CEO survey on Sustainability

Date: 12-02-2008
Source: PR Newswire

A new global survey of 1,254 senior business executives, including more than 300 CEOs, shows that energy efficiency plays a central role in corporate sustainability efforts -- a finding that has implications for how companies manage their real estate. Fifty-two percent of all respondents named energy efficiency as one of their leading sustainability priorities, a goal that is addressed primarily or solely through real estate strategies.

The survey, conducted by the Economist Intelligence Unit (EIU), was co-sponsored by global real estate services firm Jones Lang LaSalle and seven other leading companies from different industries: A.T. Kearney, Bank of America, ExxonMobil, Orange, PricewaterhouseCoopers, SAP and SunGard. The overall report, issued by the EIU today, sheds light on the growing importance of corporate sustainability in enabling companies to compete and to attract customers. While the survey did not focus specifically on real estate topics, 46 percent of respondents selected one of three real estate strategies as the number-one sustainability priority from a list of 10 possible priorities.

"CEOs and other corporate officers are very focused on improving sustainability, but they may not realize the major impact their real estate departments can make in achieving their goals," said Dan Probst, Chairman, global environmental sustainability board at Jones Lang LaSalle. "As this study shows, the path to sustainability often starts with real estate and facility strategies."

Specifically, the EIU survey found:
-- 33 percent of senior executives ranked "improving energy efficiency
across global operations" as a major priority, and 19 percent ranked it
as the leading priority.
-- 36 percent ranked "improving the local environment around operating
facilities" as a major priority, and 14 percent ranked it as the
leading priority.
-- 26 percent ranked "reducing greenhouse gas emissions and/or
waste/pollutants as a major priority, and 13 percent ranked it as the
top priority. Buildings are responsible for nearly three quarters of a
company's total GHG emissions, excluding manufacturing.

The full findings of the EIU study are a topic under discussion today at a sustainability conference in New York City hosted by EIU, and a similar event in London on February 26. Colin Dyer, CEO of Jones Lang LaSalle, is a featured speaker at both events, discussing the corporate response to environmental sustainability.

Communication is Key

The "leading priority" selected by the most CEOs is also addressed through real estate operations, albeit less obviously. Thirty-seven percent ranked "communicating performance on sustainability to investors and stakeholders" as a major priority, and 24 percent ranked it as the leading priority. Responses to another question show that 36 percent of CEOs view "difficulty in developing targets, measures and controls required to entrench sustainable priorities within the organization" as a leading barrier to progress in sustainability.

As the leading global facility management firm with proprietary tools in place to measure and report progress in portfolio-wide energy and sustainability initiative, Jones Lang LaSalle helps some of the world's largest companies meet the challenge of gathering, analyzing and reporting information on energy and water usage, greenhouse gas emissions and other environmental impacts.

Business Case for Sustainability

The EIU study also revealed reasons why a focus on sustainability makes good business sense. EIU found that global companies that have delivered strong share price growth over the past three years are more proactive on corporate sustainability issues than those that have seen their share price stagnate or decline. Companies in the survey that have seen their share price performance grow by at least 50 percent in the last three years (share price climbers) place a higher importance on social and environmental goals than companies with share prices that have declined by more than 10 percent (share price losers).

A majority of executives (57 percent) said the benefits of pursuing sustainability outweigh the costs. Although more than 80 percent expect a minimal benefit to profitability. They believe sustainable practices can reduce costs (particularly energy expenditure), open up new markets and improve their company's reputation.

Senior executives acknowledged difficulty in executing on sustainability goals, implementing an average of just 4.8 policies out of a list of 16, EIU found. In addition, more executives reported poor performance than good performance on individual areas of sustainability.

"The results of this research show that most companies are still working out what sustainability means for their business, and how to implement it," says Robin Bew, Editorial Director of the Economist Intelligence Unit. "At a basic level, a lack of consensus on what the topic encompasses results in an absence of relevant targets."