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2013
by: David Kiron, Nina Kruschwitz, Holger Rubel, Martin Reeves and Sonja-Katrin Fuisz-Kehrbach

For the past five years, MIT Sloan Management Review and The Boston Consulting Group have collaborated on an annual research project to assess how businesses address their sustainability challenges. In the past, we focused on sustainability broadly as a business agenda and how that agenda drives profits and business model innovation. This year, we turn our attention to sustainability’s next frontier: addressing the most significant sustainability issues. These are the key social, environmental and economic issues that, if not embraced or addressed, can thwart a company’s ability to thrive — or even survive.

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We posed three questions to get at the heart of the matter:

Our findings are both encouraging and disconcerting. Although some companies are addressing important issues, we found a disconnect between thought and action on the part of many others. For example, nearly two-thirds of respondents rate social and environmental issues, such as pollution or employee health, as “significant” or “very significant” among their sustainability concerns. Yet only about 40% report that their organizations are largely addressing them. Even worse, only 10% say their companies fully tackle these issues.

Companies that perceive sustainability issues as significant and thoroughly address them share distinct characteristics. For example:

These leading companies suggest a path forward.

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About the Authors:

David Kiron is executive editor of MIT Sloan Management Review’s Big Ideas initiatives. He can be contacted at dkiron@mit.edu.

Nina Kruschwitz is MIT Sloan Management Review’s managing editor and special projects manager. She can be contacted at ninakru@mit.edu.

Holger Rubel is a senior partner and managing director in the Boston Consulting Group’s Frankfurt office and global sustainability lead. He can be contacted at rubel.holger@bcg.com.

Martin Reeves is a senior partner and managing director in the Boston Consulting Group’s New York office and leads the BCG Strategy Institute worldwide. He can be contacted at reeves.martin@bcg.com.

Sonja-Katrin Fuisz-Kehrbach is a project leader at the Boston Consulting Group’s Hamburg office and core member of BCG’s sustainability team. She can be contacted at fuisz-kehrbach.sonja-katrin@bcg.com.


Contributors

Carola Diepenhorst, sustainability manager, BCG

Knut Haanaes, senior partner and managing director, BCG

Olivier Jaeggi, managing partner, ECOFACT

Jason Jay, director, MIT Sloan Initiative for Sustainable Business and Society, MIT Sloan School of Management

Martha E. Mangelsdorf, editorial director, MIT Sloan Management Review

Edward Ruehle, writer

Daniel Sobhani, associate, BCG


Acknowledgments

Edgar Blanco, research director, MIT Center for Transportation & Logistics, MIT; David Bresch, head of sustainability and political risk management, Swiss Re; Robin Chase, cofounder and former CEO, Zipcar and founder, Buzzcar; Ken Cottrill, writer, MIT Center for Transportation & Logistics, MIT; Matthew Clark, marketing director strategy, Boston Consulting Group; Jérôme Courcier, CSR officer, Sustainable Development Division, Crédit Agricole S.A.; Suzanne Fallender, director of CSR strategy & communications, Intel Corporation; Nick Folland, group corporate affairs, Kingfisher; Kathy Gerwig, vice president of employee safety, health and wellness and environmental stewardship, Kaiser Permanente; Scott Griffin, CEO, Greif Corporation; Dan Hesse, CEO, Sprint Nextel Corporation; Jason Jay, director of the MIT Sloan Initiative for Sustainable Business and Society, MIT Sloan School of Management; Hans Joehr, corporate head of agriculture, Nestlé S.A.; William Kornegay, senior vice president, Hilton Worldwide; Eric Olson, senior vice president, BSR; Kyung-Ah Park, managing director and head of Environmental Markets Group, Goldman Sachs; John Pflueger, principal environmental strategist, Dell Inc.; Jorgen Randers, professor of climate strategy, Norwegian Business School; Hannah Clark Steiman, writer, Metamorphos/Us; John Sterman, Professor of Management, MIT Sloan School of Management; David Struhs, vice president of sustainability, Domtar; Peggy Ward, director of the Enterprise Sustainability Strategy Team, Kimberly-Clark Corporation; Andy Wales, vice president of sustainable development, SABMiller; Kathrin Winkler, chief sustainability officer, EMC.


Photo Credits

Chapter Three: Bahamas Banks submarine topography courtesy of Flickr user NOAA Photo Library; Chapter Seven: Water Art courtesy of Flickr user Marie and Alistair Knock; About the Research: Kulusuk — Mountains & Icebergs courtesy of Flickr user Bossi.


References

1. Bradsher, K., “China Tries to Clean Up Toxic Legacy of Its Rare Earth Riches,” New York Times, October 22, 2013.

2. Intergovernmental Panel on Climate Change. Climate Change 2013: The Physical Science Basis. September 2013.

3. Initiative for Responsible Mining http://www.responsiblemining.net (accessed 10/29/2013)

4. U.N. Global Compact, 2013. Global Compact LEAD. http://www.unglobalcompact.org/HowToParticipate/Lead/index.html (accessed 10/22/2013).

5. Blanco, E., Cottrill, K. Delivering on the Promise of Green Logistics. http://sloanreview.mit.edu/article/delivering-on-the-promise-of-green-logistics (accessed 12/10/2013).

i. Eccles, R.G., Serafeim, G., 2013. The Performance Frontier. Harvard Business Review 91 (5), 50-60.

ii. Global Reporting Initiative, 2013, G4 Sustainability Reporting Guidelines. https://www.globalreporting.org/ reporting/g4/ (accessed 10/23/2013).

iii. Eccles, R.G., Ioannou, I., Serafeim, G. The Impact of Corporate Sustainability on Organizational Processes and Performance. Harvard Business School Working Paper (2-035). July 29, 2013.

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