CHAPTER 1
CEO Study on Sustainability

An excellent report called "The UN Global Compact-Accenture CEO Study on Sustainability 2013, Architects of a Better World" is one of the world's largest CEO studies on sustainability to date. It had more than 1,000 top executives from 27 industries across 103 countries discuss a new global architecture for businesses contributing to global priorities.

Peter Lacy, CEO Study Lead and Managing Director of Accenture Strategy & Sustainability Asia Pacific, outlined in the introduction that sustainability has become established on the leadership agenda of almost every leading business.

He wrote that "This year is a unique opportunity to take stock as we stand at a crossroads in the global economy. Business leaders are committed to leading the way, but will require greater ambition and wider support as they work to align sustainability impact with value creation, and markets with sustainable development outcomes, such that business leaders can truly become the architects of a better world."1

Refocus of Business Leaders-Top Priorities

Business leaders are refocusing, and the report shows that two thirds of responding CEOs outlined the following top three priorities for the future success of their business:

1. Growth and employment: 64 percent
2. Education: 40 percent
3. Energy: 39 percent

Link between Sustainability and Business Value

CEOs were asked as part of the study, what barriers they had to further progress in embedding sustainability into their organization. CEOs saw one factor arising more than any other over the past decade: the lack of a link between sustainability and business value. CEOs are clear that action must be justified against traditional measures of success.1

The report lists two areas for the agenda for action:

1. Government intervention to align public policy with sustainability at global, national, and local levels, including hard measures on regulations, standards, and taxation
2. Company sharing, to learn from others who are already leading the way, harnessing sustainability as an opportunity for innovation and growth, and delivering business value and sustainability impact at scale

United Nations Global Compact: The Ten Principles-Understanding Their Scope of Sustainability

Throughout the report, the term sustainability encompasses environmental, social, and corporate governance. The ten principles the United Nations Global Compact asks companies to embrace, support, and enact within their sphere of influence are as follows:

Human Rights

• Principle 1: Businesses should support and respect the internationally proclaimed human rights.
• Principle 2: Make sure that they are not complicit in human rights abuses.

Labour

• Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining.
• Principle 4: The elimination of all forms of forced and compulsory labor.
• Principle 5: The effective abolition of child labour.
• Principle 6: The elimination of discrimination in respect of employment and occupation.

Environment

• Principle 7: Businesses should support a precautionary approach to environmental challenges.
• Principle 8: Undertake initiatives to promote greater environmental responsibility.
• Principle 9: Encourage the development and diffusion of environmentally friendly technologies.

Anti-Corruption

• Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

Seven Steps to Sustainability

From the research and analysis done, the report outlined, as follows, that leaders are approaching sustainability differently. CEOs see seven key themes that guide their thinking and actions, which transform strategies, business models, value chains, and industries in order to achieve leadership in sustainability and high performance.

• Step 1: Realism and context-understanding the scale of the challenge and the opportunity.
• Step 2: Growth and differentiation-turning sustainability to advantage and value creation.
• Step 3: Value and performance-"what gets measured gets managed;" quantifying the value of sustainability initiatives, more sustainable business models, track impact on communities.
• Step 4: Technology and innovation-new models for success; investment in renewables, intelligent infrastructure enabled by machine-to-machine communication, closed-loop business models, innovative R&D, cloud computing, analytics, etc.
• Step 5: Partnerships and collaboration-new challenges, new solutions; close partnerships with governments, policymakers, industry peers, consumers, and NGOs.
• Step 6: Engagement and dialogue-broadening the conversation; two-way dialogue-engaging stakeholders (consumers and local communities, regulators and policy makers, investors and shareholders, employees and labor unions) to negotiate role of business in addressing global challenges.
• Step 7: Advocacy and leadership-shaping future systems; collaborative solutions with governments and other stakeholders; business leaders' advocacy and public commitment is integral to progress.

Will the pace of change address the global challenges to be able to support a population of nine billion by 2050? Time will tell.

CEOs on Sustainability

The report shows that business leaders are successful in making the case for sustainability within their organizations.

• Eighty-four percent of CEOs report that it is discussed and acted on at the board level.
• Seventy-eight percent of CEOs see sustainability as an opportunity for growth and innovation.
• Eighty percent see it as a route to competitive advantage in the industry.

The importance of sustainability can vary from industry to industry; see Table 1.1

TABLE 1.1 CEOs' Perception of the Importance of Sustainability Varies by Industry

* Based on 1,000 completed responses.

Source: UNGC-Accenture CEO Study 2013.

Siemens is one company outlined in the report. It has achieved strong growth throughout the downturn through a focus on innovative technologies in clean energy (offshore wind turbines), enabling customers to cut CO2 emissions worldwide and develop intelligent infrastructure.

CEO Learnings2

You will not be judged anymore only by the top line or bottom line results in your company. You will increasingly be judged by the contributions that you will make to society.

Paul Polman, Unilever

The world is more complex, and risks are more interconnected; but a complex world is an opportunity, if you can deal with its complexity.

Martin Senn, Zurich Insurance Group

We measure our success not by the profit we make, but by the difference we make.

Bob Collymore, Safaricom Ltd.

The role of every company is to be a positive force in society: you have to focus on creating value, creating success, and if you look from the perspective of the long term then in going about your business you should engage with society positively.

Carlos Brito, Anheuser-Busch InBev

There is a natural evolution in the investment community towards sustainability, corporate governance and transparency: these will soon become normal parts of the investor discussion.

Federico Ghizzoni, UniCredit

To accelerate progress on sustainability, we need governments to recognize the role of business as a solution in providing growth and innovation.

Sir Andrew Witty, GlaxoSmithKline

Assess & Reflect #1

HOW IMPORTANT ARE SUSTAINABILITY ISSUES TO THE FUTURE SUCCESS OF YOUR BUSINESS?

Assess & Reflect...