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CEOs Reveal Their 2017 Sustainability Priorities

Some companies would like nothing better than to have the federal environmental restrictions that are cutting into their bottom line loosened. Yet customers and employees want companies to be more sustainable or they will go elsewhere. So whom does a CEO listen to?

GettyImages-637060248-compressorSome companies would like nothing better than to have the federal environmental restrictions that are cutting into their bottom line loosened. Yet customers and employees want companies to be more sustainable or they will go elsewhere. So whom does a CEO listen to?

A recent survey gauged over 500 CEOs about sustainability issues. Executives from across the globe shed light on the top sustainability challenges facing their companies in 2017, and the steps they plan on taking to meet them.

For sustainability advocates, the findings represent a mix of cheer, disappointment and everything in between. The following 4 areas stood out in the survey. The first two hit the mark and the concluding two represent missed opportunities.

“Integrating sustainability into the firm’s corporate branding and marketing strategy came in as the top 2017 sustainability action for CEOs worldwide, and at No. 3 for U.S. CEOs.

1. Branding and marketing. Integrating sustainability into the firm’s corporate branding and marketing strategy came in as the top 2017 sustainability action for CEOs worldwide, and at No. 3 for U.S. CEOs. In this case, no news is good news. The measure has scored high ever since 2011, when the annual survey first featured it. The sentiment comes amid increasing consumer demand for more environmentally and socially responsible goods. For example, data and measurement company Nielsen recently found that 66% of consumers would pay more for sustainable brands—up from 50% in 2013. Businesses that have yet to enact a robust sustainability-focused branding and marketing strategy should consider following suit.

2. Talent recruitment. As America’s labor market tightens, so does the premium companies place on recruiting and retaining talent. In fact, the survey finds that “failure to attract/retain top talent” is the top hot-button issue for U.S. CEOs. It may very well be why, at No. 6, U.S. CEOs place “emphasize sustainability values and brand in talent recruiting.” Worldwide, CEOs rank this at No. 11—further down the list, but an increase from where it came in last year, at No. 13. This increase signals that CEOs are paying attention to the positive impact a strong sustainability brand can have on a company’s ability to attract and retain talent. Research from Cone Communications, for example, found that two-thirds of millennials say they refuse to work for a company that lacks strong corporate responsibility commitments.

3. Innovation. U.S. CEOs place innovation—specifically, “commit innovation/R&D efforts to build a portfolio of sustainable products/services,” at a discouraging No. 10. But business executives in Asia and Europe rank the commitment much higher, at No. 2 and No. 3, respectively, acknowledging that sustainability not only builds trust and reputation, but also is an important driver of growth.

A gap this big may hinder America’s future competitiveness, given the rising demand for sustainable products and services. In just the past year, sales of consumer goods from sustainably committed brands have grown more than 4%; those without such commitment grew less than 1%. What’s more, the push by U.S. CEOs toward integrating sustainability into branding and marketing needs to be accompanied by a commitment to innovation. Whether your business comprises 5 or 5,000 employees, its success partly depends on making innovation a priority.

4. Boardroom engagement. Worldwide, many CEOs fall short in making the connection between board engagement and sustainability leadership. Coming in dead last, at No. 20, is “strengthen board oversight of sustainability issues/risk.” U.S. executives rank it at No. 17.

This represents a significant corporate blind spot. Research finds that an actively engaged board serves as a key pillar of sustainability leadership. Companies looking to better engage their board on this front should ensure their boards spend adequate time discussing sustainability issues. This can be done by ensuring sustainability oversight is formally assigned to the board (to the full board, to an existing committee, or to a dedicated sustainability committee) and by appointing board members with relevant expertise.

About Thomas Singer

Thomas Singer
Thomas Singer is principal researcher in Corporate Leadership at The Conference Board.