Most CEOs say environmental sustainability is important but that belief isn’t reflected in how much time or attention they spend on the subject, according to Bain & Company.
The consultants argue the lack of current and comprehensive data on company efforts and difficulty measuring the ROI of sustainability investments are two of the factors that mean sustainability isn’t getting the attention it deserves.
A new briefing from Bain & Company titled, Memo to CEOs: Break Your Inertia on Sustainability, states there’s a mismatch between CEO concerns and their priorities.
According to Bain, nearly half of all environmental sustainability programs are considered failures by the companies deploying them—and the failure rate is increasing over time as programs become more ambitious.
“If you look at where CEOs spend their time, environmental sustainability ranks low—much lower than you might expect, given the importance leaders place on it (see Figure 1). Too often, CEOs find themselves in a reactive mode, addressing environmental issues only when an issue threatens to create public relations problems or limit business performance,” the authors write.
“Rarely is the topic of greening your business the most urgent issue of the day. Waiting for that day will leave CEOs in a reactive stance.”
The need to reduce a company’s environmental impact is being driven by three cohorts: consumers who demand greater accountability from corporations, employees and future talent who want to work for companies that share their values, and investors who are backing businesses that can thrive in a low carbon economy.
The memo identifies a number of hurdles including a lack of data to make smart decisions and difficulty measuring the outcomes.
“Today CEOs might receive a quarterly scorecard from an executive charged with all of these issues, rather than getting continuous and executable information on this one—which seems out of sync with the elevated prominence the topic requires in many corporations,” the authors write.
Moving into a proactive role requires an ongoing focus on environmental sustainability by clearing defining goals and appointing a data-driven leader to lead the charge.
“In some ways, a sustainability transformation is like a cost transformation, requiring a defined ambition, a data-driven assessment of the current state, identification of opportunities and priorities, and a well-executed change program. Taking these steps can help CEOs break the inertia that hampers so many environmental sustainability programs, and implement lasting change,” the authors write.