Wednesday, December 23, 2009

3 Hurdles to Decisive Corporation Action on Sustainability

The post summarizes an excellent article in MIT Sloan Management Review about the hurdles to corporate investments for sustainability culled from a research initiative. The 3 identified hurdles reflect challenges we see with our clients and are good reminders to sustainability leaders who are refining plans for 2010.

Improved company or brand image is the top business driver, but no standard definition of sustainability is widely accepted and the business case can be illusive

- Improved company image is, by far, the most frequent business benefit cited, followed by cost savings, competitive advantage, and improved employee recruitment and retention
- While business drivers are numerous (commodity price volatility, customer demands, investor and NGO pressure, regulation risk, need to attract and retain employees, etc.), the business case for sustainability-related investments can be hard to build, in part, because no single established definition of sustainability exists
- The most frequently cited definition for sustainability is the so-called Brundtland Commission definition of triple bottom line: economic, environmental, and societal considerations

3 hurdles to decisive and effective corporation action on sustainability

Based on research, the article cites three common hurdles:
1.Organizations don't understand what sustainability is or what it means to their enterprise
2.Companies have difficulty modeling the business case or even finding a compelling business case
3.Execution is flawed because of internal skepticism and lack of measurement

Implications for sustainability leaders
The first two hurdles are communication challenges. Sustainability leaders need to invest more in defining and promoting a common language and a fact base of the opportunities and threats facing their organization. Surprisingly, 70% of respondents in the research did not have a strong, written business case for sustainability.

In addition to overcoming skepticism and improving measurement, our experience suggests that accountability needs to be improved. Only 12% of firms have a sustainability director, cross-functional teams rarely drive substantial change, and few line managers have sustainability metrics in their operational goals.


ochant said...

Great post. Some companies are overcoming those hurdles just fine. I like what WWF is doing with their Climate Savers program: where companies volunteer to curb their emissions and set their own goals. Probably the most impressive of the Climate Savers’ efforts is JohnsonDiversey, who originally promised an 8% GHG reduction over 10 years (2003-2013), and just recently announced they are tripling that to a 25% reduction. I watched some of the Copenhagen talks by their CEO ( and they’ve taken it even farther in honor of COP15 – announcing they’ll assess a carbon footprint for all of their products and make that info public. I think if every business on the planet put forth the same effort it would create more change than government could ever dream of producing.

jclark said...

Addressing your point that "the business case for sustainability-related investments can be hard to build"

Many organizations evaluate investment decisions based on the investment pay back period.

A combination of Return on Investment (economic) and carbon footprint reduction (environmental) establishes a more meaningful measure of return for environmental sustainability investment decisions.

John Clark