Can Sustainability Be Sustained?
Maybe it’s not as hard as some people think to “do good” and “do well” at the same time. New research shows that organizations that use sustainability-related strategies to a greater degree are also more likely to be doing well in the marketplace.
The global survey, based on responses from 1,365 business professionals, was commissioned by the American Management Association and conducted by the Human Resource Institute (now co-branded as the Institute for Corporate Productivity). It looked not only at the degree to which organizations are using sustainability approaches but also at how this differs among higher-performing and lower-performing organizations, as determined by self-reports in areas such as revenue growth and profitability. The data indicates that higher-performing organizations are more likely than their lower-performing counterparts to use sustainability practices to a greater extent and to attach more importance to qualities associated with sustainability.
Exactly what is sustainability? One definition is “a company’s ability to achieve its business goals and increase long-term shareholder value by integrating economic, environmental and social opportunities into its business strategies” (“Symposium,” 2001; Corporate, 2007). Some experts have described it as balancing financial imperatives with social and environmental imperatives. In practice, it means doing everything from ensuring the safety of employees to collaborating with local communities to making products that are socially and environmentally sound.
The survey asked respondents about what they considered the most important organizational qualities needed for building a sustainable organization. The three top-ranked qualities were 1) top management’s visible support for sustainability, 2) deeply held corporate values that are consistent with sustainability, and 3) sustainability’s placement as central to overall corporate strategy.
There was a significant gap, however, between the perceived importance of these qualities and the extent to which organizations embody these qualities. In other words, few companies live up to the ideal of sustainability. Only about a tenth of respondents think their organizations are implementing a sustainability strategy to a very great extent, and another 25% think their organizations are doing so to an above-average extent.
It might be a different story in the future. After all, survey respondents didn’t see any formidable barriers to making organizations more sustainable. Even the top-ranked barriers – a lack of demand from customers, a lack of demand from managers and employees, a lack of understanding, and a lack of standardized metrics – were rated as only moderately strong.
Another factor that might drive up the use of sustainability practices is their self-reinforcing nature. The survey shows that there’s a correlation between the degree to which firms implement sustainability strategies and the degree to which they see measurable benefits from sustainability initiatives. It’s hard to tease out causes and effects here, but it’s possible that the more organizations implement such strategies, the more they see measurable benefits from them.
Employee attitudes are another factor that could compel organizations to adopt sustainability principles and practices. The survey shows that respondents personally care more about sustainability issues than they think their organizations do, especially when it comes to social and environmental concerns. This is especially true in certain areas, such as providing safe and reliable food sources, enhancing worker job security, ameliorating climate change, ensuring the well-being of employees, and addressing poverty and homelessness.
Survey respondents – about half of whom were HR professionals – also believe that attracting and retaining diverse top talent will be among the primary drivers of key business decisions a decade from now. To the degree that talented people demand sustainability practices from their employers, organizations are likely to embrace those practices in the future.
According to the survey, two other important future drivers of business decisions are 1) the need to improve reputation and brand image with the shareholders and the public and 2) the need to enhance innovation. Both relate back to sustainability. Corporate responsibility initiatives are one way to enhance an organization’s reputation, and making products and services “greener” could turn out to be a major impetus behind future innovations.
On the other hand, the survey also found that environmental issues were not highly rated in terms of their ability to drive key business issues, either today or in 10 years. For example, the environmental issue that is probably receiving the most attention in the press and the scientific community – the risks associated with greenhouse gases and global climate change – was seen as a relatively low-ranked driver of key business decisions. In fact, it was ranked 24th out of 25 issues today. Looking 10 years ahead, this issue is ranked 23rd out of 25 issues. Two other issues that have relatively low ranks in terms of driving key business decisions are “securing needed energy resources” (ranked 17th today and 17th in 10 years) and “securing needed raw materials over the long term for our employees, suppliers, customers and the communities in which we operate,” ranked 22nd today and 22nd in 10 years.
It’s interesting that respondents view various environmental issues as personally very important and yet don’t believe these issues will drive key business decisions to any great extent. Perhaps these business professionals correctly assess the priorities of their businesses, or perhaps they underestimate the combination of evolving social values and the potential for stronger environmental regulations. Respondents did view “effectively addressing regulatory restrictions” as an important factor that drives key business decisions, and this could turn out to be relevant in light of a recent U.S. Supreme Court ruling that the Environmental Protection Agency has the authority to regulate greenhouse gas emissions (Greenhouse, 2007).
No one can be certain about whether the sustainability paradigm will become more broadly and deeply ingrained in organizations in coming years, but the study suggests that a variety of social, economic and environmental trends are giving it a kind of momentum. Ultimately, though, this trend will hinge on the degree to which employees at all levels – but especially organizational leaders – decide to adopt sustainability principles and practices.
For more information:
For more on related issues, see the institute’s Ethics in Business Knowledge Center. Also, be on the lookout for a soon-to-be-released Sustainability Knowledge Center. In addition, other 2007 Sustainability Survey information will be published on the i4cp Web site, and the entire report will be published by the American Management Association . For more information on other freely available research reports produced by AMA, please click here .
Documents referenced in this TrendWatcher include the following: Corporate Communication Institute. “Sustainability and the Bottom Line: Symposium Reveals Benefits of Energy/Environmental Performance.” GreenBiz.com, obtained April 2007.
Greenhouse, Linda. “Justices Say E.P.A. Has Power to Act on Harmful Gases.” New York Times, April 3, 2007.
