The Triple Bottom Line Blog

Here's a quite interesting report from The Economist about how business executives are incorporating environmental factors into their decision-making. The highlighted list of findings from the survey of 320 international execs includes:

(1) Environmental risk management is frequently managed in an ad hoc fashion.

(2) There is no clear consensus about who should be responsible for environmental risk.

(3) Many companies conduct strategic activities without a formal assessment of environmental risk. . .

That third item is perhaps the most interesting. To spell it out in more detail, consider these specific data:

Less than half [of the companies surveyed] conduct an environmental assessment when developing new products and services, falling to 32 percent when selecting suppliers or partners, 26 percent when planning geographical expansion and 19 percent when planning mergers and acquisitions.

These findings certainly call into question the general assumption that most corporations today are doing a reasonably good job of considering environmental factors when making major decisions. In fact, they suggest just the opposite--that most companies are facing environmental risks not pro-actively but reactively, scrambling to figure out what to do with environmental problems after they jump up and bite them rather than anticipating and avoiding or minimizing them.

The survey leads me to conclude that we're mostly past the point of having to convince CEOs and their stratospheric colleagues of the relevance and importance of environmental issues. Now the challenge is getting these issues built into the decision-making systems of corporations, alongside financial, regulatory, legal, and other issues that routinely get examined and addressed before any big decision is made.

Labels: C-Suite, environmental issues, risk management, strategic planning, The Economist