A new survey from KPMG reflects a surprising change in CEO views on sustainability/ESG initiatives: expectations for a return on program expense.
“… 55% of CEOs reported that they expect to see ‘significant returns’ from their sustainability investments in 3-5 years, with 19% anticipating significant returns as soon as 1-3 years. Another 25% expect a longer period, predicting 5-7 years… The survey also assessed CEOs’ key priority areas for their sustainability efforts, with Operations emerging as the top focus area, cited by 42% of respondents, followed by Products at 24%..”
In past years, executives tended to treat ESG initiatives differently from other business activities. Viewed through the lens of reputation, brand, responding to investor requests, “values” and other intangible benefits, CEOs gave ESG/sustainability a pass when it came to ROI. This was actually counterproductive as it allowed ESG/sustainability to operate “outside the business” – not playing by the same rules as every other business activity/function. Many corporate practitioners became too comfortable with this.
The change in executive expectations means that CSOs and staff have to explain (or calculate) the fruits of their labor in traditional business terms, so they too must change how they look at their efforts. Fortunately, that isn’t anything new to us. We frequently blog on the matter, including our “occasional series” on simplifying the ESG business case (see Part 1, 2 and 3 – with Part 4 coming this week). We have other detailed resources available specifically to help determine and communicate hard dollar business value of ESG/sustainability endeavors – such as Guidebooks on communicating ESG value and ESG risk reduction. If you aren’t a PracticalESG.com member with access to this and other resources, sign up now and take advantage of our no-risk “100-Day Promise” – during the first 100 days as an activated member, you may cancel for any reason and receive a full refund.
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