“Symposium on Sustainability – Profiles in Leadership.” New York: October 2001.
The global survey, based on responses from 1,365 business professionals, was commissioned by the American Management Association and conducted by the Human Resource Institute (now co-branded as the Institute for Corporate Productivity). It looked not only at the degree to which organizations are using sustainability approaches but also at how this differs among higher-performing and lower-performing organizations, as determined by self-reports in areas such as revenue growth and profitability. The data indicates that higher-performing organizations are more likely than their lower-performing counterparts to use sustainability practices to a greater extent and to attach more importance to qualities associated with sustainability.
Exactly what is sustainability? One definition is “a company’s ability to achieve its business goals and increase long-term shareholder value by integrating economic, environmental and social opportunities into its business strategies” (“Symposium,” 2001; Corporate, 2007). Some experts have described it as balancing financial imperatives with social and environmental imperatives. In practice, it means doing everything from ensuring the safety of employees to collaborating with local communities to making products that are socially and environmentally sound.
The survey asked respondents about what they considered the most important organizational qualities needed for building a sustainable organization. The three top-ranked qualities were 1) top management’s visible support for sustainability, 2) deeply held corporate values that are consistent with sustainability, and 3) sustainability’s placement as central to overall corporate strategy.
There was a significant gap, however, between the perceived importance of these qualities and the extent to which organizations embody these qualities. In other words, few companies live up to the ideal of sustainability. Only about a tenth of respondents think their organizations are implementing a sustainability strategy to a very great extent, and another 25% think their organizations are doing so to an above-average extent.
It might be a different story in the future. After all, survey respondents didn’t see any formidable barriers to making organizations more sustainable. Even the top-ranked barriers – a lack of demand from customers, a lack of demand from managers and employees, a lack of understanding, and a lack of standardized metrics – were rated as only moderately strong.
Another factor that might drive up the use of sustainability practices is their self-reinforcing nature. The survey shows that there’s a correlation between the degree to which firms implement sustainability strategies and the degree to which they see measurable benefits from sustainability initiatives. It’s hard to tease out causes and effects here, but it’s possible that the more organizations implement such strategies, the more they see measurable benefits from them.
Employee attitudes are another factor that could compel organizations to adopt sustainability principles and practices. The survey shows that respondents personally care more about sustainability issues than they think their organizations do, especially when it comes to social and environmental concerns. This is especially true in certain areas, such as providing safe and reliable food sources, enhancing worker job security, ameliorating climate change, ensuring the well-being of employees, and addressing poverty and homelessness.
Survey respondents – about half of whom were HR professionals – also believe that attracting and retaining diverse top talent will be among the primary drivers of key business decisions a decade from now. To the degree that talented people demand sustainability practices from their employers, organizations are likely to embrace those practices in the future.
According to the survey, two other important future drivers of business decisions are 1) the need to improve reputation and brand image with the shareholders and the public and 2) the need to enhance innovation. Both relate back to sustainability. Corporate responsibility initiatives are one way to enhance an organization’s reputation, and making products and services “greener” could turn out to be a major impetus behind future innovations.
On the other hand, the survey also found that environmental issues were not highly rated in terms of their ability to drive key business issues, either today or in 10 years. For example, the environmental issue that is probably receiving the most attention in the press and the scientific community – the risks associated with greenhouse gases and global climate change – was seen as a relatively low-ranked driver of key business decisions. In fact, it was ranked 24th out of 25 issues today. Looking 10 years ahead, this issue is ranked 23rd out of 25 issues. Two other issues that have relatively low ranks in terms of driving key business decisions are “securing needed energy resources” (ranked 17th today and 17th in 10 years) and “securing needed raw materials over the long term for our employees, suppliers, customers and the communities in which we operate,” ranked 22nd today and 22nd in 10 years.
It’s interesting that respondents view various environmental issues as personally very important and yet don’t believe these issues will drive key business decisions to any great extent. Perhaps these business professionals correctly assess the priorities of their businesses, or perhaps they underestimate the combination of evolving social values and the potential for stronger environmental regulations. Respondents did view “effectively addressing regulatory restrictions” as an important factor that drives key business decisions, and this could turn out to be relevant in light of a recent U.S. Supreme Court ruling that the Environmental Protection Agency has the authority to regulate greenhouse gas emissions (Greenhouse, 2007).
No one can be certain about whether the sustainability paradigm will become more broadly and deeply ingrained in organizations in coming years, but the study suggests that a variety of social, economic and environmental trends are giving it a kind of momentum. Ultimately, though, this trend will hinge on the degree to which employees at all levels – but especially organizational leaders – decide to adopt sustainability principles and practices.
For more information:
For more on related issues, see the institute’s Ethics in Business Knowledge Center. Also, be on the lookout for a soon-to-be-released Sustainability Knowledge Center. In addition, other 2007 Sustainability Survey information will be published on the i4cp Web site, and the entire report will be published by the American Management Association . For more information on other freely available research reports produced by AMA, please click here .
Documents referenced in this TrendWatcher include the following: Corporate Communication Institute. “Sustainability and the Bottom Line: Symposium Reveals Benefits of Energy/Environmental Performance.” GreenBiz.com, obtained April 2007.
Greenhouse, Linda. “Justices Say E.P.A. Has Power to Act on Harmful Gases.” New York Times, April 3, 2007.
“Symposium on Sustainability – Profiles in Leadership.” New York: October 2001.