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How Corporate Sustainability Impacts Enterprise and Stock Valuations

Sustainability: The Next Value Driver for the Enterprise

Both CEO’s and Board Members perceive Sustainability to be of importance to their company’s future success.  According to a 2010 survey by the United Nations Global Compact CEO Survey,

 

93% of CEO’s see Sustainability issues as important to their company’s future success.  Yet, 44% of CEO’s feel that it will take 5-10 years and 26% believe it will take 10-15 years to embed sustainability into the enterprise and only 10% believe they can do it in less than 5 Years.

 

 

74% recited that the economic downturn of the past few years has led their company to align sustainability planning more closely with their core business model and value. CEO’s anticipate a new generation of leadership with concerted efforts to shape a corporate culture that is supportive of sustainability goals, in turn strengthening the corporate brand. Trust and reputation are also strong incentives for taking action on sustainability issues, followed by revenue growth and cost reductions.

 

 

91% of CEO’s stated their company will employ new technologies like renewable energy and energy efficiency, while 96% stated they believe sustainability issues need to be fully intergraded into the corporate strategy and operations of the enterprise.

 

Barriers that prevent Board Members and the CEO from implementing Sustainability issues include

 

 

 

  • The complexity of implementing strategy across the enterprise
  • Lack of recognition from the financial markets
  • Failure to recognize a link to value added and value drivers

 

Factors that will drive Sustainability to be fully embedded within the core business

 

 

 

  • Boards of Directors hold management accountable for sustainability objectives
  • Consumers demand products and service that address sustainability
    • Potential for revenue growth and cost reduction
    • Greater value placed on a company’s sustainability activity by shareholders, investors and stakeholders
    • Merging of sustainability and financial metrics in reporting that accurately portrays its long term investment value

    CEO’s, Board Members and Investor Relations Officers looking to differentiate the enterprise from their peers and add value to the enterprise can take the lead by pioneering implementation of sustainability programs.
    Joseph Scime 716-430-6809