Sustainability may sound like yet another corporate buzz word, the latest fad in a long line of management fads. But sustainability is serious business. A new standard of performance that measures the social, environmental, and economic effects of business activities—the so-called "triple bottom line"—it can mean the difference between a company’s long term success or failure.
Alas, few corporations recognise the links between sustainability, reputation, and financial performance. However, without a sustainability risk management program in place, companies are flirting with disaster. A major misstep or miscalculation on triple-bottom-line issues can ruin reputations, jeopardise corporate financial integrity, and imperil relationships with customers, investors, and the banks.
The good news is that 2005 was an encouraging year for the sustainability investing market. Increasing investor demand—from retail to institutional asset owners—for this strategy was observed across the globe. At the same time, companies worldwide moved sustainability up their agenda to use it as a key source of competitive advantage.
These were among the finding in this, the third
Sustainability yearbook, published by PricewaterhouseCoopers and the SAM Group, an independent asset management company headquartered in Zurich, Switzerland. As the report clearly shows, a corporate sustainability assessment conducted by SAM in 2005 perceived an improvement in sustainability performance across all sectors: Companies are converging in first generation sustainability themes like corporate governance, and transparency and accountability along the whole supply chain are increasingly visible through policies and control mechanisms.
However, the Sustainability Yearbook 2006 also demonstrates that, despite these encouraging developments, substantial room for progress remains. In addition to examining major risk and compliance (GRC) issues—as well as ways in which GRC can be linked to performance—the study also demonstrates how companies can deploy a structured GRC approach, and utilise key enablers.
Along with this guidance on how to develop an integrated view of governance, the Yearbook also provides a critical overview of the status of sustainability practices in a wide range of industries, from aerospace & defense, automobiles, banking, biotechnology, and chemicals, to computer services & internet, financial services, telecommunications, healthcare, transportation, oil & gas, pharmaceuticals, travel & tourism, and utilities.
Fielding a vast amount of data, and focused case studies, the report clearly shows that sustainability is a viable business approach for companies because it encourages growth and therefore enhances their competitive position, i.e., sustainable companies are an attractive investment because they offer superior returns in the form of more sustainable shareholder value creation.
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