Sustainability is key, execs say, but firms aren't doing enough

Business leaders who care about sustainability say they know what they like … and they see a lot to like, the more their organisations work to become sustainable.

“Sustainability will become increasingly important to business strategy and management over time, and the risks of failing to act decisively are growing,” states “The Business of Sustainability,” the report prepared by the MIT Sloan Management Review and The Boston Consulting Group.

The two organisations conducted a global survey of more than 1,500 corporate executives and managers as part of their new Sustainability Initiative. Supported in part by business analytics firm SAS, the effort aims to make the survey an annual undertaking.

The initiative’s first-ever survey found that 92 per cent of respondents said their companies were addressing sustainability in some way. The current economic downturn does not appear to be having an impact on that, either: fewer than 25 per cent said their companies have decreased their commitment to sustainability because of the recession. In fact, respondents in the automotive and media/entertainment industries said their companies have generally increased their commitment to sustainability.

On the other hand, while most of those surveyed agreed that business will play a major part in addressing long-term and global sustainability challenges, a majority of respondents — more than 70 per cent — said their companies were not doing enough to take advantage of sustainability-focused opportunities … or to reduce the risks they faced.

Furthermore, many of the initiatives companies have taken were launched not for business reasons, but to meet regulatory requirements.

A handful companies are going above and beyond, however, and enjoying “substantial rewards” for doing so, the survey found:

“Once companies begin to act aggressively, they tend to unearth more opportunity, not less, than they expected to find, including tangible bottom-line impacts and new sources of competitive advantage,” the report states.

The most sustainability-minded business leaders are also more to motivate other firms in their supply chain to improve their performance too. Sixty-two per cent of them said it was important to set sustainability criteria to suppliers, compared to just 25 per cent of executives and managers who said they didn’t know much about sustainability.

“This suggests that the more people know about sustainability, the more thoughtfully they evaluate it and the more opportunity they see in it — and the more they think it matters to how companies manage themselves and compete,” the report stated.

Beyond government regulation, consumer and employee sentiment are the top reasons most corporations adopt sustainability measures. Among businesses in agriculture, mining and water, however, the main motivator is concern about environmental pollution. By contrast, firms in the media/entertainment, technology and telecommunications sectors name global political security as the key reason to boost sustainability.

One of those surveyed for the report, Steve Fludder, vp of ecomagination for GE, said, “I think that the world has reached a tipping point now. We’re beyond the debates over whether (addressing sustainability) is something that needs to be done or not — it’s now mostly about how do we do it.”