New international research from the Carbon Trust shows business not prepared for global resource crunch.
10 December 2012
The leaders of listed companies remain unprepared for the effects of dwindling natural resources, according to new research from the Carbon Trust.
The study, amongst 475 senior executives in Brazil, China, Korea, UK and USA, shows that many are not prepared to look at the issue of resource shortages now and believe they will not need to make significant changes in their business operations to combat resource scarcity until 2018. Most consumer-facing companies predict that they will only need to take action within the next ten to 15 years at the earliest, meaning they may not have plans in place until 2025.
This inaction was found to be widespread, with 43% of organisations surveyed stating that they do not monitor the risks to their business of environmentally-related shocks such as energy price rises and environmental disasters.
Over a half (52%) have not set targets for managing the reduction of carbon, water or waste.
This could be related to the fact that a half (47%) of executives believe that acting on sustainability issues such as these decreases profits - and only 13% of board directors are remunerated for achieving sustainability metrics. However, when resource constraints become a reality, 60% of organisations think the cost of their products and services will need to increase, 55% that they will need to engage in fewer markets and 43% that they will deliver a less varied service or product offering.
Tom Delay, Chief Executive, Carbon Trust, says, "The research shows that many organisations are 'asleep at the wheel' when it comes to addressing sustainability and resource scarcity, doing nothing to address a problem they indicate could hit their operations by 2018. Too often businesses see taking action on resource and sustainability issues as an obligation and a cost. We know from our extensive work on carbon that good management of resources can lead to new commercial opportunities and thriving businesses. Currently, many organisations seem to accept that they will have to make significant changes to their business because of resource scarcity, and that these changes could impact their profits. But many are sleepwalking into a resource crunch."
There is, however, a silver-lining for companies in the UK, who are currently best placed to deal with a resource constrained world. They spend the most on sustainability and are the most likely to have a programme with targets and reporting practices in place. They are also the most confident that there is a business case for managing and reducing carbon emissions, water and waste. Brazilian companies are the least likely to have a sustainability programme, with 51% saying they do not currently have one, compared to 13% in the UK. A key reason for this is investment, as 76% of the companies questioned in Brazil state they cannot afford the investment required, compared to 31% across all countries surveyed.
Delay continues, "UK listed companies are better placed than most for the upcoming resource crunch - could this mean that despite the current shift in the world economic order the UK will gain commercial opportunities as competitors in other markets struggle to cope in a resource-constrained world?"
The study also reveals a wide chasm between business-to-business and consumer-facing organisations' approaches to sustainability and when they expect to feel the impact of resource constraint. While consumer-facing companies estimate that on average this will be in ten years time, those in "B2B" organisations predict they will need to take action in four years. Given this split on the urgency to take action, it is perhaps unsurprising that 54% of consumer-facing organisations surveyed do not have a sustainability programme, compared to just 19% of "B2B" companies. A third (33%) of consumer-facing companies admit that they have no plans to introduce a sustainability programme at all.
Across all organisations surveyed, it appears that sustainability is a long way off from being embedded within the boardroom. The sustainability buck stops with the board in only 4% of organisations surveyed. A quarter (25%) of respondents even state that no one is responsible or accountable for sustainability within the company.
Vanson Bourne conducted the survey by telephone with 475 C-level executives from a variety of functions within a wide-ranging number of industries. Interviews were conducted during October 2012.
Vanson Bourne, a specialist research-led consultancy, carries out quantifiable user research delivering robust and credible research-based analysis. The company interviews senior decision makers from a variety of functions, across a whole range of industries, in organisations from the smallest to the largest, in markets around the globe. Vanson Bourne's clients range from start-ups to well-known companies.
The Carbon Trust is an independent company with a mission to accelerate the move to a sustainable, low carbon economy. The Carbon Trust: