Six Sustainability Trends to Watch in 2012
A whole year has passed since we published our 2011 Sustainability Trends to Watch. Now, it’s time to look at the important issues regarding sustainability reporting in 2012. Although many of the trends from last year still hold true, this year we anticipate seeing more of the following:
1. Return on Investment in Sustainability Initaitives
Although sustainability- and CSR-related initiatives have long been thought of as non-financial, the truth is quite the opposite. Capital investments in projects that increase energy efficiency and/or develop on-site renewable energy, along with publication of a CSR report, can positively influence a company’s bottom line.
The increased awareness that “corporate responsibility (CR) reporting enhances financial value” was a key finding of KPMG’s International Corporate Responsibility Reporting Survey 2011. The survey found that for companies reporting on sustainability, financial value comes from two sources: direct cost savings and enhanced reputation in the market. Further information on sustainability reporting and return on investment can be found in a recent article published by Addison.
Of particular interest in the KPMG report was how the issues that drive business reporting have changed. In 2008, economic considerations topped the list, with 58 percent of companies considering them a priority. Today only 32 percent identify economic considerations as a major driver, compared with 67 percent that emphasize improving their reputation or brand and 58 percent that cite ethical considerations.
Another study linking sustainability to financial performance is a working paper recently published by Harvard Business School, “The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance.” In examining two comparable sets of firms over an 18-year period, the authors found strong evidence that “the High Sustainability firms significantly outperform the Low Sustainability firms, measured in both accounting and stock market terms.” The study also showed that “High Sustainability firms have a longer-term time horizon, have more long-term investors, and place a greater emphasis on measuring and reporting non-financial information.”
To learn more about Addison's outlook for 2012 and our sustainability practice, please contact: