Most environmental rating organizations, agencies or systems continue to focus on businesses’ operational impacts – for example, pollution levels – or environmental management practices. Public support activities that influence environmental regulations are not taken into consideration. This happens despite the fact that corporate political activities (like, for example, campaign funding) can be more effective in fighting climate change and promoting environmental protection, given the urgent need – worldwide – for far-reaching policy solutions.

Examples of advocacy activities, include:

• over one thousand business leaders who joined the We Can Lead group, which supports strong climate policy, and
• twenty companies that joined Business for Innovative Climate & Energy Policy, an important corporate policy advocacy group

Taking public support activities into account

Corporate responsibility ratings that influence buying decisions by consumers, employment decisions by jobseekers or investment decisions by socially responsible investors, should seriously consider political activities by corporations. Such activities may include support for climate action, including political contributions, and engagement or collaboration with non-governmental organizations. Effectively integrating such factors into their ranking procedures, is highly important for rating agencies and organizations. They will become more competitive and more valid, when evaluating and deciding on environmental leadership.

References:

This article is based on published information by MIT Sloan Management Review. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the publication’s meaning. If you would like to quote these written sources from the original please revert to the following link:

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MIT Sloan Management Review

• According to two-thirds of survey participants, sustainability is highly important for being competitive in the modern marketplace  Tweet This!.

• Approximately 31 per cent of survey participants said their companies were currently profiting from sustainability initiatives.

• 68 per cent of businesses surveyed increased the time and resources committed to sustainability efforts.

• Companies profiting from their sustainability initiatives were:
  • more likely to have strong leadership commitment to sustainability, a separate sustainability report and sustainability function, a sustainability focus by business units, and a chief sustainability officer
  • three times more likely than other companies to have a robust business case for sustainability
  • 50 per cent more likely to clearly communicate who was responsible for sustainability
  • more than twice as likely, compared to other organizations, to have operational and personal key performance indicators connected to sustainability
  • 60 per cent more likely to relate sustainability to financial incentives
  • twice as likely to change their business model due to sustainability
  • more than twice as likely to say sustainability increased their collaboration with competitors

References:

This article is based on published information by MIT Sloan Management Review. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the publication’s meaning. If you would like to quote these written sources from the original please revert to the following link:

https://shop.sloanreview.mit.edu/store/the-sustainability-challenge?utm_source=newsletter&utm_medium=email&utm_content=Learn%20more%20%C2%BB&utm_campaign=Enews%20Sust%2011/9/17

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Despite the difficulties cross-sector collaborative efforts have come across, complex sustainability issues have to be dealt with collaboratively  Tweet This! and on a global scale by businesses, to achieve systemic change. Three different, but interrelated, types of work are required:

• Conceptual work: Contextualizing complex issues. Different – yet interdependent – sustainability approaches, tools or frameworks have to be related and integrated. There is a need to:
  • collectively develop conceptual frameworks, building community, and
  • achieve clarity and simplicity, without oversimplifying complex issues

• Relational work: Open conversation and collaborative investigation. Far-reaching, sincere, reflective dialogue based on trust is required, to promote joint learning, exploration, and action-oriented initiatives.

• Action-driven work: Developing cooperative change initiatives. Feedback from diverse stakeholders has to be collected – a procedure that may require time and effort –, to ensure that effective, cooperative action can be taken for systemic change.

Three key questions

As the need for collaboration between governments, NGOs and businesses to tackle complex sustainability issues and achieve widespread systemic change becomes increasingly evident, three key questions remain to be answered:

• How can the transition from benchmarking to developing learning communities be accomplished?

• What is the proper balance between setting goals and providing space for innovation and reflection?

• What is the correct balance between public and private interest?

