New business models Contents Foreword About the research Executive summary Part I Sustainability: Still seen as linked to financial performance  Box: Sustainability gains ground in developing economies Part II The challenge of measuring and reporting sustainability indicators 10 Box: A new way to track environmental impact  12 Part III The early emergence of new business models 13 Box: An evolving role for NGOs 17 Conclusions 18 Appendix: Survey results 19 References 31 © The Economist Intelligence Unit Limited 2014 New business models Foreword Six years after the onset of the global financial crisis, sustainability concerns are continuing to work their way into the mainstream of business Despite continued uncertain economic conditions, most companies remain persuaded that there is a strong causal link between their financial performance over a 5-10-year time horizon and their current commitment to improving their environmental, social and governance performance Against this background, a number of business leaders are reviewing their approach to sustainability, weighing new corporate strategies and new business models in efforts to ensure their longterm sustainability discusses companies’ views on sustainability measures, the challenge of measuring and reporting sustainability outcomes, and the prospects of business models focusing on longterm sustainability (Sustainability is defined as “meeting the needs of the present without compromising the ability of future generations to meet their own needs”.) The research was commissioned by the Enel Foundation The EIU bears sole responsibility for the content of this report The findings and views expressed in the report not necessarily reflect the views of the Enel Foundation Christopher Watts was the author of the report, and Aviva Freudmann was the editor New business models for the 21st century is an Economist Intelligence Unit (EIU) report that October 2014 © The Economist Intelligence Unit Limited 2014 New business models About the research In September-October 2013 The Economist Intelligence Unit surveyed 285 senior executives, mostly in Asia-Pacific, Europe and North America, on their approaches to corporate sustainability, their experiences in measuring and reporting sustainability outcomes, and their plans to explore new business models to ensure long-term sustainability This briefing paper is based on the results of this survey and a comparable survey conducted in 2011 The research also includes a programme of in-depth interviews, as well as desk research on the topic of corporate sustainability More than half (58%) of the 285 respondents to the latest survey are executives at C-level or above; approximately 60% are responsible for strategy and business development at their companies Around 37% of those surveyed represent businesses with US$500m or more in annual revenue Companies in the professional services, financial services and manufacturing sectors have the strongest representation in the survey Approximately 58% of respondents to the latest survey are based in developing countries These demographic characteristics are similar to those of the survey taken in 2011 In that survey, the sample of 282 respondents was also at a senior level, with 74% at C-level or above Approximately 74% of respondents to the 2011 sample were responsible for strategy and business development at their companies About 43% represented companies with US$500m or more in global annual revenue Professional services were strongly represented in the 2011 sample as well, and approximately 53% of respondents were based in developing countries Five of the survey questions asked in 2011 were also asked in the latest survey This allowed a comparison of changes in company views over time in those areas, for example views of the link between commitment to sustainability goals and financial performance; the main obstacles to incorporating sustainability principles; how companies report their performance in sustainability measures; and their top priorities in environmental, social and governance sustainability In addition to the online survey, The Economist Intelligence Unit conducted a programme of eight in-depth interviews with senior business executives and other experts in sustainability The insights from these interviews appear throughout the report The Economist Intelligence Unit would like to thank all survey respondents, as well as the following executives (listed alphabetically by organisation name) who participated in the interview programme: l Mark Kramer, founder and managing director, FSG, US l Ernst Ligteringen, CEO, Global Reporting Initiative, Netherlands l Kate Gibson, vice president of corporate responsibility, and Paul Snyder, vice president of corporate responsibility, InterContinental Hotels Group, UK l Wim Bartels, global head of sustainability assurance, KPMG, Netherlands l Beroz Rumie Gazdar, senior vice president, group sustainability, and Vishwesh Palekar, senior vice president, innovation and emerging markets, Mahindra & Mahindra, India l Gladys Naylor, environmental manager, and Lora Rossler, group head of corporate affairs, Mondi Limited, South Africa l João Paulo Ferreira, vice president, Natura Cosméticos, Brazil l Justin Bakule, executive director, Shared Value Initiative, US © The Economist Intelligence Unit Limited 2014 New business models Executive summary As growing numbers of companies embed environmental, social and governance (ESG) sustainability issues into the core of their businesses, a range of challenges is emerging Not least among these is the perception that sustainability practices are becoming part of the business mainstream—thereby, paradoxically, diminishing the perception that an individual company stands to gain an advantage over its immediate competitors by adopting such practices Against this backdrop, a small number of business leaders are reviewing their approach to sustainability and considering fresh corporate strategies and alternative business models These new approaches are aimed at improving their own companies’ long-term fortunes, as well as those of the communities and the environments in which they operate This briefing paper is based on an online survey of 285 senior executives and on eight in-depth interviews with corporate executives and other experts in sustainability, complemented by extensive desk research These research components provide the basis for the discussion of current approaches to sustainability among companies in both developed and developing economies; the challenges of measuring and reporting sustainability; and the emergence of alternative business models © The Economist Intelligence Unit Limited 2014 Here are the main findings of the research The perceived link between sustainability efforts and long-term profitability remains strong In the latest survey, 66% of managers say there is a strong causal link between sustainability and long-term financial performance, a figure largely similar to the 70% who said so in 2011 On the other hand, 11% of respondents now see no such link—an increase from 6% in 2011 Meanwhile, more and more managers say they are facing obstacles to embedding sustainability principles in their businesses, with 52% saying that immediate financial goals are currently more urgent Despite uncertain financial times, companies continue to promote sustainability The survey shows that more managers now understand the wider importance of sustainability and are stepping up their efforts to embed sustainability principles into their strategies The increased willingness to act could stem in part from tightening regulation in the environmental, social and governance spheres Sustainability is gaining ground more in developing markets than in developed markets Survey responses among business managers in developing markets indicate a strengthening commitment to sustainability; indeed, the New business models majority of the expansion of sustainability practices in the past two years appears to have come from developing economies The reason for these countries’ strong commitment may be their relatively heavy dependence on natural resources requiring conservation, as well as their tightening regulations More developing-market firms are reporting their sustainability performance Amid growing regulation, 20% of firms now publish sustainability goals and performance at least once a year, similar to the 18% who reported doing so in 2011, while 15% of survey respondents state that they regularly publish an integrated report combining financial and sustainability results, up from 11% in 2011 The results from developing economies show an increase in reporting, with 24% of such companies now publishing sustainability reports, compared with 19% two years ago Companies are focusing on measuring core indicators Businesses are tending not to develop and report new metrics Many are focusing on core measures such as resource efficiency (39%), workplace accidents (32%) and waste (30%) Experts interviewed for this report emphasise © The Economist Intelligence Unit Limited 2014 that external reporting is only part of the picture; embedding sustainability indicators in internal processes and systems is just as important Almost two-thirds of firms are reviewing their sustainability strategies While 28% of respondents are dissatisfied with their existing environmental, social and governance sustainability strategies, 32% doubt that these strategies will stand the test of time Almost two-thirds (63%) of firms say they are reviewing new strategies or business models to ensure longterm sustainability Most companies have yet to revise their overall strategies based on such reviews In efforts to ensure their long-term sustainability, a small number of firms are considering alternative business models, such as the concept of creating shared value, which aims to identify business opportunities that address social issues, creating value for the firm and for society around it For now, uptake of the shared value approach remains low While 21% of managers say they have drawn up new strategies or business models with a specific focus on creating shared value, 16% say they have not reviewed the case for shared value and not intend to so New business models Sustainability: Still seen as linked to profitability The link between introducing sustainabilityoriented policies and bolstering long-term profitability appears to be well anchored in corporate thinking Our survey shows that around two-thirds (66%) of respondents believe that there is a strong causal link between a