Sustainability’s Next Frontier

Sustainability’s next frontier is the need to tackle the most material sustainability issues, according to our fifth annual report, prepared in collaboration with MIT Sloan Management Review.

This year's research had three broad objectives: first, to uncover which sustainability issues—social, environmental, or economic—executives see as most critical; second, to understand how companies are addressing them; and third, to explore what it is that those companies that are addressing these issues most effectively are doing differently.

Based on a sample of 1,847 respondents from commercial enterprises, this year’s survey revealed that companies are primarily focusing on immediate business-related issues, such as energy efficiency, rather than longer-term ones like climate change. In general, we saw the strongest commitment in resource-intensive industries—and in companies with a global footprint.

Yet overall, our research found an eye-opening disconnect between thought and action regarding material sustainability issues. The challenge is not in seeing the importance of these issues. Close to 90 percent of executives believe a sustainability-oriented strategy is essential to long-term competitiveness. Nearly two-thirds of those surveyed, for example, rate social and environmental issues, such as pollution and employee health, as “significant” or “very significant” sustainability concerns. Yet only about 40 percent reported that their organizations are addressing them. Even more troubling, only 10 percent said their companies are fully tackling these issues.

There are key differences between those companies whose actions match their stated beliefs—we call them “walkers” because they “walk the talk” on sustainability—and those whose beliefs and actions are out of sync. In particular, walkers have done the following:

• Articulated a clear sustainability strategy
• Placed sustainability permanently on the top-management agenda
• Developed a business case for sustainability
• Changed their business model to address the sustainability issues that matter most

Walkers go beyond general pronouncements and assign responsibility for doing something about these concerns operationally. They’re also much better at measuring progress on performance. As a result, they are more likely to profit from their sustainability efforts.

These and more insights from this year's study can be found in the full report, which is available from MIT Sloan Management Review. It offers much richer detail on the distinction between walkers and talkers, on the sustainability issues that executives perceive as material, and the obstacles companies face in addressing material sustainability issues as well as the catalysts to transform good intentions into superior results.