Short-term profits put corporate sustainability commitments at risk
02 Aug 2010 00:01 
Corporate / Services – Business
O2 study of 500 senior executives finds sustainability is struggling to gain traction in British boardrooms
Sustainability is at risk of dropping off the corporate agenda post-recession with business ditching it in favour of strategies to generate short-term profits and enhance their balance sheet, according to a new report released by O2 today.
With spending still under pressure, Harnessing Change: Preparing for Business in the Next Decade, reveals that the downturn has left British boardrooms deeply divided on the issue. Nearly half (46%) of business and public sector leaders plan to prioritise sustainability over the next two years, but more than a third (36%) admits they will turn away from it. 1 in 3 argues that they don’t have the expertise to quantify and justify its benefits resulting in it failing to fly in boardrooms.
Despite being at odds with sustainability in the short-term, the report finds that corporate commitment to environmentalism has reached a tipping point, with an emerging consensus that sustainability is good for business. Nearly 60% of the senior executives questioned said it will increase market share over the next ten years and almost half (44%) said it will boost profits by making their operations more efficient.
The findings come after warnings from the Committee on Climate Change that the UK is in danger of missing carbon reduction targets, and follows a report for the UN in June that said the downturn had done little to dampen global corporate commitment to sustainability.
Ben Dowd, O2 Business Sales Director, said: “Our report reveals that success and sustainability go together, but UK executives are facing serious barriers to pushing it up the agenda. With budgets under ever increasing scrutiny, sustainability will only gain real traction in Britain when boardrooms have the tools to prove its commercial benefit. Harnessing state of the art technology is the answer with energy monitoring, and expert consultancy just some of the ways that can give British boardrooms the confidence they need to make sustainability part of their profit improvement plans.”
Commissioned by O2 and authored by The Future Laboratory, the report surveyed executives at companies with turnovers between £50 million and £500 million and includes interviews with leading members of the business and academic communities.
Tom Savigar, the report’s author and director of The Future Laboratory, said: “The recession should have prompted all organisations to see opportunities for cost reduction in improving sustainability, but it hasn’t, yet. Sustainability strategies that encompass the environment, governance and society, will come to define growth in the future, but it requires long-term thinking, with the commercial return on investment not realised immediately. There will be those that will be reluctant to take on board a long-termist view; but indecision and hollow sustainability promises will increasingly come under fire from legislators and consumers.”
Notes to Editors:
Additional findings:
- Nearly half (47%) of the 500 senior executives surveyed plan to invest up to 50 per cent more to make their businesses more sustainable over the next decade
- One third of executives aged between 25 and 44 believe improving the sustainability of their organisations is very critical to its success, with those aged 45 to 54 seeing it as critical
- Nearly three quarters of executives said they would drop suppliers with a poor record on sustainability
The report sets out a sustainable path to profit in the next decade:
1. Investment in innovation
5 out of 10 executives (52%) agree that becoming more innovative and investing in research and development is key to becoming more sustainable
Nearly two thirds (62%) would like to spend up to 40% more of their budgets on research and development in the next decade
2. Driving internal advocacy to think long-term
The vast majority (85%) believe that retaining and training existing employees is key to transforming how their organisation behaves
Half (48%) will run high profile education campaigns for staff
3. Investment in new technology
More than three quarters (79%) agree that investment in new technologies will mesh sustainability with core business strategy
A third (31%) will use it to monitor and drive return on investment; a quarter will invest in technology to recalibrate how their organisation operates post-recession
4. Forging stronger ties with local communities
A staggering 9 in 10 (91%) leaders state that collaboration with the public will generate new solutions to sustainability
2 in 5 go a step further and say that smart innovation on climate change will come from consumers
5. Lobbying for more rules and guidance from government
A third of Britain’s largest employers (30%) intend to actively lobby the government for better regulation and better benchmarks on sustainability
20% feel they need to set up NGOs to help promote best practice
About the report
This report is the second in a three-part series commissioned by O2. It investigates how large British organisations across both private and public sectors will adapt to (and capitalise on) rapid, unexpected and sometimes cataclysmic change over the coming decade. The series looks at the following subjects:
Chapter1: the nature of change and need for large organisations to become more efficient
Chapter 2: the case for greater sustainability over and above immediate commercial gain
Chapter 3: the way organisations will become increasingly social (customer- and public-centric)
The reports have been written by The Future Laboratory and Future Poll (The Future Laboratory’s research division). Our project involved a three-step research process: consolidating and analysing desk research; conducting a quantitative survey of senior managers and directors within 500 large British organisations (with a turnover of between £50 million - £500 million); selecting and interviewing experts including academics, authors, and strategists. The quantitative survey and supporting research was conducted in May 2010. Unless otherwise stated, all statistics in this report are from the quantitative survey.
