MIT Sloan Management Review

Caesars Entertainment, the world’s most geographically diversified gaming company, has emerged as an environmental leader in the hospitality industry. In just five years, it reduced its carbon footprint by nearly 10% and reduced its energy use per square foot by 20%. Gary Loveman, Chairman and CEO, became interested in sustainability during the depths of a global financial crisis. The company’s sustainability program has breathed new life into the company’s business and boosted pride among employees.

It’s only natural that a beer company would be concerned about water. It takes five liters of water, on average, to manufacture one liter of beer. When SABMiller mapped its water footprint and found that it took 45 liters of water to produce one liter of its beer in the Czech Republic, and 155 liters in South Africa, the company changed its water practices to make its beer more sustainable. An interview with SABMiller’s senior vice president of sustainable development explains how they did it.

Dan Hesse, CEO of Sprint, says that the company’s strong focus on sustainability is paying off in cost savings and long-term brand image — even if customers don’t yet pay attention to whether phones themselves are green.

Since 2010, MIT Sloan Management Review (MIT SMR) and The Boston Consulting Group (BCG) have been charting how organizations are responding to sustainability as a source of competitive advantage. This year we found that nearly 50 percent of companies have changed their business model because of sustainability opportunities. In this presentation, David Kiron, executive editor at MIT SMR, and Eugene Goh, a principal with BCG, cover highlights of the report and discuss specific company examples.

This is the fourth annual research report jointly produced by MIT SMR and BCG on the connection between sustainability and business. This year’s report focuses on who is profiting from their sustainability practices and why. Overall, respondents reporting profit from sustainability went up by 23% to 37 percent of the total. As we explore in detail, business-model innovation is the crux of sustainability profits for a majority of companies.

As Kimberly-Clark began down the path toward sustainability, it was confronted with layers of miscommunication between itself and environmental activists–not to mention a lack of real understanding among many of its customers and suppliers. Tom Falk, chairman and CEO of K-C, says that all that began to change as the company got better at listening.

Results from the fourth year of MIT SMR’s research collaboration with the Boston Consulting Group have found that managers who say sustainability has caused their organization to change its business model are also more likely to say that the organization’s sustainability activities have added to profits. Respondents to the survey who changed their business model also generated profits from their sustainability-related activities.

Trends suggest that the public is no longer satisfied with corporations that focus solely on short-term profits. A recent study comparing companies that adopted environmental and social policies with companies that didn’t supports this view.

However, few companies are born with a commitment to sustainability. To develop one, companies need leadership commitment, an ability to engage with multiple stakeholders along the value chain, employee engagement and disciplined mechanisms for execution.

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.

Just because you can’t measure an action doesn’t mean it’s not creating strategic value, says Suzanne Fallender, director of CSR Strategy and Communications for Intel. Her job, though, is to measure wherever she can and make the best case possible for incorporating sustainability efforts into every facet of the company.

Stonyfield Farm’s Wood Turner says that with the company’s environmental efforts now in their third decade, the company is working “to move beyond a relatively small environmental team to a true company-wide green team.”

This year, most survey respondents say sustainability is permanently on their companies’ top management agendas. What’s more, a substantial portion of respondents say their companies are profiting from sustainability activities – and even increasing their commitments to sustainability initiatives. This is the third year that MIT Sloan Management Review and the Boston Consulting Group have reported out on the survey conducted of managers and executives from companies based around the world

This year, more survey respondents say sustainability is on their company’s management agenda. Not all companies have found ways to profit from their sustainability efforts — but those that have share some interesting characteristics.

History shows that the road to technological innovation is long and winding, but lessons from successes and failures with other emerging technologies offer managers a helpful guide.

Representatives of 15 organizations on the leading edge of sustainability in Canada explain why businesses don’t take action on social and environmental issues.

How fast are businesses adopting sustainability-driven management? The new Sustainability & Innovation Study identifies two distinct camps — ‘embracers’ and ‘cautious adopters’ — and offers a snapshot of how the management future will look.

We know: correlation isn’t causation. But still — it’s provocative to consider the disparity between how top-performing companies approach dealing with sustainability strategies and how lower performers do.

Given the lousy global economy, it may come as a surprise that corporate commitments to sustainability-driven management have actually strengthened over the last year. Almost 60% of companies say that their investments increased in 2010.

This report on the second annual Sustainability & Innovation Global Executive Study by MIT Sloan Management Review and The Boston Consulting Group reveals two distinct camps of companies: “embracers” — those who place sustainability high on their agenda — and “cautious adopters,” who focus more on energy cost savings, material efficiency, and risk mitigation. The report identifies seven practices exhibited by embracers, which together begin to define sustainability-driven management.

It’s no surprise: some of the biggest competitive benefits reported by executives who have adopted corporate sustainability strategies are some of the most intangible benefits.