Tuesday, November 20, 2007

You've come a long way...environment

A new survey of top executives and managers from McKinsey ("Assessing the Impact of Societal Issues") appears to demonstrate that environmental concerns, including climate change, are increasingly important in decision-making.

In the past there’s been a split between C-level executives and “senior managers” (i.e. below C-level) in terms of how seriously each group takes climate change, and their willingness to push corporate action. If I remember correctly (never a guarantee), C-level execs in the past were less inclined to be concerned about global warming, and thus less inclined to lead their companies to change policies. Senior managers were more concerned and interested in pushing change forward. 36% of the McKinsey survey's 2,687 respondents were C-level, which could either represent a good blend of opinions, or mean that the managers and C-level conflict is still hidden.

Among the results:

  • 87% of executives say they personally are somewhat or very worried about global warming and climate change. Only 3% do not believe it is happening.
Not sure if this represents personal opinion, which doesn't always follow through into strategy and corporate decision-making.
  • 51% of survey respondents pick the environment, including climate change, as being one of three issues that will attract the most public and political attention during the next five years, compared to 31% in 2005.
While this is positive trend, I'm disappointed it only cracked half of the executives' top three.
  • 48% felt the environment, including cc, was one of the three issues that would have the most impact on shareholder value in the next five years.
This is acutally higher than I would've thought, given that most of the significant damage from climate change occurs decades from now. Which again, causes concern, as what happens to this opinion 5 years from now, when shareholder value hasn't materialized?

However, my biggest concern with this survey, which I noticed the last time, is the relative absence of effective and impactful strategy in dealing with these issues.
  • In asking what are the top three most effective tactics in managing social and environmental issues, "Media, public relations" is still tied as the most effective tactic (35%), as with actually "developing and implementing policies" designed to address these issues (35%).

  • Similarly "improving compliance with law" (29%) ties with "lobbying regulators, government" (28%) and "changing product lines, processes" (16%) ties with "advertising, marketing" (15%).

To be fair, it's not as though the environmental community or other relevant interest groups have given the corporate community much to work with. While we see a thawing in the relations, for decades, an aggressive relationship of "us" vs. "them" on both sides has limited knowledge transfer, stakeholder engagement efforts, and broad-based coalitions among the various parties. The group I worked with this summer (NRDC) is certainly taking the lead in this effort (e.g. establishing a Center for Market Innovation) and I'm recruiting with a number of consulting groups (Booz, McKinsey, Deloitte, etc) which are now launching various sustainability or climate change focus areas.

Ultimately, the next generation of business leaders are focusing on these efforts far more so than in the past, and being educated (yours truly is quoted) in ways of blending the economic with the social and environmental. So this may not be a quick fix, but there's still some hope for more intelligent and strategic options in the future.

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