Businesses are starting to adopt more socially and environmentally sustainable practices not simply as result of brand building or altruism, but because it makes good financial sense, although UK companies still identify stakeholder pressure as the dominant factor, according to research by Grant Thornton (GT)
The survey of 2,500 businesses in 34 economies for its International Business Report (IBR) found that an increasing number of companies report on sustainability while a majority now view integrated reporting as best practice.
Two thirds (67%) of respondents identify cost management as the top driver towards more sustainable business practices globally, up from 56% in 2011. It is a particularly dominant driver in Latin America (77%, up from 68% in 2011) and North America (76%, up from 45%).
The second biggest driver is client/consumer demand (64%), followed by because it is the 'right thing to do’ (62%).
In contrast in the UK, businesses cited client/consumer demand (62%) as the main driver behind their CSR efforts, followed by recruitment/staff retention (49%) and cost management (48%).
Jane Stevensen, GT’s director of sustainability, said: ‘The findings suggest that the benefits of adopting more environmentally and socially sustainable business practices are becoming ever more tangible, for example through tax relief on charitable activity or lower energy bills due to efficiency measures introduced.
'Despite the overall recognition of cost benefits, it's interesting to see that British businesses seem far more reactive in their approach to CSR and are largely responding to stakeholders' needs.’
This may be why UK businesses lead the way internationally on public demonstrations of their sustainability efforts. According to the IBR, the number one CSR initiative implemented over the last 12 months is donating to community causes/charities, cited by 68% of business leaders globally and 80% of UK business leaders.
Nearly three quarter (73%) of UK businesses said they had participated in community/charity activities, while the global response was 65%. Similarly, 75% of UK companies also said they had improved their energy efficiency or waste management compared to 65% globally.
GT’s research found that just under one third (31%) of firms globally currently report on sustainability initiatives, either combined with financial reports or separately. In the UK, only one quarter (24%) of businesses stated they report on sustainable initiatives.
However, a further quarter (26%) of international businesses plan to begin reporting externally on sustainability matters in the next five years (31% in the UK).
Overall, 57% globally agree that reporting on non-financial matters, such as sustainability, should be combined with financial reporting, whereas in the UK, only 46% agreed.
Stevensen said: ‘Effective reporting and more integrated thinking can play an important role in encouraging businesses to demonstrate how they are performing not just financially, but also within the wider social, environmental and economic context.
'Not only does it offer businesses a more robust assessment of the strength of their operating model but it also better informs the decisions of key stakeholders and investors.’