company’s commitment to embed environmental, social and governance (ESG) sustainability goals and its long-term (5-10 years) financial performance “There are immediate gains, but having commitment to sustainable development brings long-term gains,” asserts Gladys Naylor, environmental manager at paper and packaging group Mondi Limited “These gains translate into cost savings across a wide range of areas including risk mitigation measures.” One company that has established a link between its commitment to environmental and social goals, on the one hand, and its bottom line, on the other, is Brazilian cosmetics company Natura Cosméticos It introduced the Crer para Ver (“To Believe is to See”) product line in 1995, earmarking the earnings from these products for the Natura Institute, a corporate body that funds education projects Since 1995 the institute has invested R15.5m (€5.1m) in local elementary schools The company says that its overall focus on sustainability issues has helped drive Sustainable Investing: Establishing Long-Term Value and Performance, Deutsche Bank, June 2012 Available at: https://www.db.com/ cr/en/docs/Sustainable_ Investing_2012 Establishing-long-termvalue-and-performance.pdf annual revenue to R6.3bn, from R429m in 1995 “Since Natura started including sustainability in its business model, its financial results have improved significantly,” says Natura vice president João Paulo Ferreira In seeing opportunity in sustainability, Natura is not alone Some companies believe that environmental improvement programmes or social betterment initiatives help them bolster their reputations, differentiate themselves from competitors and/or achieve cost efficiencies Others say simply that such programmes help them meet their regulatory obligations In any case, a growing body of research suggests that sustainability can give firms a financial advantage Not least, research by Deutsche Bank concludes that “there is overwhelming academic evidence that firms with high ratings for corporate social responsibility (CSR) and ESG factors have a lower (ex ante) cost of capital in terms of debt (loans and bonds) and equity”.1 One reason for this may be that firms committed to sustainability are relatively less risky “Companies that are preparing for a resource-constrained future are companies that are strategically well run,” says Justin Bakule, executive director of the Shared Value Initiative, a US-based non-profit strategy consulting firm In your view, how strong, if at all, is the causal link between a company’s financial performance and its commitment to environmental, social and governance goals? - Short term (1-2 years) (% respondents) Strong 16 Weak 36 No causal link 40 Don’t know © The Economist Intelligence Unit Limited 2014 New business models In your view, how strong, if at all, is the causal link between a company’s financial performance and its commitment to environmental, social and governance goals? - Long term (5-10 years) (% respondents) Strong 66 Weak 14 No causal link 11 Don’t know Although the majority of respondents believe in the link between sustainability and longterm profitability, there has been a slight decline in this majority: the figure has fallen by 4 percentage points from the 70% recorded in a comparable survey in 2011 However, 11% of the survey panel state that they see no long-term connection, up from 6% in 2011 And only 16% of the survey panel see a strong causal link between a company’s short-term (1-2 years) financial performance and its commitment to ESG goals Growing numbers of businesses act to promote sustainability The corporate perception of a link between commitment to sustainability goals and improved long-term financial performance tracks the sentiment on sustainability practices as a source of competitive advantage In the latest survey, 48% of respondents say that sustainability practices are a source of competitive advantage—roughly comparable to the 51% who said so in 2011 As sustainability practices become mainstream—owing to regulatory requirements or for other reasons— there may be less of a perceived competitive edge to be gained by any one company vis-à-vis its competitors by adopting such principles, since the competitors may be adopting similar principles and practices “Sustainability is becoming less of a competitive advantage now that many companies have moved into it,” explains Wim Bartels, global head of sustainability assurance at KPMG “Many of these companies want to follow the leaders.” However, it appears that sentiment in favour of the idea that such practices help companies improve their own performance—relative to their own previous performance, if not relative to the performance of their competitors—continues to be strong According to the latest survey, 70% of respondents believe that having a sustainability strategy is a prerequisite for their company’s long-term growth; this compares with 76% who said so in 2011 Here, the steepest decline is evident among companies in developed markets (65% in the latest survey, versus 71% in 2011) That said, it is not always easy for companies to embed sustainability principles in their systems and daily practices Sustainability-oriented practices may have their internal corporate champions, but they also have their detractors