Sustainability Nears a Tipping Point

by: Knut Haanaes, Martin Reeves, Ingrid von Streng Velken, Michael Audretsch, David Kiron and Nina Kruschwitz



For the third consecutive year, MIT Sloan Management Review and the Boston Consulting Group have conducted a survey of managers and executives from companies around the world, asking how they are developing and implementing sustainable business practices. This research report discusses our findings and offers lessons to managers who are either trying to develop a sustainability agenda or wondering whether they should.

More than 4,000 managers from 113 countries responded to our survey this year; we focused on the nearly 3,000 executives from the commercial sector for this report. According to those respondents, 70% of companies have placed sustainability permanently on their management agendas; many companies have placed it on their agendas in the past six years. (See “The Sustainability Movement Nears a Tipping Point.”) Two-thirds of our respondents said that sustainability was necessary to being competitive in today’s marketplace, up from 55% in our 2010 survey. (See “Most Managers Believe a Sustainability Strategy Is a Competitive Necessity.”) Moreover, despite a lackluster economy, many companies are increasing their commitments to sustainability initiatives, the opposite of what one would expect if sustainability were simply a luxury afforded by good times.

This rosy picture must be balanced against another set of data. While sustainability has made it onto many management agendas, responses indicate it ranks just eighth in importance among other agenda items. Meanwhile, economic growth continues to deplete the planet’s stocks of natural capital, despite the efforts of many companies to minimize their impacts through activities such as decreasing their carbon footprints and cultivating closed-loop production systems.

In spite of this mixed story, almost a third of respondents say that their sustainability activities are contributing to their profitability.

About the Authors

Knut Haanaes is a partner and managing director in the Geneva office of The Boston Consulting Group, as well as the head of BCG’s global sustainability practice. He can be contacted at Haanaes.knut@bcg.com.

Martin Reeves is a senior partner and managing director in the New York office of The Boston Consulting Group. He is also the global leader of BCG’s strategy institute. He can be contacted at Reeves.martin@bcg.com.

Ingrid von Streng Velken is a project leader in the Oslo office of The Boston Consulting Group and the global manager for BCG’s sustainability practice. She can be reached at Velken.ingrid@bcg.com.

Michael Audretsch is a consultant in the Oslo office of The Boston Consulting Group. He can be reached at Audretsch.michael@bcg.com.

David Kiron is executive editor of MIT Sloan Management Review’s Innovation Hubs. He can be reached at dkiron@mit.edu.

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

Contributors

Martha E. Mangelsdorf, Editorial Director, MIT Sloan Management Review

Robert W. Holland, Jr., Managing Director, MIT Sloan Management Review

Stefan Wächter, Analyst, BCG

David Arthur, Consultant, BCG

Claire Love, Project Leader, BCG

Diederik Vismans, Project Leader, BCG

Eugene Goh, Principal, BCG

Sarah Murray, Writer

Elena Corrales, Analyst, BCG

Douglas Woods, Partner and Managing Director, BCG

Acknowledgments

Edgar Blanco, Research Director, MIT Center for Transportation and Logistics; Roberta Bowman, Senior Vice President and Chief Sustainability Officer, Duke Energy; Robert Eccles, Professor, Harvard Business School; Suzanne Fallender, Director of CSR Strategy and Communications, Intel; Lewis Fix, Vice President of Brand Management and Sustainable Product Development, Domtar; Peter Graf, Chief Sustainability Officer, SAP; Stuart Hart, S.C. Johnson Chair in Sustainable Global Enterprise, Samuel Curtis Johnson Graduate School of Management, Cornell University; Jørgen Ole Haslestad, President and CEO, Yara; Jason Jay, Lecturer, MIT Sloan School of Management; Nathan Jones, Vice President for Government and Institutional Sales, HTI, Eastman Chemical; Chris Librie, Director, Environmental Initiatives, HP; Christoph Luenenburger, Leader of Sustainability Practice, Egon Zehnder; David Mann, Chief of Staff, Khosla Ventures; Paul Murphy, CEO, Valid Nutrition; Frank O’Brien-Bernini, Chief Sustainability Officer, Owens Corning; Andreas Regnell, Head of Strategy and Environment, Vattenfall; Agneta Rising, Vice President and Head of Environment, Vattenfall; Nick Robins, Head of the Climate Change Centre of Excellence, HSBC; Jim Rogers, President and CEO, Duke Energy; Cathy Ross, Senior Program Officer, Latin America Program, Open Society Foundations; Christian Rynning-Tønnesen, President and CEO, Statkraft; Peter Senge, Senior Lecturer, MIT Sloan School of Management; Dave Stangis, Vice President of CSR, Sustainability and Community Affairs, Campbell Soup; Graeme Sweeney, Executive Vice president of CO2, Shell; Mark Vachon, Vice President, GE ecomagination, GE; Peggy Ward, Director of the Enterprise Sustainability Strategy Team, Kimberly-Clark; Gaylon White, Director of Design Programs, Eastman Chemical; Peter White, Director for Global Sustainability, Procter & Gamble; Scott Wicker, Chief Sustainability Officer, UPS; Don Young, Senior Vice President of Corporate Sustainability, Smith & Nephew

Additional Support

SAP

SAP is a market leader in enterprise application software that helps companies of all sizes and industries run better. Founded in 1972, SAP has a rich history of innovation and growth as a true industry leader. Today, SAP has sales and development locations in more than 50 countrires worldwide. SAP applications and services enable more than 109,000 customers worldwide to operate profitably, adapt continuously and grow sustainably. www.sap.com

Shell

Shell is a global group of energy and petrochemicals companies with approximately 101,000 employees in more than 90 countries and territories. With sustainable development at the core of all business decisions, Shell uses technology and innovation to discover, develop and deliver energy in safe and responsible ways and to help tackle the energy challenges of the future. www.shell.com

References

1. R. Bowman and M.S. Hopkins, “What’s Your Company’s Sustainability Filter?,” January 18, 2011.

2. http://www.businesswire.com/news/home/20100122005661/en/Nike-Outlines-Global-Strategy-Creating-Sustainable-Business

3. We acknowledge, of course, that some businesses in developing countries may have substantively contributed to the environmental degradation that other, more sustainability-oriented businesses must contend with.

4. Worldwatch Institute, “State of the World: Our Urban Future,” 2007.

5. S.L. Hart and S. Sharma, “Engaging Fringe Stakeholders For Competitive Imagination,” Academy of Management Executive 18, no. 1 (Feb. 2004): 15.

6. “IDB to Support Expansion of CEMEX Microfinance Program for Low-Income Families,” June 28, 2011.

7. World Economic Forum and the Boston Consulting Group, “Redefining the Future of Growth: The New Sustainability Champions,” Geneva, Switzerland, 2011.

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