An increasing number of chief executives recognises that sustainability is one of the main challenges they face over the coming years, a new survey among 3,000 CEOs said.
The pressure on CEOs is not coming from consumers and policy makers, but from board members and investors, said the study, conducted in 40 countries and 28 industries by the IBM Institute for Business Value (IBV), a think tank by tech and consultancy firm IBM.
Investor resistance emerged as the least important factor that CEOs consider when it comes to identifying obstacles to becoming more sustainable. The main obstacles were unclear business benefits, a lack of suitable data, and regulatory and technological barriers.
The survey results hold relevance for the asset management community as fund managers are increasingly required to report on the sustainability impact of their portfolios, especially when it comes to ESG and impact funds. Companies in which they invest are not yet required to disclose the effects of their business in terms of sustainability but will be so required over the course of the coming years.
‘Strong pressure from investors’
While almost 60 percent of CEOs feel strong pressure from investors, only a quarter say their sustainability efforts make it easier to raise capital, the survey showed.
The IBV study described four types of CEOs when it comes to sustainability. CEOs who make sustainability investments solely to meet compliance and regulatory requirements view investors, together with customers and employees, as “obstacles rather than enablers” in their sustainability pursuits. This type accounts for about 29 percent of the total.
The bulk of CEOS, or about 43 percent, are those who view sustainability as an operational business optimization opportunity. Almost all of these have a strategy in place for their company, although they do not yet partner in their ecosystem and value chains for sustainability.
Transformational CEOs
IBV said about 13 percent of CEOs can be described as “transformational”. They recognize sustainability investments “as revolutionary–a once-in-a-career opportunity to change an organization for the better.” On the other side of the spectrum, there are the “assessing CEOs, 15 percent of the total, who “consider sustainability a challenge, but not a personal responsibility” and their involvement in sustainability initiatives is limited.
One CEO,Felipe Nascimento of Mapfre Seguros, a Brazilian business of a Spanish multinational insurance company, pointed out the potential for investments to drive increased momentum around sustainability. “The more investors choose to direct their investments to companies focused on sustainability, the more accelerated the transition will be.”