McKinsey & Company recently published findings from its February 2010 survey on “How Companies Manage Sustainability.” Nearly 2,000 executives from a wide range of industries and regions participated. A highlight statement from the survey is that “most companies are not actively managing sustainability, even though executives think it’s important to a variety of corporate activities.”
This gap is attributed to no clear definition of what sustainability means, and as a result, only 30% or the respondents indicated that they “actively seek opportunities to invest in sustainability or embed it in their practices.”
The survey found that respondents framed sustainability in the following way: 55% as an environmental management issue; 48% as a governance issue; 41% as a societal issue; and 56% indicated they define sustainability in two or more ways. Only 6% said that sustainability is both a C-suite priority and that it was formally and effectively embedded in its business practices.
Questions about the way sustainability efforts create value for companies were asked. There was a noticeable difference in the way energy companies responded to the questions versus other sectors, as well as questions throughout the survey. On value questions, non-energy companies identified reputation building (55%) as the top value-creation issue. Following this were, growth opportunities (39%), cost savings (53%); risk avoidance (29%), and customer loyalty (29%).
As identified in the previous post on sustainability as a megatrend, the survey results highlight the need for clarity on understanding the value from establishing a sustainability program. Hand-and-glove with this, is tying the value and sustainability strategy to the company’s overall strategy. This is observed in the difference between the energy sector responses from other sectors, given the energy sector’s unique strategic issues due to their environmentally intense nature, as well as the need to manage its high risks.
In putting together a sustainability strategy, it is important to consider information such as the McKinsey survey results, ideas from NGOs and third party reporting organizations, industry guidelines, and market-basket benchmarking. However, the organizational and management science literature strongly suggests that such strategies need to be developed uniquely for each company. Saying this through a systems thinking lens, the strategy must be developed based on an understanding of a company’s internal and external systems.
Many EHS professionals and their departments are seeing their activities being reframed and reorganized in terms of sustainability and CSR. Navigating in this expanded context can be challenging and require new skills. For the professionals and departments who want to take a leadership role in developing their company’s sustainability strategy and program, a place to start is to highlight the link between EHS activities and company reputation.
© Redinger EHS, Inc. (2010)