Corporate Sustainability Nearing Tipping Point

Almost a third (31%) of companies say sustainable business practices now contribute to their profits, and 70% say it’s now permanently esconsed in their management strategy, according to a  MIT Sloan Management Review-Boston Consulting Group report.

Two-thirds of companies see sustainability as necessary to being competitive, up from 55% in 2010, and two-thirds say  management attention to, and investment in, sustainability  increased in the last year.

The report, “Sustainability Nears a Tipping Point,” offers striking
evidence of how sustainability is moving beyond communications, risk management and reputational concerns to producing  concrete profits.

Among the 3,000 corporate leaders that participated in the worldwide study are Duke Energy, CEMEX, BMW, UPS, HSBC, HP,  Campbell Soup, GE, Nike, Kimberly-Clark and Wal-Mart.

The study includes a survey and in-depth interviews with corporations from every major industry and region of the
world.

Companies that say sustainability contributes to profits are going beyond merely implementing individual initiatives such as lowering carbon emissions, reducing energy consumption, or investing in clean technologies; they are changing their operating frameworks and strategies.

These companies are 50% more likely to have CEO commitment to sustainability, twice as likely to have a separate sustainability reporting process and twice as likely to have a separate function for sustainability. They are also 50% more likely to have a person responsible for sustainability in every business unit and more than 2.5 times as likely to have a chief sustainability officer.

The report identifies three key areas where sustainability
has driven significant organizational change for companies that are seeing profits:

• Organizational structure: Managers are often supported by  separate cross-functional senior management committees that can sanction and support corporate sustainability objectives.
• Business model: 57% say they have a business case for sustainability, compared to just 18% among the rest of the respondents.
• Operations: Greater collaboration among geographic
  business units is a hallmark of sustainable business
  practices. They also collaborate more with customers  and suppliers than other companies.

“There’s a learning curve to incorporating sustainability into strategy. Companies that have had it on their agenda and have worked on it for years are now seeing tangible results. Our research suggests a pattern: First a company focuses on reducing costs, boosting efficiency, and enhancing its corporate reputation. Then, after a while, it takes a broader view, becoming innovative with products and processes, and gaining access to new markets,” explains Knut Haanaes, who leads Boston Consulting Group’s Sustainability practice.  Continue reading more…