Majority of U.S. Companies Report Progress in Adopting Sustainability Strategy; More Programs Expected, Says KPMG Survey

Customers, Branding Drive Adoption; Significant Reporting Challenges Remain

Apr 18, 2011, 00:01 ET from KPMG LLP

NEW YORK, April 18, 2011 /PRNewswire/ -- Nearly 55 percent of U.S. executives say their organization has a formal sustainability strategy in place, according to the recent KPMG International study, Corporate Sustainability: A progress report. Another 12 percent say they are working on a strategy and an additional 19 percent expect to eventually develop a formal plan.  

The findings also confirm that U.S. companies are closing the gap with their counterparts elsewhere. More than 62 percent of executives globally say they have implemented a formal sustainability program, according to the study, which was released in connection with the launch of the new KPMG Global Center of Excellence in Climate Change & Sustainability, based in the Netherlands.

"These results are encouraging and we see highly focused companies continuing to make progress in developing and implementing sustainability strategies that they say result in greater profitability and efficiency," said John R. Hickox, who leads KPMG's Climate Change & Sustainability (CC&S) practice in the Americas.

"Many others remain challenged, however, as to what issues or measures they should use for reporting their environmental health, safety and corporate social responsibility program results to stakeholders – and how to utilize those metrics to transform their business operations," Hickox said.

The KPMG study also found that the drivers behind most sustainability programs – in this country and elsewhere -- have been customer influence and brand enhancement, while challenges included how to determine and measure program metrics, obtaining reliable internal sustainability data, and meeting a variety of reporting requirements.

The study suggests that many companies are finding strategic advantages in embracing and implementing a comprehensive, cohesive sustainability program.  Asked to identify the top three benefits from their sustainability program, the respondents most often chose: better or more efficient business processes and practices; increased profitability or shareholder value; and the ability to attract or retain new or existing customers.

"Leading companies that have embedded sustainability programming and reporting into their processes and culture are finding ways to leverage their investment to cut costs, and meet regulatory and customer expectations," Hickox said. "It is all about believing in the transformative benefits that thinking differently can bring to a company, its culture and its bottom-line results."

When asked to identify the key business drivers for implementing sustainability-related business objectives within their companies, the U.S.  executives cited enhancing brand reputation (37 percent), regulatory or legal compliance (35 percent), reducing costs (34 percent), product or service differentiation (24 percent), and increasing profitability and managing sustainability risks (both 23 percent). Other business drivers included: customer retention (20 percent), staying competitive (15 percent), generating shareholder value (13 percent), and recruitment and employee retention (8 percent).

Nevertheless, implementing and maintaining sustainability programs is not easy. Survey respondents said their organizations grapple with how to determine and measure program metrics, with 41 percent of the executives saying that determining meaningful benchmarks for peer-to-peer comparisons was a moderate challenge, and 32 percent indicating it was a major challenge.

In addition, the study found that creating or finding reliable internal data related to sustainability was cited most often by respondents as a challenge, with 59 percent of respondents saying it was a moderate challenge and 18 percent saying it was a major challenge.  Meeting the reporting requirements of a variety of stakeholders was the next most challenging aspect of sustainability reporting, with 46 percent saying it was a moderate challenge and 27 percent labeling it a major challenge.

More than 43 percent of the U.S. respondents also said that it was difficult to overcome organizational focus on other programs that provide more readily measureable short-term financial benefits.

Other survey findings included:

  • Identifying the top three most influential stakeholders of a sustainability strategy, U.S. respondents said their customers (47 percent), their employees (34 percent), the management team and their board of directors (34 percent), regulators (29 percent), competitors (20 percent), business or supply chain partners (17 percent) and their investors (16 percent).

  • Companies have made "improving the corporate environmental footprint of products and services" a moderate (40 percent) or high (38 percent) priority in the next 12 months.  

  • Organizations planning a sustainability program expect to implement one within the next two years (61 percent) or 3-5 years (22 percent), while 17 percent say they have no timetable. Less than 6 percent of the respondents believe their companies do not need a sustainability strategy.

Yvo de Boer, Special Global Adviser for KPMG's CC&S practice and former Executive Secretary of the United Nations Framework Convention on Climate Change, pointed to the advances made at the December U.N.-led talks in Cancun, Mexico, in setting up systems that will help business effectively address sustainability issues.

"Creation of an international body to ensure technology improvements are spread as widely as possible, agreement on the future of market-based mechanisms to limit emissions, and plans implemented for new funding for climate change programs are critical steps forward," de Boer said. "We must work to ensure the details of these initiatives develop."

The survey, conducted in October, polled 378 senior executives, 86 from the United States, representing a range of industries across North America, Asia Pacific, Europe, the Middle East, Africa and Latin America.

About KPMG Climate Change & Sustainability Services 

KPMG Climate Change & Sustainability Services is a global team comprising over 700 member-firm professionals who work in the field of climate change and sustainability - offering advisory, tax and assurance services to both public and private sector organizations.

KPMG's Global Center of Excellence for Climate Change & Sustainability, based in Amsterdam, leverages the services and talent provided by the KPMG global network of member firms, and supports and accelerates KPMG's service development to help clients better understand the complex and evolving business environment risks and opportunities relating to CC&S. Activities will include thought leadership, knowledge management, business development and leading and/or supporting the delivery of engagements for key public and private sector clients around the globe.

About KPMG International

KPMG is a global network of professional firms providing Audit, Tax and Advisory services.  We operate in 150 countries and have 138,000 people working in member firms around the world.  The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

About KPMG LLP

KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the U.S. member firm of KPMG International Cooperative ("KPMG International.")  KPMG International's member firms have 138,000 professionals, including more than 7,900 partners, in 150 countries.

Contact:

Bob Wade


KPMG LLP


201-307-7482



SOURCE KPMG LLP



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