References:

This article was compiled using a publication by MIT Sloan Management Review. For the sake of readability, we did not use brackets or ellipses but made sure that the extra or missing words did not change the publication’s meaning. If you would like to quote these written sources from the original please revert to the link below:

https://shop.sloanreview.mit.edu/store/the-sustainability-challenge?utm_source=newsletter&utm_medium=email&utm_content=Learn%20more%20%C2%BB&utm_campaign=Enews%20Sust%2011/9/17

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How is an organization to make the transition to sustainability? What does this transition entail? How is any sustainability initiative – which is essentially different from other corporate initiatives – to be effectively realized? There are three separate phases in successfully carrying out a sustainability initiative, each requiring different skills and competencies – including, most importantly, leadership competencies – from the individuals involved:

• Making a clear and convincing case for change: As many organizations are not receptive, or are even reactive to sustainability (unaware of the opportunities involved), the individuals leading the sustainability effort – the sustainability leaders – must be able to communicate a convincing sustainability vision, collaborate, and influence others, also possessing change leadership skills.

• Turning vision into action: In this phase, the sustainability vision has to be translated into a complete change program consisting of specific initiatives and firm commercial targets. For this to happen, sustainability leaders must be skilled in results delivery and, at the same time, have a commercial orientation, being able to take corrective action when needed.

• Developing a long-term sustainability strategy: As sustainability becomes a core value for the organization, creating competitive advantage, sustainability leaders have to be able to anticipate future needs and trends, pursuing partnerships and encouraging innovation.

References:

This article was compiled using a publication by MIT Sloan Management Review. For the sake of readability, we did not use brackets or ellipses but made sure that the extra or missing words did not change the publication’s meaning. If you would like to quote these written sources from the original please revert to the link below:

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Quite often, business executives fail to realize the extent to which truly radical thinking and action are needed to move from unsustainability towards sustainability, and change the way businesses operate – they fail to recognize that sustainability is a radical idea, requiring equally radical action  Tweet This!.

Reducing unsustainability, instead of promoting sustainability

Innovative solutions are required, but the global business community seems to be focused on economic development as a central theme, despite the fact that sustainability may, essentially, have nothing or little to do with economic development as such. Businesses are, thus, only concentrated on reducing the unsustainability of a defective economic development system founded on an addiction to consumption – with consumption representing a major cause of unsustainability, in both human and environmental terms.

What should be done?

Sustainability may be defined as the “possibility that all forms of life will flourish forever”. So, how can businesses contribute to achieving this vision? Below are a few steps that could be taken in such a direction:

• changing the rules of the competition, not least through voluntary, collaborative action involving business, government, advocacy and intergovernmental groups
• redefining, collaboratively, the idea of what constitutes progress, redefining profit
• critically assessing a company’s core mission and values, in terms of the sustainability or unsustainability created
• promoting, through the design of products and services, responsible, ethical behavior and choices in daily life

References:

This article was compiled using a publication by MIT Sloan Management Review. For the sake of readability, we did not use brackets or ellipses but made sure that the extra or missing words did not change the publication’s meaning. If you would like to quote these written sources from the original please revert to the link below:

https://shop.sloanreview.mit.edu/store/the-sustainability-challenge?utm_source=newsletter&utm_medium=email&utm_content=Learn%20more%20%C2%BB&utm_campaign=Enews%20Sust%2011/9/17

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While the research stresses that businesses should not rely solely on government intervention to address major sustainability topics such as climate change, it draws attention to international initiatives guiding companies in dealing with – and communicating their performance on – environmental, social and governance (ESG) issues, including:

• the UN’s Principles for Responsible Investment (UN PRI), to which over 1,600 investment organizations have committed;
• the Sustainability Accounting Standards Board (SASB) in the U.S., developing sustainability accounting standards and a materiality matrix identifying, for businesses, key sustainability issues;
• the UN’s Sustainable Stock Exchange Initiative, aimed at the creation of more sustainable capital markets through the collaboration with stock exchanges.

