John Davies writes in GreenBiz.com about a new report just released by Ernst & Young which presents a disconcerting paradox when it comes to corporate sustainability efforts. Namely that while more companies are concerned about increased risk and proximity of natural resource shortages, corporate risk response appears to be inadequate to address the scope and scale of some of these challenges. We reprint his article with links to the full report here with his permission.
Has sustainability become a risky business?
A new report released by Ernst & Young presents a disconcerting paradox when it comes to corporate sustainability efforts.
While more companies are concerned about increased risk and proximity of natural resource shortages, corporate risk response appears to be inadequate to address the scope and scale of some of these challenges.
The free report looks at six corporate sustainability trends with a strong focus on the internal influencers of corporate performance (CEOs and boards), as well as external forces ranging from governments to shareholders and investors.
The findings of the study were based primarily on a survey conducted late last year by GreenBiz Group of our roughly 3,600-member GreenBiz Intelligence Panel, consisting of executives and thought leaders in corporate environmental strategy and performance. The report analyzed the results from 282 respondents from 17 sectors employed by companies with annual revenue greater than $1 billion, mostly U.S.-based.
One key finding of the report is how the sustainability focus in a growing number of companies is moving from eco-efficiency efforts to a discussion concerning risk reduction and mitigation. As with other sustainability and CSR issues, language is critical and sustainability executives need to learn how to translate the issues they are tracking into the language of enterprise risk management (ERM).
I have written over the years about how the sustainability executive’s job is to be the chief translation officer. Nowhere will this be more important than in helping the chief risk officer and CFO understand the importance of sustainability issues when it comes to long-term resiliency planning. Conversely, risk officers will need to help sustainability executives understand their tools and approaches.
According to the report, the survey found 79 percent of respondents said that sustainability risks are incorporated into their enterprise risk management framework, but only three in 10 companies said they had run scenario analyses and 36 percent said they had no plans to do so. This is revealing when considering that slightly more than half (51 percent) of those surveyed anticipate their company’s core business objectives to be affected by natural resource shortages (such as water, energy, forest products and rare earth minerals/metals) in the next three to five years.
* Full text available here.
# # #
About the author:
John Davies is vice president and senior analyst at GreenBiz Group, heading up independent research regarding green strategies and business operations and the sustainability profession. Davies also leads the GreenBiz Executive Network, a member-based, peer-to-peer learning forum for sustainability professionals.