- 90 percent of executives view a sustainability strategy as critical to long-term competitiveness and viability.
- Yet a disconnect exists between thought and action, with many companies failing to fully address the most material sustainability issues they face.
- There are key distinctions between the actions of companies that “walk the talk” on sustainability and those that don’t.
Cambridge, Massachusetts – Companies have largely accepted the importance of addressing sustainability issues, yet a large gap persists in translating that awareness into action. So says a new global study by MIT Sloan Management Review (MIT SMR) and The Boston Consulting Group (BCG). The study was being released on December 17 in a report titled “Sustainability’s Next Frontier: Walking the Talk on the Sustainability Issues that Matter Most”.
The study, based on a survey of more than 1,800 executives and managers from companies around the world, found that the stated importance of sustainability has remained largely constant since 2010. Close to 90 percent of respondents believe that sustainability-oriented strategies are essential for current and future competitive advantage.
The research, however, highlighted a disconnect between belief and action. For example, two-thirds of executives rated environmental or social issues as significant or very significant, yet only 40 percent reported their companies were “largely” addressing them. Just 10 percent reported their companies were “fully” addressing these issues.
Companies that take effective action on the sustainability issues that they identify as important to their organizations – those that walk the talk, in the report’s parlance – differ in several ways from companies that merely tout the importance of sustainability issues but do little to address them. The study suggests that “walkers” articulate a clear sustainability strategy, place these issues permanently on the top-management agenda, develop a clear business case for sustainability-related initiatives, and change their business models to address the material sustainability issues they face.
“Walkers go beyond general pronouncements and assign operational responsibility,” noted report co-author Holger Rubel, a BCG senior partner and the global leader of BCG’s sustainability efforts. “They’re also much better about measuring progress.”
“Most industries tend to focus on immediate business-related sustainability issues,” said Rubel. “For instance, energy efficiency appears to be the most salient environmental issue, and, indeed, resource-intensive companies, such as industrial goods makers or utilities, are much more likely to have invested in these issues and made them pay off. Resource-light industries, such as media and entertainment, have done relatively little on sustainability as a whole.”
Issues more likely to affect industries in the medium to long term, by contrast, get little attention. Climate change is the clearest example. Around 90 percent of surveyed managers believe that climate change is real and significantly influenced by human action. Yet, “only 11 percent of respondents rate climate change as a major issue for their companies,” remarked David Kiron, report co-author and executive editor of MIT SMR.
Geography also matters. Globally operating companies – with businesses across three or more regions – are more likely to be concerned about and to address these issues. Companies focused on developed economies, especially in North America, are at the opposite end. Companies focused on Europe, often seen as the vanguard, are only in the middle. Interestingly, South American companies are almost as vigilant here as their global counterparts, Kiron said.
To illustrate how organizations are employing these practices, the report cites numerous company examples, including Swiss Re, Crédit Agricole, Domtar, Avis Budget Group, General Electric, Hilton Worldwide, Dell, Kaiser Permanente, Nestlé, General Motors, Honda, Ocean Spray, and Tropicana.
About the Research Methodology
For the fifth year, MIT Sloan Management Review, in partnership with The Boston Consulting Group (BCG), conducted a global survey, to which more than 5,300 executives and managers responded. The report’s analysis is based on a smaller sub-sample of 1,847 respondents from commercial enterprises, with respondents from academic, governmental, and non-profit organizations excluded. A wide variety of industries are represented. The sample was drawn from a number of sources, including BCG and MIT alumni, MIT Sloan Management Review subscribers, BCG clients, and other interested parties. In addition to the survey results, the authors interviewed practitioners and experts from a number of industries and disciplines to understand the practical issues facing organizations today.
Click here to read/download the Full Report.