PwC: Almost Half of Execs Using Sustainability Valuation

by | Sep 7, 2012

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About half of corporate executives polled – 46 percent – say they use sustainability valuation methods to compare and prioritize their sustainability initiatives, according to a PricewaterhouseCoopers survey.

In the poll of 1,400 executives, 36 percent said their biggest challenge is prioritizing sustainability initiatives. Another 10 percent said they are beyond prioritization and are now in the stage of asking how much capital to allocate to sustainability.

However, many respondents indicated that they struggle with putting a dollar value on sustainability initiatives — 39 percent have not attempted any valuation techniques (see chart).

The survey also found that 31 percent of respondents were interested in quantifying the impact of sustainability in shareholder value, and about 17 percent said direct cost savings is what matters the most. This, according to PwC, indicates that the indirect benefits of sustainability initiatives are not yet on these executives’ radar screens.

The impact on the environment remains the no.1 indirect benefit that survey respondents said they are concerned about, drawing almost a fourth of the response. However, talent, corporate know-how and retention came in as a close second.

A May report published by PwC, Sustainability Valuation: An Oxymoron?, outlined two approaches — direct and indirect — that companies can use to measure the value of sustainability and the contribution their environmental efforts make to profits.

Two other reports released earlier this year by PwC illustrate the increasing importance of sustainability for investors as well as environmental, social and governance issues for private equity houses. PwC found 94 percent of private equity firms believe that ESG activities can create investment value. However, only 20 percent of the firms have put systems in place to measure value created from ESG activities.

A November 2011 study by Verdantix named PwC as one of only a few firms that excel when providing major companies with corporate-wide sustainability visions.

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