UN Global Compact-Accenture CEO Study: Utilities Sector Report

This latest UN Global Compact-Accenture CEO Study indicates that CEOs within the utilities industry already see sustainability as a critical factor in the success of their businesses, in part because of the environmental impact of their operations.

The study identifies current perceptions, and indicates 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, including those in the utilities industry, now see sustainability—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.

• Ninety-two percent of utilities CEOs believe that sustainability issues will be important to the future success of their business.

• Eighty-eight percent of utilities CEOs believe that sustainability issues should be fully integrated into the strategy and operations of a company.

• Fifty-six percent of utilities CEOs cite “brand, trust and reputation” as one of the top three factors driving them to take action on sustainability issues.

• Sixty percent of utilities CEOs identify governments as the most important stakeholder group that will impact the way they manage societal expectations.

• Forty percent of utilities CEOs cite competing strategic priorities as the most significant barrier to embedding sustainability.

• Eighty-four percent of utilities CEOs believe that companies should integrate sustainability through their supply chain; only 64 percent believe that their company has done so.

• Ninety-two percent of utilities CEOs see “accurate valuation by investors” of sustainability as important to reaching a tipping point in sustainability; only 16 percent see investors as an important stakeholder.

• Ninety-two percent of utilities CEOs see climate change as the global development issue most critical to address for the future success of their business.

• Ninety-six percent of utilities CEOs report that their company will employ new technologies to address sustainability issues over the next five years.

The utilities industry arguably occupies a special position in the sustainability debate, at least on environmental issues. As the pressures of emissions reduction and resource constraints directly utilities’ core business, questions of water, waste, environmental pollution and community impact are central to their operations.

In discussing their motivations for taking action on sustainability, utilities CEOs see governments and communities as key stakeholders, suggesting that leading companies see sustainability issues playing a larger role in shaping perceptions; in securing a license to operate; innovate and grow; and in creating a competitive advantage in the marketplace.

Eighty-one percent of utilities CEOs believe that sustainability is fully embedded into the strategy and operations of their companies—as compared with only 50 percent in 2007.

However, challenges still remain:

• Regulatory uncertainty. Utilities executives spoke of the need for greater clarity around the scope of future regulation.

• 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.

• Consumer uncertainty. The effect of environmental impacts on consumer buying patterns remains unclear.

In order to overcome these challenges and accelerate a tipping point in the integration of sustainability into core business, CEOs believe that a number of “must-have” 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:

• Create a clearer and more positive regulatory environment for sustainability.

• 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.

• Actively shape consumer and customer awareness, attitudes and needs.

CEOs of the world’s leading companies are willing to step up to the challenges ahead, and they recognize that—as the Global Compact celebrates its 10th anniversary—this is “the end of the beginning” and not “the beginning of the end” in the transition to a new era of sustainability.