More Companies Say Sustainability Needed to be Competitive

Two-thirds of corporate leaders say management attention to and investment in sustainability rose from 2010 to 2011, according to a global study by MIT Sloan Management Review and The Boston Consulting Group.

In the third annual Sustainability & Innovation Global Executive Study, sponsored by SAP and Shell, two-thirds of companies also said sustainability is necessary for competitiveness, up from 55 percent a year before.

The study of over 2,800 corporate leaders found 31 percent companies saying that sustainability is contributing to their profits, while 70 percent have placed sustainability permanently on the management agenda. Among the companies investing time and money in sustainability strategy and practices, according to the report, are Duke Energy, CEMEX, BMW, UPS, HSBC, HP, Florida Ice & Farm, Campbell Soup, GE, Nike, Kimberly-Clark, Wal-Mart, and India’s Jain Irrigation.

On the other hand, the report says that sustainability ranks eighth in importance among management agenda items. The authors say, however, that the corporate sustainability movement is nearing a tipping point: that at which a substantial proportion of firms derive financial benefit from such activities.

This year’s report focused on the 31 percent of companies that say sustainability activities are contributing to their profits. This group, who the authors call “harvesters,” tend to have a distinctive organizational mindset.

They are over 2.5 times as likely as non-harvesters to have a chief sustainability officer, twice as likely to have a sustainability function and twice as likely to have a separate sustainability reporting process. They are also 50 percent more likely than non-harvesters to have CEO commitment to sustainability, and 50 percent more likely to have a head of sustainability in each business unit. Harvesters are more likely to collaborate among geographical business units, as well as with their customers and suppliers.

In addition, 57 percent of harvesters say they have a business case for sustainability, compared to only 18 percent among non-harvesters.

Last year’s MIT/BCG survey found that corporate approaches to the environment tend to fall into two camps, with a gap between sustainability “embracers” and “cautious adopters.”