50 environmental focus


Mid-tier organisations take the lead on sustainability


Mandatory carbon reporting requires action from all companies listed on the main London Stock Exchange and a new report by business adviser Grant Thornton highlights how enhanced sustainability reporting is influencing mid-tier businesses and public sector organisations.


Over three quarters (80%) of companies with a turnover between £250 million and £1 billion have board-level accountability for sustainability reporting, with over half (51%) of CEOs taking this on personally. Up to 70% of these organisations also state that sustainability is either ‘fully’ or ‘partially’ embedded in their corporate financial targets and 92% state that sustainability performance is either ‘very important’ or ‘important’ to the overall success of their organisation.


As the largest listed companies look to reduce their own carbon impact by choosing suppliers offering more sustainable products, services and raw materials, mid-market companies recognise this will impact their business – 84% cite customers as a key audience to communicate the business implications of their sustainability efforts, second only to


policy makers. This is particularly important in the food and beverage sector which has the highest proportion of organisations (32%) with sustainability goals fully embedded in their supply chain management, reflecting the connections between consumer demand, food production, packaging and transport and the strategy of major retailers.


Despite recognising the commercial impact of carbon reporting, mid-tier organisations face challenges embedding sustainability targets throughout their business. The departments with the lowest score for ‘fully’ or ‘partially’ embedding sustainability in their function are sales, HR, and research and development. Given consumer concern about sustainability is growing and increasingly features in corporate purchasing decisions, these are areas for mid-tier organisations to focus on in order to generate revenue from sustainable products and services.


A large percentage of respondents (67%) already include sustainability information in some form of external reporting – either as a standalone sustainability report or within their annual report however less than half (43%) are


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Jane Stevensen, head of sustainability at Grant Thornton, commented: “Medium- sized businesses are the backbone of the UK economy and the CEOs of these firms recognise the importance of sustainability and are taking personal accountability for this. The impetus of mandatory carbon reporting for larger firms will accelerate changes in business practice across UK plc. It is clear from this report that the mid-tier companies that take the initiative integrating and publicising sustainability alongside financial reporting will be able to differentiate their brands with investors, shareholders and customers. Embedding sustainability targets within key functions such as sales, research and development, and HR will also be vital in engaging staff and ensuring this is an integral part of business practice.”


To help motivate change in their companies, 51% plan to fully or partially embed employee recognition (without financial incentives) for incorporating sustainability into their strategy over the next two years. In terms of integrating sustainability into pay and bonuses, the most popular options are using executive bonuses (33% fully or partially embedding this in their business), promotion decisions (28%), employee bonuses (24%) and employee pay rises (21%).


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