Contributing experts:
James Goodman, Forum for the Future
Tejas Ewing, carbon markets coordinator, New Economics Foundation
Toby Shillito, CR Index and Business Support Director, Business in the Community
Paul Gurney, manager in Accenture's Sustainability Services team and fellow and former lecturer in the International Centre for Corporate Social Responsibility (ICCSR) at the University of Nottingham
Richard Ellis, Head of CSR, Boots
O2’s sustainability credentials
O2 was the first UK mobile operator to be certified with the Carbon Trust Standard, achieving a 15% reduction in energy consumption (relative to turnover) in the past three years, saving £8 million. In October 2009, O2 became one of the largest companies to sign up to the 10:10 climate change initiative.
O2’s parent company, Telefónica, is currently No1 in Telecoms sector (inc Mobile) in Dow Jones Sustainability Index (DJSI).
O2’s new UK Headquarters in Slough have dramatically reduced carbon emissions and cut operating costs while at the same time giving employees a fantastic working environment. Since November 2009, O2 UK has reduced annual CO2 emissions per HQ employee by 53%.
In 2008, O2 installed £1.3 million worth of Smart Meters across some 3,500 retail sites and mobile base stations. The company also installed sub-meters into offices, contact centres and switch sites. This has provided more visibility and control over energy usage. Not only has the use of smart metering reduced energy consumption, it has also proved good business – saving £2.6 million to date.
Last year, O2 held nearly 500 tele-and video-conferences to bring people together without the need for travel and related emissions. This is in addition to the thousands of audio conference calls conducted by its people each year.
O2’s strategy is not just about delivering benefit today. The leading operator is working with Jonathon Porritt and his colleagues from Forum for the Future, to develop a longer-term vision and strategy for its sustainability work. Each year, Porritt reviews key projects, audits O2’s progress and provides new benchmarks.
Sustainability and the mobile sector
Research by The Climate Group, ‘SMART 2020’, predicts that by 2020, the mobile telecoms sector can use its services to help cut global emissions by around five times its own carbon footprint. That equates to a staggering €600 billion (£475.2billion1) in saved costs.
For more information contact:
Telefónica UK Limited is a leading communications company for consumers and businesses in the UK, with 23 million mobile, fixed line and broadband customers as at 31 December 2011.
Telefónica UK Limited is part of Telefónica Europe plc, a business division of Telefónica S.A. which uses O2 as its commercial brand in the UK, Ireland, Slovakia, Germany and the Czech Republic, and has 58.1 million customers across these markets.
Telefónica UK employs around 11,000 people in the UK and has 450 retail stores.
Telefónica UK launched its sustainability plan for people and planet in February 2012. The company has announced that over the next three years, it intends to help one million young people develop new life skills and save 4 million tonnes of carbon emissions. See www.o2.co.uk/thinkbig/blueprint
O2 is the naming rights partner of The O2, the world-class entertainment venue.
O2’s UK 2G mobile network provides voice and data services which are available to 99% of the UK’s population.
O2’s UK 3G (HSPA+ 900 / 2100 MHz) network currently provides voice and high speed data services to over 84% of the UK population at speeds of up to 14.4Mbp and 21Mbps in major cities.
O2 was the first UK operator to deploy a 4G/LTE trial network which has demonstrated peak speeds of over 100Mbps to a mobile device.
Telefónica Europe also owns 50% of Tesco Mobile, which operates in the UK and Ireland, and 50% of Tchibo Mobilfunk in Germany.