Sustainability Nears a Tipping Point

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

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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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