According to MIT SMR and BCG’s research, companies should take certain key steps in developing sustainable business practices  Tweet This!, including the following:

• The importance of a sustainability strategy: while 90 per cent of executives consider sustainability as important, only 60 per cent of businesses have a sustainability strategy in place, despite the great significance of having a real sustainability strategy fully embedded into a company’s business strategy. The survey also found that the percentage of companies with a sustainability strategy increased in Europe, Latin America and Australia.
• Concentrating on material issues: businesses focused on material issues, with their sustainability efforts directly connected to material business issues, reported up to 50 per cent extra profit from sustainability – successfully connecting strategic necessity to strategic opportunity.
• Organizing your business properly in order to achieve your measurable objectives: building sustainability into business units doubles the likelihood of your organization profiting from its sustainability initiatives.
• Building a business case for sustainable business practices: although 60 per cent of companies had a sustainability strategy, only 25 per cent had developed a clear business case regarding their sustainability efforts.

References:

This article was compiled using a report by MIT Sloan Management Review (MIT SMR) and The Boston Consulting Group (BCG). For the sake of readability, we did not use brackets or ellipses but made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the link below:

http://marketing.mitsmr.com/offers/SU2017/58480-MITSMR-BCG-Sustainability-Report-2017.pdf?utm_source=Publicaster&utm_medium=email&utm_campaign=susrpt17&utm_content=Corporate+Sustainability+at+a+Crossroads&cid=1

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More specifically:

• 63 per cent of the survey’s respondents who said their companies profited from sustainability activities also said their company changed its business model on account of sustainability
• 46 per cent of survey respondents who changed their business model because of sustainability said sustainability efforts added to their companies’ profits, compared to 26 per cent of those who did not change their business model
• 50 per cent of survey respondents who changed three or four business model elements because of sustainability said their companies profited from sustainability initiatives, while only 37 per cent of those who changed only one element of their business model said so
• Survey respondents who said that, due to sustainability efforts, they changed their business model and strengthened collaboration with 6 to 10 types of stakeholders were more than twice as likely to say their companies profited from sustainability, compared to respondents who changed their business model but increased collaboration with not more than two types of stakeholders

According to the survey, in order to increase their sustainability-based profitability, companies should:

• Be prepared to change their business model
• Understand how their customers think in relation to sustainability and what they would be willing to pay for, as regards sustainable products or services
• Collaborate more extensively with customers, businesses, individuals and groups outside the company’s boundaries

References:

This article was compiled using a survey by MIT Sloan Management Review and the Boston Consulting Group (BCG). For the sake of readability, we did not use brackets or ellipses but made sure that the extra or missing words did not change the survey’s meaning. If you would like to quote these written sources from the original please revert to the link below:

http://sloanreview.mit.edu/article/the-benefits-of-sustainability-driven-innovation/

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A new study on workplace diversity, co-authored by MIT economist Dr. Sara Ellison, indicates that gender-diverse teams are more productive compared to single-gender ones  Tweet This!.

According to Ellison, “a more diverse set of employees means you have a more diverse set of skills,” which may well “result in an office that functions better” – despite the fact that individual employees may, in fact, be happier when working with people of the same sex.

Employees in single-sex offices “might be happier, they might be more comfortable, and these might be cooperative places, but they seem to perform less well”, Ellison said. Just as “a baseball team entirely composed of catchers could have high esprit de corps,” but, at the same time, “would not perform very well on the field”.

The study found that switching from a single-sex office to a gender-diverse one, would increase revenues by approximately 41%.

It is worth noting that, according to the study, employees “may like the idea of a diverse workplace more than they like actual diversity in the workplace” and that this perception, that a company embraced diversity, is not enough, to lead to improved performance. “In offices where people thought the firm was accepting of diversity, they were happier and more cooperative,” Ellison said. “But that didn’t translate into any effect on office performance.”

References:

This article was compiled using a publication by MIT News. For the sake of readability, we did not use brackets or ellipses but made sure that the extra or missing words did not change the publication’s meaning. If you would like to quote these written sources from the original please revert to the link below:

http://news.mit.edu/2014/workplace-diversity-can-help-bottom-line-1007

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A survey of more than 3,000 managers and investors from more than 100 countries showed that:

• Managers’ and investors’ perceptions on the importance of sustainability performance differ: the latter consider it far more important than managers do.
• Investors see sustainability as benefiting a company in more than one ways: improving the way it operates, reducing risks and costs.
• Investors today are ready to not invest in a company whose sustainability performance is judged as poor.
• There seems to be a significant lack of communication and an insufficient sharing of information both within – across the company hierarchy – and between firms, when it comes to corporate responsibility.
• A company’s inclusion in sustainability indices seems to not constitute an important factor for both company managers and investors as regards the evaluation of the company’s sustainability performance.
• Although companies consider it important, few have a sustainability strategy in place.