Uncertain financial and market conditions may play a role here as well In the survey, 44% To what extent you agree with the following statements? Please select one answer for each statement (% respondents) Strongly agree Agree somewhat Neither agree nor disagree Disagree Strongly disagree Don’t know ESG sustainability strategy is a pre-requisite for my company’s long term growth 33 38 16 41 ESG sustainability is currently a source of competitive advantage for my company 20 27 27 19 61 Sustainability issues are important in my geographic region 32 39 19 Sustainability issues are currently important in my sector 27 31 22 16 41 Sustainability issues are relatively unknown in my sector but are becoming more important 11 34 © The Economist Intelligence Unit Limited 2014 18 23 10 New business models Which, if any, of the following are the main obstacles to incorporating sustainability principles into the company’s strategies and practices? Please select up to three (% respondents) Immediate financial goals are more urgent 52 Absence of a compelling business case for sustainability 44 Lack of consensus on ultimate goals of a sustainability programme 31 Inadequate budget 30 Insufficient clarity concerning responsibilities in the company 27 Lack of clarity on legal or regulatory obligations to meet sustainability standards 26 Need for more transparency in operations or practices 10 Other, please specify Not applicable—we have no obstacles to implementing sustainability principles Don’t know of respondents—who are overwhelmingly in strategy, business development and general management functions—describe the absence of a compelling business case for sustainability as an obstacle to incorporating sustainability principles into their company’s strategies and practices This figure represents a major increase from the 27% who said so in 2011 Meanwhile, 52% of respondents claim that immediate financial goals are more urgent, up from 44% two years ago The survey shows that a growing proportion of executives appear to understand the importance of sustainability as a concept About 70% of respondents say that sustainability is important in their region, about the same as the 66% who said so two years ago Among respondents in developed markets, this figure is 71%, about the same as the 69% who said this in 2011, but in developing economies the figure is now 70%, up markedly from 63% (See box: Sustainability gains ground in developing economies.) Similarly, companies’ efforts to incorporate sustainability into their businesses appear to be gathering pace, in spite of the obstacles For example, 54% of respondents say that their firms have drafted new strategies or business models in the past three years in Which of the following statements describes your company’s policies on setting environmental, social and governance (ESG) goals? Please select all that apply (% respondents) Our company has set more demanding social goals for itself (vis-à-vis employees and surrounding communities) within the past three years 29 Our company has set more demanding environmental goals for itself within the past three years 28 Our company has set more demanding governance goals for itself within the past three years 28 Our company has not focussed on ESG objectives but plans to so in the next three years 22 Our company plans to incorporate new environmental, social and/or governance goals into new business models during the next three years 20 Our company has incorporated new environmental, social, and/or governance goals into an entirely new business model during the past three years 17 Our company is not focussed on ESG objectives and has no plans to so in the next three years 16 Our company has created a new business model to deliver both profit and ESG objectives 14 © The Economist Intelligence Unit Limited 2014 New business models Sustainability gains ground in developing economies Responses to a variety of survey questions indicate that sustainability is gaining ground in developing markets more than in developed markets Why? Here are three possible reasons not addressed One recent report2 calls this the “lens of proximity”, which it describes as a “heightened perception of sustainability issues when their impacts are close by and immediate” l First, sustainability regulation in developing economies is becoming heavier One example is energy efficiency regulation in heavy manufacturing industries such as iron and steel, chemicals and cement, which typically account for a greater proportion of economic activity in developing markets than they in developed economies l Third, in some developing economies traditional values relating to conserving resources and minimising waste remain deeply entrenched, whereas they may be less engrained in the consumerist societies of the developed world Beroz Rumie Gazdar, senior vice president of group sustainability at Mahindra & Mahindra, an India-based industrial concern, says: “As Indians, we were always taught to conserve things, not to waste.” l Second, many developing countries are dependent on natural resources; people in these countries may have a sharper sense of what is at stake if sustainability issues are The UN-Global Compact CEO Study on Sustainability 2013: Architects of a Better World, Accenture, September 2013 