In addition to teaching my clients a thing or two, I’m always delighted when I learn something new from them. Recently, a number of clients have expressed interest in exploring careers in the growing field of Corporate Sustainability. When you hear that term, what comes to mind: Environmental stewardship? Long term planning? Something “Green” and feel-good?
One of my clients shared a recent post about a joint MIT/Boston Consulting Group (BCG) Sustainability & Innovation project that explores “how sustainability pressures are transforming the ways we all work, live, and compete.” Defining Corporate Sustainability as Environmental, Social and Governance (ESG) the project research is designed “to help managers to better understand the new forces that will affect their organizations, to navigate through the overwhelming mass of information about sustainability, and to fend off the threats and capitalize on the opportunities that sustainability issues present.”
Most strikingly, the research highlights the link between corporate sustainability and financial performance that is now being noted by investors. The study finds that
“90% of investors are likely to measure a company’s sustainability performance before making any investment decisions” citing as the top three reasons “increased potential for long-term value creation, improved revenue potential, and demonstration of operational efficiency.” (http://3blmedia.com/News/Investors-See-Strong-Link-Between-Corporate-Sustainability-and-Financial-Performance
This is a pretty radical shift from the mentality that’s it’s all about the numbers, and only the ones from the last quarter/week/day/hour! As recently as 2010, Bloomberg News published an article entitled “Investors Don't Care About Sustainability” that indicated just 22% of 766 CEOs surveyed believed that investors would be “key stakeholders in driving their action on sustainability over the next five years.” (http://www.bloomberg.com/news/articles/2010-11-09/investors-dont-care-about-sustainability)
Because those CEOs viewed the “lack of investor interest as a critical barrier to further investment,” very few of them even attempted to communicate to shareholders about sustainability as a business issue, perpetuating the cycle of disregard. This is despite a whopping 93% of CEOs believing that “sustainability will be ‘important’ or ‘very important’ to the future success of their business” and 96% believing that “sustainability should be fully integrated in the strategy and operations of a company.”
What has changed in the intervening years? Evidently, CEO’s have enabled progress by identifying and executing on the three key positives the Bloomberg article posits as necessary for sustainability to be embraced:
- Demonstrating the role of sustainability in shaping future strategy
- Quantifying the impact of sustainability on revenue, cost, risk and intangibles
- Communicating the contribution of sustainability to value creation
As a partner in the recent Sustainability & Innovation project, global management consulting firm BCG, which describes itself as “the world’s leading advisor on business strategy,” is not only reporting on this shift but embedding sustainability into their own practice narrative, indicating that their consulting approach “ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results.”
It is heartening that many leading companies are breaking the investor deadlock with compelling evidence that a business strategy that incorporates sustainability works. 80% of the CEOs surveyed believe that a “tipping point” of sustainability is embedded within the majority of companies global is possible within 10 to 15 years. Can’t be too soon!
Look for my next post on the career and personal impact of Sustainability.