Some key facts:

• For 75% of investors, a company’s sustainability performance is a key factor in deciding to invest in the company.
• More than 50% of investors say their companies will not invest in businesses with a poor sustainability record.
• Research has shown that by managing successfully its sustainability issues, a company’s financial and operational performance is also improved – the company performs better than other companies in its sector –, putting the company in a growth path and decreasing the costs of capital.

According to the study, in order to attract investors interested in their sustainability performance, businesses should:

• Raise awareness about sustainability issues among both internal and external stakeholders.
• Identify and effectively deal with their material issues.
• Take actions on sustainability issues and focus on the results – results that should be real and measurable – of these actions.
• Plan and implement, in consultation with stakeholders, a sustainability strategy, making it an inextricable part of their wider corporate strategy.

References:

This article was compiled using published information by the MIT Sloan Management Review and The Boston Consulting Group (BCG) which is located at the link below. For the sake of readability, we did not use brackets or ellipses but made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link: 

http://sloanreview.mit.edu/projects/investing-for-a-sustainable-future/

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“Companies have been complaining that nobody cares about sustainability,” Robert Eccles, chairman of Arabesque Partners and professor of management practice at Harvard Business School, says. “But investors care, and companies need to up their game.”

Seventy-five percent of senior executives at investment firms said a company’s good sustainability performance was “materially important when making investment decisions”. Additionally, 75% said the fact that sustainability practices lead to improved revenues and operational efficiencies was a strong reason to invest in a company.

Divesting From Companies with Poor Sustainability

Conversely, if a company had a record of poor sustainability performance, 44% of investors said they would not invest in it and another 60% of investment firm board members said they would divest from a company if it had a poor sustainability footprint.

Growing Significance

Many investors agree sustainability has grown in importance in recent years. Ninety-two percent of investors said good sustainability performance mattered more so today than just three years ago.

A main reason why a company’s sustainability performance mattered to investors was that sustainability increased the company’s potential for long-term value creation. Investors also want to avoid being linked to companies that experience corporate scandals, like Volkswagen’s diesel emission scandal, which led to investor losses of about $33 billion last October, according to the report.

Companies Need to Take Action

It seems many companies are missing out on possible investor opportunities for failing to implement sustainability practices. The survey showed that the number of companies with a sustainability strategy in place has decreased in recent years. In 2015, 60% said they had a sustainability strategy, down from 68% in 2014 and 62% in 2013.

MIT and BCG offered recommendations companies can take to ramp up sustainability practices and gain the attention of sustainability focused investors, such as incorporating sustainability strategy into the overall corporate strategy.

The GRI Standards

Today, 80% of the world’s 250 largest companies are using the Global Reporting Initiative’s Standards for sustainability reporting. They are dealing with their most important impacts responsibly, taking a structured, systematic approach to improving performance and following a 4-step process: identify – measure – manage – change.

Sustainability reporting according to the Global Reporting Initiative’s Standards helps companies identify key issues to focus on and, accordingly, improve productivity and reduce costs. Additionally, through gaining access to new markets and clients, their competitiveness improves. And these are just some of the benefits.

References:

This article was compiled using a study by MIT Sloan Management Review and The Boston Consulting Group. For the sake of readability, we did not use brackets or ellipses but made sure that the extra or missing words did not change the study’s meaning. If you would like to quote these written sources from the original please revert to the links below:

https://spendmatters.com/2016/07/20/investors-increasingly-care-about-a-companys-sustainability-practices/

http://marketing.mitsmr.com/offers/SU2016/57480-MITSMR-BCG-Sustainability2016.pdf?utm_source=WhatCounts%2c+Publicaster+Edition&utm_medium=email&utm_campaign=surpt16&utm_content=Download+the+Report+(PDF)&cid=1

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