Available at: http://www.accenture com/Microsites/ungcceo-study/Documents/ pdf/13-1739_UNGC%20 report_Final_FSC3.pdf Trends in Sustainability Disclosure: Benchmarking the World’s Stock Exchanges, CK Capital, October 2013 Available at: http://static corporateknights.com/ StockExchangeReport2013 pdf efforts to ensure long-term sustainability And approximately 29% say their businesses have set themselves more demanding environmental and social sustainability goals within the past three years, the highest proportion being among respondents in developing markets Part of the reason for this stepped-up activity may be the growing volume of new sustainability regulation being introduced by governments and other stakeholders For example, India’s Perform, Achieve and Trade scheme, targeting energy efficiency, is being rolled out progressively across the country’s heavy industry In addition, sustainability disclosure requirements have been growing steadily in the past decade;3 the proportion of such initiatives that are mandatory has risen to 72%, from 58% Carrots and Sticks: Sustainability reporting policies worldwide – today’s best practice, tomorrow’s trends, KPMG Advisory, the Global Reporting Initiative, and the Centre for Corporate Governance in Africa, 2013 Available at: https:// www.globalreporting.org/ resourcelibrary/carrotsand-sticks.pdf © The Economist Intelligence Unit Limited 2014 in 2006.4 To some extent, such initiatives are driving the adoption of sustainability principles, even among managers who are sceptical that their business will benefit For many companies, incorporating sustainability principles means reviewing their strategies and business processes with environmental, social and governance sustainability principles in mind A case in point is Natura of Brazil “Our strategic planning cycle provides for annual reviews and adjustments based on external and internal assessments,” says Mr Ferreira “Sustainability provides guidelines for the company’s business strategy We are constantly reviewing our positioning regarding sustainability, as well as our business strategy.” New business models Appendix Which of the following statements describes your company’s policies on setting environmental, social and governance (ESG) goals? Please select all that apply (% respondents) Our company has set more demanding social goals for itself (vis-à-vis employees and surrounding communities) within the past three years 29 Our company has set more demanding environmental goals for itself within the past three years 28 Our company has set more demanding governance goals for itself within the past three years 28 Our company has not focussed on ESG objectives but plans to so in the next three years 22 Our company plans to incorporate new environmental, social and/or governance goals into new business models during the next three years 20 Our company has incorporated new environmental, social, and/or governance goals into an entirely new business model during the past three years 17 Our company is not focussed on ESG objectives and has no plans to so in the next three years 16 Our company has created a new business model to deliver both profit and ESG objectives 14 To what extent you agree with the following statements? Please select one answer for each statement (% respondents) Strongly agree Agree somewhat Neither agree nor disagree Disagree Strongly disagree Don’t know ESG sustainability strategy is a pre-requisite for my company’s long term growth 33 38 16 41 ESG sustainability is currently a source of competitive advantage for my company 20 27 27 19 61 Sustainability issues are important in my geographic region 32 39 19 Sustainability issues are currently important in my sector 27 31 22 16 41 Sustainability issues are relatively unknown in my sector but are becoming more important 11 19 34 © The Economist Intelligence Unit Limited 2014 18 23 10 New business models In your view, how strong, if at all, is the causal link between a company’s financial performance and its commitment to environmental, social and governance goals? - Short term (1-2 years) (% respondents) Strong 16 Weak 36 No causal link 40 Don’t know In your view, how strong, if at all, is the causal link between a company’s financial performance and its commitment to environmental, social and governance goals? - Medium term (2-5 years) (% respondents) Strong 36 Weak 42 No causal link 13 Don’t know 10 In your view, how strong, if at all, is the causal link between a company’s financial performance and its commitment to environmental, social and governance goals? - Long term (5-10 years) (% respondents) Strong 66 Weak 14 No causal link 11 Don’t know Which, if any, of the following are the main obstacles to incorporating sustainability principles into the company’s strategies and practices? Please select up to three (% respondents) Immediate financial goals are more urgent 52 Absence of a compelling business case for sustainability 44 Lack of consensus on ultimate goals of a sustainability programme 31 Inadequate budget 30 Insufficient clarity concerning responsibilities in the company 27 Lack of clarity on legal or regulatory obligations to meet sustainability standards 26 Need for more transparency in operations or practices 10 Other, please specify Not applicable—we