The MIT Sloan Management Review Report was recently released (http://sloanreview.mit.edu/feature/sustainability-strategy/). According to their survey, corporate sustainability programs grew markedly in 2011. About 70% of nearly 3,000 executives surveyed said that sustainability was on the management agenda in 2011 and will probably remain so permanently. Two-thirds of those managers surveyed said that sustainability-related strategies are not just “nice” or even adding on to profit, but are necessary to stay competitive. 24% of those surveyed meet their criteria of “Embracers”, companies that have incorporated sustainability in the management agenda, have a business case for sustainability within their company, and feel that sustainability is necessary to stay competitive. About 31% of those surveyed meet their criteria of “Harvesters”, companies that have begun a sustainability program and realize the business case, but have not made it a far-reaching or permanent part of the culture.
What is especially telling are the corporate motivators to become more sustainable. The factor that was said to be the greatest motivator is the belief of customer preference for sustainable products and services (41% of those surveyed). Political pressure (35%) was next, followed by resource scarcity/price volatility (30%), competitors’ sustainability programs (28%), and stricter requirements from customers along value chain (26%).
A study by McKinsey & Company shows that energy efficiency is particularly profitable. Their study shows that proper energy efficiency programs that will generate an internal rate of return of about 17% and would result in meeting a significant percentage of the greenhouse gas emission reductions needed to meet Kyoto Protocol targets. If just the profits were reinvested into other greater cost strategies, then total Kyoto goals can be met at no net cost. These days a 17% return on investment is too good to ignore. This is not an environmental group talking, but a leading global business management firm. This and additional studies prove that being more sustainable is not a cost sink, but improves the bottom line of business and society as a whole, driving further growth.
Walmart recently issued its 2011 Global Responsibility Report (http://walmartstores.com/sustainability/7951.aspx) and stated that its sustainability and energy efficiency efforts begun in 2005 now saves them more than $500 million a year. Given a net 3% profit margin on their items, to match their annual $500 million of savings they would have to sell an additional $16.7 billion in goods, a real challenge.
CCES technical advisors can help you start a sustainability program from scratch or to move it along more smoothly to implement feasible projects to generate direct business benefits for your company and for your stakeholders. Others are doing it. Contact us now.