Study Reveals Gap Between Sustainability Leaders, Laggers

When surveying the corporate landscape in the context of sustainability, a new study found that companies largely fall into two camps.

In one group are those that see sustainability through a narrow lens focused on risk management and efficiency. The other is dominated by the growing number of companies taking a long view of sustainability, seeing it as a core strategy that enables long-term business growth and creates a range of intangible advantages.

Across the board, nearly 60 percent of companies revealed that despite the recession, sustainability investments actually grew in 2010, according to the second annual global sustainability study from the MIT Sloan Management Review (MIT SMR) and The Boston Consulting Group. About two-thirds of companies in the second group, the so-called "embracers," believe these kinds of sustainability investments are paying off and boosting their profits.

"What's fascinating is that our findings depict a business landscape in general that's tilting hard toward where the embracers already are," Michael Hopkins, MIT SMR editor-in-chief and report co-author, said in a statement. "So the embracers have handed us a kind of crystal ball. Their insights and behaviors suggest a blueprint for how management practice and competitive strategy will evolve."

The embracers share some common traits: They tend to be large and resource intensive. They believe sustainability offers a competitive advantage and can help a company earn their license to operate. Embracers are both early movers and long-term thinkers that balance a broad perspective that takes in a distant horizon with an immediate focus on short-term results. Sustainability is driven from the top, bottom and integrated across the company.

Embracers put stock in sustainability's intangible benefits, but also measure and assess everything. Along the way, they strive to be authentic and transparent about their efforts.

"These companies are measuring sustainability commitments in the way they would any other investment," the report said. "They are setting realistic goals expectations for the return on those investments. And yet by heading down one path -- by taking that leap of faith -- they are finding unexpected benefits emerge. Employees are more engaged in meeting environmental goals than had been anticipated. Brand value is enhanced, often in unexpected ways."

Most companies in the survey cited brand-building and reputation enhancement as sustainability's chief benefit. But its role in competitiveness is also significant, especially in some industries. For example, some 80 percent of respondents said sustainability is critical to helping companies in the automotive sector compete.

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