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This latest UN Global Compact-Accenture CEO Study indicates that sustainability is increasingly regarded as a key success factor by CEOs within the automotive industry. The study identifies current perceptions, and identifies the challenges that still need to be overcome.
Since the last UN Global Compact CEO study in 2007, CEOs’ views on sustainability have undergone a fundamental change. Business leaders worldwide, particularly in the automotive industry, now see sustainability—defined by those environmental, social and governance issues covered by the UN Global Compact’s 10 Principles—as central to their business.
Nearly 1,000 CEOs, business leaders, members of civil society and academic experts have contributed to what is the largest CEO survey on sustainability of its kind. The global geographic and industry coverage of contributing CEOs further provided unique insights into the challenges and opportunities of the coming decade.
One hundred percent of automotive CEOs believe that sustainability issues will be critical to the future success of their business.
Ninety-five percent of automotive CEOs believe that sustainability issues should be fully integrated into the strategy and operations of a company.
Seventy-one percent of automotive CEOs cite “brand, trust and reputation” as one of the top three factors driving them to take action on sustainability issues.
Sixty-seven percent of automotive CEOs identify consumers as the most important stakeholder group that will impact the way they manage societal expectations.
Seventy-six percent of automotive CEOs cite competing strategic priorities as one of the most significant barrier to embedding sustainability.
Eighty-six percent of automotive CEOs believe that companies should integrate sustainability through their supply chain; only 57 percent believe that their company has done so.
Ninety-five percent of automotive CEOs see “accurate valuation by investors” of sustainability as important to reaching a tipping point in sustainability.
Eighty-six percent of automotive CEOs see education as the global development issue most critical to address for the future success of their business.
One hundred percent of automotive CEOs report that their company will employ new technologies to address sustainability issues over the next five years.
CEOs within the automotive industry are beginning to see sustainability as a top-line opportunity. It has moved from a moral obligation and is now considered as an opportunity for cost reduction, revenue growth, risk management, innovation, brand value and other intangibles. As competition in the industry becomes fierce, sustainability is starting to play a key role across many business functions and processes, and appears to be the new competitive battleground.
There are many macro forces in play contributing to the changing industry dynamics. Trends such as resource scarcity (leading to rising fuel prices), technological innovation, rising urbanization, changing demographics, new consumer attitudes toward ‘mobility’, increased regulation, intense competition (and more) are starting to create a market environment where sustainability will become a key component for success in the industry.
However, the transition needed for the automotive industry to become truly sustainable through the development of alternative power-train technologies is far more complex. This is creating much anxiety and uncertainty, and is leading to a fundamental shift in how the industry approaches sustainability.
Regulatory uncertainty. Automotive executives spoke of the need for greater clarity around the scope of future regulation.
Technological uncertainty. Managing the innovation of multiple new technologies is complex, especially as their evolutionary path remains unclear.
Consumer uncertainty. The effect of environmental impacts on consumer buying patterns remains unclear.
Investor uncertainty. Many CEOs believe that investors are not supportive of corporate efforts to create value through sustainability, and are failing to factor performance on sustainability issues into valuation models.
To overcome marketplace and economic challenges and accelerate a tipping point in the integration of sustainability into core business, CEOs believe that a number of essential conditions need to be put in place. Businesses need to take a leadership role to bring them about, often in collaboration with wider stakeholders such as the UN Global Compact:
Actively shape consumer and customer awareness, attitudes and needs.
Implement new types of industry and cross-sector collaboration to overcome structural challenges and create a more positive regulatory environment.
Generate new knowledge, skills and mindsets for sustainable development.
Lead the creation of an investment environment more favorable to sustainable business.
Embed new concepts of value and performance at the organizational and individual levels.
Automotive CEOs, along with their peers from all industries around the world, are willing to step up to the challenges ahead. They recognize that—as the Global Compact celebrates its 10th anniversary—our current period is "the end of the beginning" and not "the beginning of the end" in the transition to a new era of sustainability.
May 22, 2011
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