Perceived Link Between Sustainability Efforts and Long-Term Profitability Remains Strong

Many companies are committed to policies to ensure environmental, social and governance sustainability – but a growing minority remain sceptical about their benefits, according to a new report from the Economist Intelligence Unit (EIU).

While the perceived link between sustainability efforts and long-term profitability remains strong at 66%, the report also shows an increasing minority of business managers who do not believe there is a link between sustainability and long-term financial performance. This is up to 11% - an increase from 6% in a similar survey carried out in 2011. 

More managers also say they are facing “sustainability obstacles” to embedding sustainability principles in their businesses, with 52% saying immediate financial goals take precedence over long-term sustainability.

The survey shows that more managers now understand the wider importance of sustainability and are stepping up their efforts to embed sustainability principles into their strategies. The increased willingness to act could stem in part from tightening regulation in the environmental, social and governance spheres.

Amid growing regulation, 20% of firms now publish sustainability goals and performance at least once a year, similar to the 18% who reported doing so in 2011, while 15% of survey respondents state that they regularly publish an integrated report combining financial and sustainability results, up from 11% in 2011.

The results from developing economies show an increase in reporting, with 24% of such companies now publishing sustainability reports, compared with 19% two years ago.

While 28% of respondents are dissatisfied with their existing environmental, social and governance sustainability strategies, 32% doubt that these strategies will stand the test of time. Almost two-thirds (63%) of firms say they are reviewing new strategies or business models to ensure long-term sustainability.

In efforts to ensure their long-term sustainability, a small number of firms are considering alternative business models, such as the concept of creating shared value, which aims to identify business opportunities that address social issues, creating value for the firm and for society around it.

For now, uptake of the shared value approach remains low. While 21% of managers say they have drawn up new strategies or business models with a specific focus on creating shared value, 16% say they have not reviewed the case for shared value and do not intend to do so.

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