Cost management driving sustainable business practices

A survey of 2,500 businesses in 34 economies finds that businesses are being driven towards more socially and environmentally sustainable practices not simply by brand building or altruism, but because it makes good financial sense. The research, from Grant Thornton’s International Business Report (IBR) also shows that an increasing number of companies report on sustainability while a majority now view integrated reporting as best practice.

The IBR reveals that the top driver towards more sustainable business practices globally is cost management, cited by two thirds of respondents (67%), up from 56% in 2011. It is a particularly dominant driver in Latin America (77%, up from 68% in 2011) and North America (76%, up from 45%). The second biggest driver is client/consumer demand (64%), followed by 'because it is the right thing to do' (62%).

Francesca Lagerberg, global leader for tax services at Grant Thornton, commented:

“Our research provides compelling evidence that CSR and broader business objectives are becoming more aligned. The findings suggest that benefits of adopting more environmentally and socially sustainable business practices are becoming ever more tangible, for example through tax relief on charitable activity or lower energy bills due to efficiency measures introduced.

“Strong social and environmental credentials can also create customer loyalty and enhance reputations, which has become increasingly important with the rise of social media. We live in an increasingly digital world characterised by instant customer feedback, so businesses need to be mindful not just of what they are doing, but of how they are doing it. Companies which gain while the local population or environment loses can quickly find demand for their products or services eroding."

According to the IBR, the number one CSR initiative implemented globally over the last 12 months is donating to community causes/charities, cited by 68% of business leaders. Two thirds (65%) said they had participated in community/charity activities, while 65% also said they had improved their energy efficiency or waste management.

Francesca Lagerberg added:

“For business leaders, commercial drivers can no longer be viewed as separate from social or environmental ones. During the lean times of the global financial crisis, cutting costs became the norm – but improving energy efficiency or sourcing local products also makes financial sense when economies are growing. In an ever more crowded and competitive marketplace, we’re seeing businesses use CSR to differentiate themselves and unlock new potential for growth.”

Sustainability reporting on the rise

According to the research from Grant Thornton, at present just under one third (31%) of firms globally report on sustainability initiatives, either combined with financial reports or separately. However, a further quarter (26%) plan to begin reporting externally on sustainability matters in the next five years. And overall, 57% agree that reporting on non-financial matters, such as sustainability, should be combined with financial reporting.

Francesca Lagerberg added:

“Integrated reporting can play an important role in encouraging businesses to demonstrate how they are performing not just financially, but also within the wider social, environmental and economic context. Not only does it offer businesses a more robust assessment of the strength of their operating model but it also better informs the decisions of key stakeholders and investors."

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John Vita, Director, public relations and external affairs, +1 312 602 8955

Dominic King, Editor, gobal research, +44 (0)207 391 9537