Good OM Reading: Sustainabilty’s Next Frontier

For the past 5 years, MIT and the Boston Consulting Group have studied the sustainability challenges facing US firms. This new report’s findings are both encouraging and disconcerting. The study found a disconnect between thought and action on the part of many firms. For example, 2/3 of respondents rate social and environmental issues, such as pollution, as “significant” or “very significant” among their sustainability concerns. Yet only about 40% report that their organizations are addressing them. Even worse, only 10% say their companies fully tackle these issues.

• More than 90% have developed a sustainability strategy, compared to 62% among all respondents.
• 70% have placed sustainability permanently on their top management agenda, compared to an average of 39%.
• 69% have developed a sustainability business case, compared to only 37% of all respondents.

These leading companies suggest a path forward. MIT calls them “Walkers” — companies that “walk the talk” by identifying and addressing significant sustainability concerns. “Talkers,” on the other hand, are equally concerned about the most significant sustainability issues, but address those issues to a far lesser degree.

Data from the past 5 years shows that many organizations are struggling to move forward. For example, the percentage of companies that have established a sustainability business case has only grown from 30% to 37% during this period. More than half of the respondents have either failed to establish a business case or haven’t even tried to create one. The percentage of companies that report their sustainability efforts are adding to profits has consistently come in at roughly 35% since 2010. Many companies have hit a crucial inflection point. They have reaped the immediate gains from sustainability but have yet to embark on the next level: addressing the most significant sustainability issues.

This is an interesting report that you may wish to share with your class when you cover our new chapter on Sustainability in the Supply Chain (Supp.5).