Managing for sustainability is an Economist Intelligence Unit report that discusses why firms are embracing sustainable practices, how companies are embedding corporate social responsibility into their businesses, and how they are gauging and reporting their success. The research was sponsored by ENEL. The Economist Intelligence Unit bears sole responsibility for the content of this report. The findings and views expressed in the report do not necessarily reflect the views of the sponsor.

The paper, based on a survey of over 200 senior executives in the areas of sustainability, corporate social responsibility and finance—as well as ten in-depth interviews with corporate executives, academics and industry experts—documents leading companies' progress towards sustainability goals. The research examines the ways they are embedding sustainability across the enterprise; how firms are involving their supply chains in the effort; how management is measuring progress towards sustainability goals; and how companies are presenting progress to outside stakeholders.

Here are the key findings:

Executives increasingly see opportunity in sustainability. Fully 87% of respondents agree that sustainability will become more important over the next three years. Of these, 46% strongly agree. While sustainability represents a risk for some executives, others see opportunity.

The link between sustainability and profitability remains unclear. Just 24% of respondents agree that there is a strong link between financial performance and commitment to sustainability in the short term. However, 69% say they consider the link strong in the long term.

The poor business climate creates an obstacle to pursuing sustainability. Thirty-four percent of respondents say that their firms' immediate financial goals are a more pressing priority than sustainability. Unsurprisingly, this represents the leading obstacle to embracing sustainability. Lack of consensus and clarity are also obstacles. Executives report including sustainability in a variety of corporate functions, including supply chain relationships (29%), improving energy efficiency (38%), educating employees on sustainability (32%) and engaging employees in sustainability-related activities (30%). Fifty-four percent of respondents report that their sustainability efforts have been led by senior management, which may explain the wide reach of such initiatives.

Cash incentives are not widespread—but are growing. Employee recognition programmes are the most widespread employee incentive, cited by 38% of respondents. Just 18% of firms link pay to sustainability indicators, but anecdotal evidence suggests that this practice is growing among leading companies.

Only around one-half of companies report progress in sustainability. Only 49% of respondents report progress in meeting their environmental sustainability goals. Slightly over one-half (53%) report their progress on meeting social sustainability goals. Nonetheless, executives at leading firms agree that stating goals and reporting progress towards those goals are essential in embracing sustainability.

Sustainability can lead to new strategies and improve image. Among the areas of sustainability, respondents tend to emphasise creating codes of ethics (51%) and promoting environmental protection (50%). For executives, such practices can pave the way for new corporate strategies—including selling green products—as well as improve the corporate image.