have no obstacles to implementing sustainability principles Don’t know 20 © The Economist Intelligence Unit Limited 2014 New business models Within your company, which among the following departments is most likely to be in charge of setting and reaching environmental, social and governance goals? (% respondents) The CEO’s office 47 There is no single unit; ESG issues are spread throughout the organisation 15 The business operations themselves 12 A separate unit devoted to ESG issues 10 The marketing function The finance function Other, please specify Thinking about your company’s environmental, social and governance goals over the next three years, which of the following represent the company’s top three priorities? Please select up to three (% respondents) Increasing energy efficiency 57 Improving employee health and safety 43 Improving local community relations 35 Ensuring compliance with laws and regulations, eg anti-corruption laws 30 Fostering accountability and transparency to all stakeholders 24 Promoting diversity and inclusion in the company’s work force 23 Offering environmentally sound products and services 21 Reducing other environmental pollution 17 Reducing CO2 emissions 16 Improving transparency in board member selection, and in board operations Increasing transparency concerning board members’ compensation 21 © The Economist Intelligence Unit Limited 2014 New business models Thinking about your company’s environmental, social and governance goals over the next five to ten years, which of the following should represent the company’s top three priorities? Please select up to three (% respondents) Increasing energy efficiency 47 Improving employee health and safety 36 Offering environmentally sound products and services 32 Improving local community relations 32 Fostering accountability and transparency to all stakeholders 30 Ensuring compliance with laws and regulations, eg anti-corruption laws 28 Promoting diversity and inclusion in the company’s work force 25 Reducing other environmental pollution 22 Reducing CO2 emissions 16 Improving transparency in board member selection, and in board operations Increasing transparency concerning board members’ compensation How, if at all, does your company report its performance in environmental, social and governance (ESG) sustainability? Please select all that apply (% respondents) We publish our ESG sustainability goals, and our progress toward meeting them, at least once a year 20 We not publish such an integrated report, but plan to so within the next two years 18 We have an ESG sustainability communications strategy that is part of our group communications strategy 17 We regularly publish a report which integrates our financial results and our progress toward ESG sustainability goals 15 We have a separate communications strategy for ESG sustainability issues 15 We publish our ESG sustainability goals, and our progress toward meeting them, on an ad hoc basis 10 We not publish any information about our sustainability practices or goals 39 Don’t know 22 © The Economist Intelligence Unit Limited 2014 New business models What metrics does your company use to measure environmental, social and governance outcomes? Please select up to three (% respondents) Energy or natural resource efficiency 39 Number of workplace accidents or injuries 32 Level of waste production/means of disposal 30 Percentage of women in senior positions 23 Bribery or corruption events 17 Carbon emissions levels 17 Level of pollutants in air, water and soil related to your company’s activities 15 Presence of ethical/SRI (socially responsible investment) funds among the company’s shareholders 12 CEO pay as a multiple of other employees’ pay Other, please specify 13 To what extent you agree with these statements about your firm’s approach to sustainability? Please select one answer for each statement (% respondents) Strongly agree Agree somewhat Neither agree nor disagree Disagree Strongly disagree Don’t know The firm’s ESG strategy is falling short of our stated expectations 21 34 24 The firm’s ESG strategy is meeting or exceeding our stated expectations 10 28 37 16 The firm’s ESG strategy is sufficient to meet sustainability goals in the long term 16 36 24 17 The firm’s ESG strategy is not sufficient to meet sustainability goals in the long term 24 22 22 10 In the past three years our firm has set new strategies and/or business models to ensure long-term sustainability 19 35 20 18 4 Our firm is reviewing new strategies and/or business models to ensure long-term sustainability 22 42 22 In the next three years our firm will set new strategies and/or business models to ensure long-term sustainability 27 41 16 6 Which of the following best describes your company’s approach to creating shared value – that is, creating long-term value for various stakeholders in addition to shareholders? Please select up to three (% respondents) We have reviewed the case for shared value and implemented changes to incorporate it into our existing strategies and/or business models 28 We have reviewed the case for shared value and have drawn up new strategies and/or business models with a specific focus on shared value 21 We have not reviewed the case for shared value but we intend to in the next three years 17 We have not reviewed