PwC on Sustainability

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August 2014

Value Any Way You Slice It: Financial value from Economic, Environmental and Social Initiatives

Sustainability and corporate responsibility practitioners believe that doing good is also good business, but the test is being able to demonstrate results in a way that resonates with leaders and other stakeholders. This continues to be a challenge. However, progress is being made that can help bridge that gap. Yes, there’s plenty of recent research from academia showing the correlation between corporate responsibility and financial results, but this isn’t always persuasive about what your company should do.

New tools and techniques are available to help companies place a dollar value on the indirect benefits achieved through environmental/social programs, and finally, rising investor interest in sustainability data is helping more "doubters" realize that sustainability is increasingly being viewed as an indicator of performance and quality.

At the recent GMA/FMI Sustainability Summit, thought leaders from the investment, corporate sustainability, academic and standard setting worlds got together for a panel discussion about what’s working and what’s not.

Some of the top-level take-aways:

  • Financial stakeholders need us to express the sustainability benefits in conventional financial terms like contribution to revenue growth, margin improvement, risk reduction, recruitment and retention, and brand;
  • Preliminary results from recent research indicates that most people tend to doubt the financial benefits of a project or strategy more when they are told that it also has benefits to society;
  • Corporate financial disclosure on environmental and social risks has grown and there are a number of strong examples in the SEC filings of sustainability leaders;
  • Companies that are explicitly including indirect benefits such as brand and relations with policy makers in their decision-making even when they don’t have quantification, like the results; and,
  • Integrating sustainability benefits in the customer value proposition gives you the opportunity to test its incremental value and claim credit when it figures into customers’ decisions.

For sustainability executives, arming yourself with both the financial and non-financial benefits of your programs, is key to having effective conversations with your counterparts in the finance department so they can understand the trade-offs of decision-making on sustainability funding.

Read more about PwC's perspective on sustainability valuation.


 

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