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Sustainability gives competitive advantage

Anuradha Shukla | Nov. 5, 2014
Investors see commercial benefit but struggle to embed it in their investment process.

Eighty-eight percent of investors believe sustainability gives an opportunity for competitive advantage, according to a new study by the Principles for Responsible Investment.

78 percent of investors see it as a differentiator in determining industry leaders but despite this belief, investors find it challenging to embed analysis of sustainability in their investment process.

91 percent said that sustainability should be better embedded into discussions between companies and investors.

88 percent agreed that they should pay greater attention to sustainability in company valuations.

"The Investor Study: Insights from PRI Signatories," was co-written by Accenture and conducted as a companion study to the September 2013 UN Global Compact-Accenture CEO Study on Sustainability.

"This study points to the realities regarding common misconceptions on the critical role that sustainability plays on both sides of the company-investor dynamic," said Georg Kell, UN Global Compact executive director. "Indeed good work is already underway to address many of these misconceptions and to better align companies and investors on matters such as sustainability valuation and overcoming a short-term approach to financial decision making."

Sustainability measurement
74 percent of business leaders said their company measures both positive and negative impacts of their activities on sustainability outcomes.

Only 17 percent of investors believe this to be the case for the companies in which they invest.

47 percent of CEOs said that they routinely incorporate sustainability issues into discussions with financial analysts. In contrast, only 27 percent of investors reported such an experience.

Helene Winch, director of Policy and Research at the PRI notes that the real impact in embedding sustainability into global markets will depend on closer engagement, a sustained focus on materiality and business value, and a commitment to the long-term.

"Our research exposes a striking gap between CEOs and investors on sustainability. Both parties clearly believe that sustainability is critical to success, but are not communicating effectively," said Peter Lacy, managing director, Accenture Sustainability Services.

Lacy advises business leaders to get better at setting out how sustainability can generate new opportunities in new markets.

Real change in global markets can also be brought about if investors build the skills of their people in understanding and assessing sustainability.

Governments should also give investors the regulatory landscape they need to invest for the long-term.


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