Companies that just “cannonball” into the pool of sustainable energy supporters — rather than cautiously testing the waters — are more confident about their current competitive position, according to a global study conducted earlier this year by MIT (News - Alert) Sloan Management Review and The Boston Consulting Group.
Seventy percent of sustainability “embracers” said they believe their organizations outperform industry peers, according to Sustainability: The ‘Embracers’ Seize Advantage. By contrast, only 53 percent of “cautious adopters” described themselves as outperformers; and 14 percent admitted to lagging behind peers — more than twice the percentage of embracers who made the same claim (six percent).
In addition, nearly three times more embracers (66 percent) than cautious adopters (23 percent) said that their own organization’s sustainability actions and decisions have increased its profits.
“What’s fascinating is that our findings depict a business landscape in general that’s tilting hard toward where the embracers already are,” said Michael Hopkins, editor-in-chief of MIT SMR and a coauthor of the report. “So the embracers have handed us a kind of crystal ball. Their insights and behaviors suggest a blueprint for how management practice and competitive strategy will evolve.”
The report identifies seven specific practices exhibited by embracers — which together begin to define sustainability-driven management—among them
1. Move early, even if information is incomplete: Embracers are not paralyzed by ambiguity. Instead, they see action as a way to generate data, uncover new options, and develop evidence that contributes to effect decision-making.
2. Balance broad, long-term vision with projects offering concrete, near-term wins: An ambitious vision might generate brand premiums, transform organizational culture, and help attract capital, talent, or partners. However, smart embracers balance those aims with narrowly defined projects in, say, supply management, which enable them to produce early, positive bottom-line results. They exhibit “relentless practicality.” Dan Esty, professor of Environmental Law and Policy at Yale University, predicts that this balanced vision will divide the leading companies from the laggards.
3. Drive sustainability top-down and bottom-up: Embracers have learned that sustainability must not only be driven by leaders prepared to talk openly about the challenges and opportunities it presents to the organization. In addition to gaining insights and ideas from multiple sources, the genuine involvement of employees drives up levels of staff engagement and productivity, and nurtures a culture that is attractive to talented recruits.
4. Aggressively” de-silo sustainability,” integrating it throughout company operations: Embracers do not treat sustainability as a separate function. Instead, they establish a culture in which sustainability is applied to all business practices.
5. Measure everything (and, if ways of measuring something do not exist, start inventing them): Embracers establish baselines and develop methods of assessment so that their starting positions can be identified and progress measured. Some of the assessments are tangible, such as waste and energy efficiency, or water conservation. However, forward-thinking companies also are trying to find way of quantifying the impact of sustainability on brand, innovation, and productivity.
6. Value intangible benefits: Smart companies are realizing that conservation of natural resources is a fundamental part of risk management — as illustrated by the work being done by Coca-Cola and PepsiCo on water conservation. And starting a sustainability journey by focusing on water and energy inefficiencies makes sense for any business. However, embracers accept that it takes time to develop their ability to measure — or even fully understand — intangible advantages, and they need to make their investment decisions on the basis of a combination of tangible benefits, intangibles, and risk scenarios.
7. Be authentic and transparent, both internally and externally: Do not overstate motives or set unrealistic expectations; communicate challenges as well as successes. The “warts and all” approach to reporting and communication has yet to be adopted by many companies, including the embracers. Those that do communicate clearly and openly find that this protects them against accusations of “greenwashing.” both internally from employees and externally from stakeholders, customers, and activists.
“Most companies — whether currently embracers or not — are looking toward a world where sustainability is becoming a mainstream, if not required, part of the business strategy,” noted Knut Haanaes, a BCG partner and managing director and coauthor of the report. “Those not already putting sustainability at the heart of their business will need to do so in the near term.”
According to the report, the corporate move toward sustainability is being driven by a number of factors and constituents, from public policy and legislation, to institutional investors and pension funds, to employees and customers. Increasing demand for green products, such as energy efficient appliances, green mortgages, and hybrid vehicles, also is providing momentum.
The research found that 69 percent of companies planned to step up their investment in sustainability this year. Just over one-quarter (26 percent) planned no change, and only two percent intended to cut back on their commitment.
For more details on the study’s findings and interview transcripts, please visit MIT’s Sustainability & Innovation website .
Cheryl Kaften is an accomplished communicator who has written for consumer and corporate audiences. She has worked extensively for MasterCard (News - Alert) Worldwide, Philip Morris USA (Altria), and KPMG, and has consulted for Estee Lauder and the Philadelphia Inquirer Newspapers. To read more of her articles, please visit her columnist page.Edited by
Rich Steeves
