As we will be devoting the majority of this course to understanding how we can innovate and leverage opportunities in sustainability, I would like to take this section to provide two readings examining correlations between high performing sustainability programs, increased organizational profitability over peers, and leading management processes.
Optional Reading:
The Business of Sustainability: Imperatives, Advantages and Actions
The first reading is jointly authored by The Boston Consulting Group and MIT Sloan Management Review, and reflects survey results from more than 1500 executives and high-level managers, and in-depth interviews with more than 50 thought leaders. It has quite a few interesting insights into sustainability's benefits to the business model and profitability, but below is one which nicely illustrates the ties between shareholder return and sustainability efforts.
The potential impact of sustainability efforts includes:
- A stronger brand and greater pricing power
- Greater operational efficiencies
- More efficient use of resources
- Supply chain optimization
- Lower costs and taxes
- Enhanced ability to attract, retain, and motivate employees
- Greater employee productivity
- Improved customer loyalty; lower rate of churn
- Enhanced ability to enter new markets
- More potential sources of revenue
- Lower market, balance-sheet, and operational risks
- Lower cost of capital
- Greater access to capital, financing, and insurance
Optional Reading:
This is a shorter piece, centered on one, rather in-depth analysis of long-term performance. RobecoSAM, the auditing firm known for its international Sustainability Yearbook rankings, examined the sustainability profile of more than 500 companies a year over a 13-year dataset to create a five-level tier of their approach to sustainability. From Leader to Laggard, they then evaluated the financial performance of those companies over the same period. Below is a central finding of that research:
