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Driving innovation with strategic sustainability

Environmental sustainability may be the next mega trend for businesses when it comes to keeping one step ahead of the competition.

But one report said top level executives should not confuse Corporate Social Responsibility (CSR) reporting with strategic sustainability.

CSR reports may highlight things like the amount of paper a company has saved by recycling, fair employment policies, or even the training its security team has received, but what many do not include is how much the company may have saved or made through sustainable initiatives.

Dr David A. Lubin, Chairman of Esty Sustainability Network, said: “The research that we have done suggests that most companies are in what we would call a defensive position - they are trying to reduce their risks and reduce their cost of waste. And the minority is in an offensive situation - really using sustainability as a driver of innovation. And an even smaller percentage are using it as a defining concept of their brand.”

Dr Lubin recently conducted a study for the World Bank on the value of emerging market sustainability. He said while CSR reporting can help transparency, it fails to highlight the competitive advantages of sustainability.

He said: “For some, they think what is at stake is their reputation or risk of discontent among their shareholders or groups that would represent public interest. For those managers, it is perhaps a quick solution to do a good job publishing a CSR report where they can identify all the terrific processes they have in place.

“But I don’t think they have, at the end of the day, a substitute for a firm having a sustainability strategy which they’ve integrated into their business, and which is driving results.

“My view is that sustainability reporting is actually different from CSR… those are really two different issues and confusion between them, I think, has not been helpful on either side.”

Environmental sustainability is commonly a goal in finance, as it is with the bigger polluters like mining and manufacturing.

Insurance provider Prudential uses financial literacy and education programmes to drive its green strategy.

Donald Kanak, Chairman of Prudential Corporation Asia, said: “In Asia, where particularly we are talking about emerging markets in some places where communities are still developing and quite poor, sustaining isn’t really the goal; it’s progressing and improving. So I have progress and still have respect for the environment, for society, for the future. And so, if we think about how we have approached this over the years, I would say it is evolving all the time.”

Prudential added that getting the money to the right places so that low carbon energy is created, will be a challenge in the next decade.

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