it’s not going to change the end-game.

This perhaps should not be surprising in a world where un-priced externalities such as carbon emissions fundamentally distort the economic playing field, where investors still don’t seem to care (according to the Global Compact CEOs) and where sustainability ranks well down the list of priorities for consumers. But it’s a conclusion that runs entirely contrary to much of the “sustainability frame” that dominates today.

What’s important about the 2013 CEO Study on Sustainability is that it has put on the table recognition from a large group of CEOs that we need public policy to help enable the kinds of sustainability efforts that those CEOs want to pursue. They sound willing to fight the good fight, but like salmon swimming upstream, at some point you realize there’s no way around the dam of today’s economic and policy infrastructure.

This should be big news for many sustainability constituencies, and for other constituencies more specifically focused on environmental topics such as climate change. Can these various constituencies respond to the cry for help from the U.N. Global Compact CEOs and find ways to work together toward the kinds of policies we need?

I don’t want to suggest that there is any single answer to problems facing us today when it comes to climate change, biodiversity loss and the range of social and economic challenges that also rank high on environmental and social agendas. But it could be that a large group of influential CEOs is willing to work to advance policy action in a much more aggressive way than in the past. Can we figure out whether they’re serious, and if so, make some real progress?

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Climatographer Team

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