This is the first of a series of two articles that explores the emerging role of sustainability in the corporate sector.
In 2010, if you asked the CEO of a Fortune 500 company the area that was receiving the most increased attention and investment by their organization, you would hardly expect sustainability to be the answer.
Incredibly, MIT Sloan Management Review and the Boston Consulting Group asked these companies that question, and received that answer.
Looking closely, one could argue that this is not a surprise, that we expect companies to consider green a catchier term for plain vanilla cost-cutting and resource efficiency.
Surprisingly again, green is no longer a synonym for efficiency, but for an ever-increasing number of organizations, it is a strategy that is a competitive differentiator.
According to the survey, 59% of the respondents said they have increased their commitment to sustainability, with only 3% decreasing it and 34% not changing their existing level of engagement.
The respondents who claim to have embraced sustainability say that the benefits of this course of action are many—nearly half say it increases brand reputation, compared to 28% nodding in favor of energy efficiency gains. While a quarter of the respondents said it increased competitive advantage, all of 32% said it resulted in better, and not simply more, innovation of products and/or business models and processes.
Judging from this survey, it is clear that boardrooms across the world are taking note of this important issue that is green and incorporating it into their business models. Today companies are not only looking to improve their image, but to actually out-innovate and out-compete their peers by looking through the green lens.
If the creation of a new post for any business process can be used as a measure of its importance, then the post of CSO , Chief Sustainability Officer, is right up there with its conventional peers such as CFO and the CEO. Proctor and Gamble, Sears, Unilever, Duke Energy and SAP are just a few heavyweights that have a chief executive post for sustainability, and a lot more are joining their ranks.
Companies that look to green to find new avenues for innovation are traditionally those which are considerably more resource-oriented, such as the chemical or manufacturing sector. However, this is changing as well. In a comparatively resource-neutral sector like financial services, a staggering 65% of respondents expect to see an increase in their commitments in the year ahead. For the chemical sector, it was even higher at 83%. While this figure itself may change from sector to sector, the conclusion is clear: no industry can remain ignorant of green’s growing importance.
Apple, for example, has been in many ways a pioneer in the technology industry in this regard. Its products consistently get thinner and lighter with every new launch, even as they get more powerful. Every Apple device is free of elemental bromine and chlorine and other toxins and harmful substances. In addition, every Apple products display features like mercury-free LED backlighting and arsenic-free glass. Doing all this not only earns Apple a great reputation, it also puts them light years ahead of their competition. Moreover, this is all in the absence of any regulation that prevents manufacturers from using these chemicals in their products. Whenever such regulation becomes a reality—and it eventually will—the rest of the industry will be playing catch-up to Apple, which can in the meantime devote its resources to its core operations of making more functional products.
For business majors on campus, this is a crucial insight about how the workplace is changing at such a fundamental level and at such a rapid pace.
It is thus clear that companies in the world are incorporating sustainability into their business agenda and finding ways to generate competitive advantage from this new opportunity. The next article will focus on what companies on Centennial Campus and the University are doing to leverage this opportunity.