the case for shared value and at this time we not intend to 17 We have reviewed the case for shared value and did not find it more compelling than our current ESG approach at the current time 13 We have not reviewed the case for shared value but we intend to in the next year 12 Other, please specify The shared value approach has not appeared on our agenda 18 Don’t know 23 © The Economist Intelligence Unit Limited 2014 New business models With sustainability in mind, what are your motivations behind any shift in strategy and/or business model that your firm has implemented in the past three years or plans to implement in the next three years? Please select up to three (% respondents) The new approach enabled/will enable us to differentiate ourselves from our peers and market ourselves as environmental leaders 42 The new approach offers/will offer the potential to improve company earnings 36 Our existing approach delivered/will deliver strong results and led/will lead us to seek further ways to embrace sustainability 26 Our existing approach was/is not adequate in reaching our sustainability targets 24 The new approach enabled/will enable us to find ways out of the current economic slowdown 18 Other, please specify We have not implemented any shift in our strategy and/or business model in the past three years and not plan to implement any in the next three years 19 Don’t know 24 © The Economist Intelligence Unit Limited 2014 New business models In which country are you personally based? (% respondents) United States of America 11 India 11 South Africa Brazil United Kingdom Russia Mexico Singapore China Italy Australia Canada Germany France Hong Kong Portugal Spain United Arab Emirates Finland Greece Nigeria Pakistan Romania Sweden Other 18 25 © The Economist Intelligence Unit Limited 2014 New business models In which region are you personally located? (% respondents) Asia-Pacific 26 Western Europe 24 Latin America 15 North America 13 Middle East and Africa 13 Eastern Europe 26 © The Economist Intelligence Unit Limited 2014 New business models In which country is your company’s global headquarters located? (% respondents) United States of America 21 India 10 United Kingdom South Africa Mexico Brazil Russia Canada Germany Australia France Hong Kong Netherlands Italy Singapore Sweden Portugal United Arab Emirates Argentina China Finland Greece Nigeria Pakistan Spain Other 15 27 © The Economist Intelligence Unit Limited 2014 New business models In which region are your company's global headquarters based? (% respondents) Western Europe 27 North America 24 Asia-Pacific 20 Latin America 12 Middle East and Africa 11 Eastern Europe What is your primary industry? (% respondents) Professional services 22 Financial services 14 Manufacturing 10 IT and technology Energy and natural resources Entertainment, media and publishing Healthcare, pharmaceuticals and biotechnology Education Construction and real estate Logistics and distribution Automotive Government/Public sector Consumer goods Retailing Transportation, travel and tourism Agriculture and agribusiness Telecoms Chemicals 28 © The Economist Intelligence Unit Limited 2014 New business models What are your organisation's global annual revenues in US dollars? (% respondents) Less than $100m 47 $100m to $500m 17 $500m to $1bn $1bn to $5bn 11 $5bn to $10bn $10bn or more Which of the following best describes your title? (% respondents) CEO/President/Managing director 43 SVP/VP/Director 13 Manager 10 Head of business unit Head of department Board member Other C-level executive CFO/Treasurer/Comptroller CIO/Technology director Other 29 © The Economist Intelligence Unit Limited 2014 New business models What are your main functional roles? Select all that apply (% respondents) General management 63 Strategy and business development 60 Marketing and sales 24 Finance 18 Operations and production 16 Customer service 12 Human resources Information and research Risk R&D IT Legal Procurement Supply-chain management Other Gender (% respondents) Male 89 Female 11 30 © The Economist Intelligence Unit Limited 2014 New business models References The Economist Intelligence Unit consulted the following sources when preparing this report: l Measuring Shared Value: How to Unlock Value by Linking Social and Business Results, FSG, 2012 l The UN-Global Compact CEO Study on Sustainability 2013: Architects of a Better World, Accenture, September 2013 l Carrots and Sticks: Sustainability reporting policies worldwide – today’s best practice, tomorrow’s trends, KPMG Advisory, the Global Reporting Initiative, and the Centre for Corporate Governance in Africa, 2013 l Trends in Sustainability Disclosure: Benchmarking the World’s Stock Exchanges, CK Capital, October 2013 l Sustainable Investing: Establishing Long-Term Value and Performance, Deutsche Bank, June 2012 31 © The Economist Intelligence Unit Limited 2014 l “Creating Shared Value: How to Fix Capitalism and Unleash a New Wave of Growth”, Michael E Porter and Mark R Kramer, Harvard Business Review, January 2011 While every effort has been taken to verify the accuracy of this information, neither The Economist Intelligence Unit Ltd nor the Enel Foundation can accept any responsibility or liability for reliance by any person on this white paper or any of the information, opinions or conclusions set out in this white paper GENEVA Boulevard des Tranchees 16 1206 Geneva Switzerland Tel: +41 22 566 24 70 E-mail: geneva@eiu.com LONDON 25 St James’s Street London, SW1A 1HG United Kingdom Tel: +44 20 7830 7000 E-mail: london@eiu.com FRANKFURT Hansaallee 154, “Haus Hamburg” 60320 Frankfurt am Main Germany Tel: +49 69 7171 880 E-mail: frankfurt@eiu.com PARIS rue Paul Baudry Paris, 75008 France Tel: +33 5393 6600 E-mail: paris@eiu.com DUBAI PO Box 450056 Office No 1301A Thuraya Tower Dubai Media City United Arab Emirates Tel: +971 433 4202 E-mail: dubai@eiu.com [...]