Survey Shows Disconnect Between the Strategic Value and Measurement of Sustainability Initiatives

OAK BROOK, Ill., Dec. 8 /PRNewswire/ -- A recent survey of corporate sustainability leaders shows that while sustainability initiatives are seen as having significant strategic value to organizations, the reporting on these initiatives is challenging. The survey found that 72 percent of respondents believed that boards of directors place a high priority on sustainability and 74 percent say their organizations link their sustainability initiatives to company strategy. However, more than half of the respondents also said they thought measurement for the initiatives was lacking.

The findings are based on a survey co-sponsored by Crowe Horwath LLP, one of the largest public accounting and consulting firms in the U.S., and the Center for Business Excellence (CBE) at Miami University's Farmer School of Business. Of the survey's 178 respondents, 40 percent had annual revenues above $1 billion, while 60 percent were below $1 billion.

"While executives and boards understand that sustainability initiatives offer opportunities for long-term value, supporting those initiatives is difficult if they are unable to convey to shareholders and stakeholders exactly how the initiatives create such value," said Brian Ballou, co-director of the CBE.

The survey identified multiple challenges in sustainability reporting, including:

  • Inability to sufficiently measure sustainability initiatives
  • Insufficient resources
  • Inconsistent or unclear definitions
  • Lack of a standard verification process

Even with these challenges, more than eight out of 10 survey respondents issue sustainability reports designed to enhance their reputations with the public, customers, employees and suppliers. Nearly seven out of 10 organizations report their sustainability initiatives publicly.

More than 50 percent of the respondents said their sustainability initiatives have led to operational efficiencies, but only 12 percent said that sustainability is fully embedded in the strategic actions and decision-making processes of the organization. "The survey shows us that many organizations have real opportunities to strengthen the ties between sustainability initiatives and the overall governance of the organization," said Gregg Anderson, a director with Crowe Horwath.

"Reporting sustainability measures and issuing qualitative disclosures without a sufficient link to how these activities lead to long-term value creates a risk of efforts being perceived as 'greenwashing'," added CBE co-director Dan Heitger. Some companies, Heitger said, may focus more on the marketing of "green" activities rather than implementing business strategy and practices that improve the long-term viability of the environment and society.

Exacerbating the greenwashing risk is the finding that 48 percent of organizations do not have an independent review of the information presented in their sustainability reports. "Without an independent review, stakeholders may be skeptical about the relevance and reliability of the information provided, making them unwilling to use the information for decision making," said Anderson.

Even with the economic downturn, nearly seven out of 10 organizations do not expect a decrease in annual spending on sustainability initiatives. "An increased emphasis on understanding how these initiatives tie to the overall corporate strategy could lead to enhanced long-term value to shareholders and stakeholders," added Anderson.

About Crowe Horwath

Crowe Horwath LLP (www.crowehorwath.com) is one of the largest public accounting and consulting firms in the United States. Under its core purpose of "Building Value with Values®," Crowe assists public and private company clients in reaching their goals through audit, tax, risk and consulting services. With 25 offices and 2,500 personnel, Crowe is recognized by many organizations as one of the country's best places to work. Crowe serves clients worldwide as an independent member of Crowe Horwath International, one of the largest networks in the world, consisting of more than 140 independent accounting and management consulting firms with offices in more than 400 cities around the world.

About Miami University's Center for Business Excellence

The Center for Business Excellence (www.fsb.muohio.edu/cbe) is an interdisciplinary center that brings together professionals, academics, and students to study, discuss, and advance issues associated with corporate governance, enterprise risk management, and sustainability. The vision of the Center is to create generations of leaders focused on long-term organizational value. The mission of the Center is to improve organizational decision making through a stakeholder management framework that integrates integrity, leadership, and transparency.

SOURCE Crowe Horwath LLP



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