Organisations today are increasingly recognising the benefit of focusing on environmental and social responsibility as a strategic objective. IBM's 2009 survey of 224 business leaders worldwide shows that three quarters of respondents in Western Europe believe corporate social responsibility (CSR) has increased in importance over the past year. In fact, many major UK companies are investing in campaigns to drive ethical brands and business practices into the mainstream; some have been more vocal about their commitment to CSR, and particularly, how going greener makes good financial sense.
To be sustainable, businesses are now embracing a relatively new objective: optimising their operations to minimise environmental impact and improve social outcomes in a manner that also maximises performance. This approach is gaining momentum, especially in Western Europe where more than two-thirds of organisations we surveyed focus on CSR as part of an integrated business strategy to grow new revenue streams and control costs.
As a result, they face an entirely new set of decisions. Can they cut down on waste without increasing the price of products? Do they need to rethink distribution options to reduce carbon dioxide emissions and the impact of volatile energy prices? Should they segment products and services to meet a growing number of consumer sustainability concerns?
Challenges abound in addressing these issues, especially in accessing the information needed to meet these new strategic objectives. Overall, organisations have intensified efforts to collect information about their operations in areas from sustainable procurement to ethical labour standards. However, many are still missing - by a wide margin - the information they need to operate as a sustainable enterprise.
Organisations that outperform competitors have proven to be far better at casting a wide net for information across their ecosystems. They are also collecting information that is more relevant to understanding and meeting the performance challenges of operating in a sustainable manner. What's holding other organisations back? There are some very real obstacles.
The optimisation gap
We surveyed leaders on three information areas related to sustainability: operations, supply chain and customers. Our results indicate that operational information needs to be timelier, supply chain information is still too insular and more customer information is needed.
Operational information: Growing but not always timely
Four in ten of the business leaders surveyed reported that over the last three years they have increased the amount of information they collect about their operations in each of eight sustainability areas we tracked: energy management, carbon management, waste management, water management, sustainable procurement, product composition, ethical labour standards and product lifecycle.
Not surprisingly, the biggest increase in the amount of information collected is in energy, where just under two-thirds of respondents report increases. In Western Europe, roughly a quarter collect carbon and water management data from suppliers, and over half of business leaders collect data from suppliers on ethical labour standards. In the UK, energy data collected is very likely to increase thanks to the Government's commitment to fit 26 million UK homes with a smart meter by 2020. This will enable homeowners to monitor their energy usage and the government estimates that it could save customers and energy companies £2.5bn-£3.6bn over the next 20 years.