... growing numbers of businesses are putting in place sustainability targets, measuring their performance against these targets using a variety of indicators, and publishing information about the progress they are making in reaching their sustainability goals disclosure requirements there The reporting requirements introduced by the Shanghai Stock Exchange in 2008 are resulting in more widespread sustainability... strategies and business models; some are going further, considering new corporate strategies and alternative business models in efforts to ensure their longterm sustainability The experiences and viewpoints of those business managers and experts included in this report—both those within the survey sample and those included in the interview programme—provide a number of insights l Sustainability is gaining ground... business models; 21% say they have reviewed the case for shared value and have drawn up new strategies or business models with a specific focus on shared value Meanwhile, 13% of survey respondents say they have reviewed the case for shared value and did not find it more compelling than their current ESG approach; 17% report that they have not reviewed the case for shared value but intend to do so in. .. models 3 The emergence of new business models weakness in their current strategy, but it may also signal expectations of tighter regulation in the future As managers step up their efforts to incorporate sustainability into their businesses, some are questioning their own approach to sustainability and are pushing through fundamental changes While the data on sentiment for or against new business models. .. existing strategies and/or business models 28 We have reviewed the case for shared value and have drawn up new strategies and/or business models with a specific focus on shared value 21 We have not reviewed the case for shared value but we intend to in the next three years 17 We have not reviewed the case for shared value and at this time we do not intend to 17 We have reviewed the case for shared value. .. ground in developing markets faster than in developed markets Sustainability principles are becoming more deeply entrenched among businesses in developing markets, according to survey results; take-up of sustainability in developing countries is faster than in industrialised ones l Take-up of the shared value concept remains at an early stage Managers attach varying meanings to the phrase shared value ,... Mahindra’s] businesses that [is] carved out of a shared value model,” points out Vishwesh Palekar, the group’s senior vice president of innovation and emerging markets The shared value approach holds promise, he concludes: “There are many businesses—particularly in the context of India and countries like India—where the concept of sustainable growth of customers is a business opportunity in itself.” New. .. do so in the next three years; 12% say that they have not reviewed the case for shared value but intend to so in the next year; a further 16% say they have not reviewed the case for shared value and do not intend to do so; and 18% of business executives state that shared value has not appeared on their company’s agenda Even if take-up of the shared valued approach is limited for the time being, it may... shared value and have drawn up new strategies and/or business models with a specific focus on shared value 21 We have not reviewed the case for shared value but we intend to in the next three years 17 We have not reviewed the case for shared value and at this time we do not intend to 17 We have reviewed the case for shared value and did not find it more compelling than our current ESG approach at the. .. 2014 The shared value idea has generated some buzz, but business managers interpret the phrase shared value in a variety of ways For now, take-up of the concept of shared value, as promoted by Mr Porter and Mr Kramer, appears limited In our survey, 28% of business managers state that their firm has reviewed the case for shared value and implemented changes to incorporate it into their existing strategies ... up new strategies or business models with a specific focus on creating shared value, 16% say they have not reviewed the case for shared value and not intend to so New business models Sustainability:... 11 34 © The Economist Intelligence Unit Limited 2014 18 23 10 New business models Which, if any, of the following are the main obstacles to incorporating sustainability principles into the company’s... sustainability into their businesses appear to be gathering pace, in spite of the obstacles For example, 54% of respondents say that their firms have drafted new strategies or business models in the