Development Crossing

Corporate Social Responsibility (CSR) and Sustainability

How Can Sustainability Initiatives Get Meaningful Funding?

These days, most business leaders have had enough media training to think they know what the outside world wants to hear. And right now, sustainability is one box they are sure to tick. Ask a CEO if sustainability is a strategic issue for their firm, and you'll only ever hear one answer: yes.

Why is it, then, that budgets for sustainability initiatives are frequently so small that they appear to have been shoved in as an afterthought? Urgency to get the keyword sustainability out in the open isn't matched by funding, but why not? Is it simply a symbolic business unit, or are businesses genuinely concerned about sustainability?

To find out what's really going on in businesses, you need to get under the skin of corporate sustainability speak. And that's exactly what we did. Instead of asking board members about their firm's sustainability strategies, we sidestepped them altogether.

Who really knows whether or not sustainability is a priority for a business? Those that have sustainability in their job title, or job description. We spoke to 250 sustainability decision-makers from big firms with revenues over $250m (£155m) representing 21 industries and 13 countries. They told us whether or not it is really as high up the business agenda as it seems, what their job entails, where they see sustainability heading in their firm and what their CEO really thinks about the issue. These are some of the things we heard.

Sustainability is important, but not right now

Sustainability isn't as important as keynote speeches might make it appear. Over half of the sustainability decision-makers that we spoke to said their CEO is pushing the topic into the distant future, describing it as a long-term issue, or one that is totally new to their firm. But there's a sense across businesses that this issue isn't going to go away. Over 90% of these same decision-makers claimed that they expect things will change by 2015, as sustainability gathers momentum. Not surprisingly, when pushing a sustainability project forward for funding, decision-makers try to win their CEOs around with the prospect of reduced costs and/or increased revenues – it's the most convincing argument they have in these credit-crunch times.

The money's there, somewhere, but it's not growing

Sustainability might be important, but that doesn't mean that funding reflects this. Nearly 40% of sustainability decision-makers expect their budgets will remain the same in 2013; a handful of respondents even expect them to shrink. And interestingly, a fifth of sustainability decision-makers can't even pinpoint what proportion of global revenues their firm channels into sustainability projects. Why is it so difficult to put into numbers? Because sustainability isn't boxed into one business unit.

An elaborate job description doesn't equal authority

A relatively new item on the corporate agenda, businesses haven't got a blueprint for sustainability's role within their firm. So what sustainability decision-makers do, and the responsibility they're given, varies considerably. But while sustainability leaders told us they set targets and policies, implement projects and measure progress, they're not always fully in charge. We heard that only a fifth of sustainability leaders have full authority over decision-making, and less than a quarter of these leaders have complete control over sustainability budgets. So while the job title might appear impressive, that doesn't mean that they actually have full responsibility for sustainability in their firm.

While executives may well be flaunting sustainability in their words, this doesn't mean they are equally as generous when it comes to budget allocation. The sustainability leaders we spoke to have big ideas and ambitious initiatives; often, their ability to generate results is stifled by a lack of funds and limited authority.

To access the Global Sustainability Leaders Survey click here.

Views: 309

Comment by Henry Klen on January 4, 2013 at 12:53pm

Great insight. I always say: make sure you have your own separate business unit with a P&L. Have a defined marketing budget otherwise you will not get any funding in big corporations.

Comment by Dan Johnson on January 7, 2013 at 12:39pm

do you have any more statistics on the budget sizes for 2013. depending on company size, would be interesting to look at and draw some comparisons.

Comment by Petra Koenvenski on January 9, 2013 at 2:15pm

I still like the old school advice from last year. http://blog.vistage.com/business-strategy-and-management/green-busi...

5 Things To Include In Your Budget. Simple and good.

Comment by Francesca Macnaghten on January 10, 2013 at 8:06am

Thanks for all the comments! @Dan Verdantix Global Sustainability Leaders Survey: Budgets And Priorities report contains more in depth insight and statistics for global sustainability budget sizes in 2013. We have also recently released a short report focusing on Corporate Sustainability Reporting Budgets and Priorities.

Comment by Dan Johnson on January 12, 2013 at 1:09pm

Thank you!

Comment by Jack Brown on January 12, 2013 at 2:10pm

We all should be morally obligated to adopt this system for the next generation. In the end, this will be beneficial in terms of productivity, profit and social awareness. Budgets for sustainabilty decreases in time because it generally involves money. Companies will only realize its return in the long term. Short term, they're not yet ready and willing to shell out more, thus the decrease. Some may even go to the extent of adopting sustainability programs just to show others that they are concerned about the environment but the reality is that they're not. 

Comment by Jeff Peterson on January 15, 2013 at 1:28pm

Sustainability investment can yield massive direct and indirect benefits. Easiest ones to measure and connect to revenue are probably energy and waste management and couple other ones. Harder ones are well-being, moral… If you want to increase your budget, you have to start slow. CEO and executives don’t like big ticket items, believe me. Start with internally which will save the company, then use it to put a case together to use the savings for your budget. Keep expanding over the years and soon you will see, people will think differently, CSR and sustainability moves from outside of the core business into the inner circle and soon to be included in stratgies. BUT and this is a big but you have to be patient, people don’t like change unless it is slow and smooth.  

Comment by Anthony Robinson on January 19, 2013 at 4:37pm

I think one of the central problems still is the definition of Sustainability.  A lot of people don't really have a clear idea of what it is or how to apply or quantify it.  It is something we are working on in the Academic field, where we examine the principles and foundations of it to derive a working definition that makes sense to scientists and financial analysts.  Waste reduction is still Job#1.

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