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Investors are beginning to see a strong link between corporate sustainability performance and financial performance. That’s creating a bigger demand for better data, and better business models.
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How much more does it cost to make a building “green”? Most people assume it’s a lot. But John Sterman, MIT Sloan School of Management’s Jay W. Forrester Professor of Management and the director of the MIT System Dynamics Group, says that the premium to build MIT’s LEED-certified Sloan School building has been small. “MIT is a data-driven place,” Sterman says. “You have to make the argument with data before people will act.”
Even the best laid plans can cause unintended consequences. But organizations that operate at less-than-optimal performance levels and are unable to think systematically are especially prone to surprising outcomes. Consider the impact of U.S. ethanol legislation on energy supply chains. Supply chains are complex eco-systems that often span multiple industries and geographies. Changing the balance between supply and demand can have a profound impact on each link in the chain. Failing to appreciate these far-reaching consequences can be disastrous and very difficult to undo.
In the third in a four-post series on Sustainability-Oriented Innovation (SOI), the authors look at the SOI process and the key actors and roles involved. To facilitate and accelerate the complex process of SOI, the authors suggest the development of SOI centers of excellence and SOI communities of practice. With both, diverse networks of problem solvers can emerge and start managing the challenges of socially and environmentally complex issues.
Wood Turner has been working in sustainability for 20 years. In 2006 he left his work at a sustainability and brand strategy firm in Seattle to lead Climate Counts, a nonprofit incubated within Stonyfield which scores and ranks large companies on their efforts to address climate change. Now VP of sustainability innovation at Stonyfield, Turner continues his work on bringing climate-conscious practices into the core of business operations. In an interview, Turner describes the collaborative processes that make this strategy work.
Information systems are designed to help companies use enterprise resources more efficiently. But what if companies used information systems more broadly — not just to measure profits but also to account for the needs of people and the environment?
All functional areas have their own “language” to express the concepts most important to their roles in a company. In the fourth installment of his series on the Sustainability Insurgency, Gregory Unruh explains how CSR officers can introduce sustainability as part of the conversation in different functions.
The idea that energy is a “free-market good” is a myth that needs to be abandoned. Subsidies for energy exist for good reason. The authors argue that in order to wean ourselves off hydrocarbon dependence, U.S. and global policies that subsidize oil and gas production at higher rates than renewable energy production need to be changed to reduce the bias in favor of hydrocarbons.
The UN’s Global Compact report identifies auditing the supply chain as the biggest obstacle to putting sustainability principle into practice. Companies simply don’t have enough information about suppliers’ sustainability practices to determine which links on the supply chain will provide the best outcome. But as global data sources become more all-encompassing — and companies’ analytics capabilities grow more sophisticated — that is changing.
Today’s fringe issues in the sustainability world often become tomorrow’s mainstream and generic market expectations, writes Gregory Unruh of George Mason University. Between these two extremes lies a third territory, which Unruh calls “strategic.” “It is in this strategic territory that proactive companies have the best opportunity to influence the sustainability standards for their industry,” he writes.
Peggy Ward, director of the Enterprise Sustainability Strategy Team at Kimberly-Clark Corporation, says that having strong support from the company’s Chairman & CEO, his global strategic leadership team, four business units and an external sustainability advisory board have been crucial to building and meeting aggressive sustainability metrics.
The MIT SMR and BCG 2012 Sustainability and Innovation research report “Sustainability Nears a Tipping Point” prompted an invitation to participate in a White House Sustainable Supply Chain Dialogue on March 30 in Washington, DC.
Can a company that supplies electricity really become a partner in helping customers optimize their electric use? Absolutely, says Jim Rogers, chairman, president and CEO of Duke Energy: “We can make it totally back of mind for you, and we can create huge productivity gains in the process.”
When properly designed and operated, the traditional supply chain has offered customers three primary benefits—reduced cost, faster delivery and improved quality. But managers are increasingly recognizing that these advantages, while necessary, are not always sufficient in the modern business world. The supply chain should be designed and managed to deliver one or more of six basic outcomes: cost, responsiveness, security, sustainability, resilience and innovation.
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