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MIT Sloan BCG Release 8th and Final Sustainability Study

Over the last eight years, the MIT Sloan Management Review and Boston Consulting Group (BCG) have conducted research on global corporate sustainability. Surveys and interviews were administered annually to executives and leaders from a wide range of industries and disciplines across the globe. In May, the partnership released its final report outlining their overall assessment of how companies address sustainability. The key lessons from the 8-year study for how to get the greatest value from sustainability efforts are summarized in this year’s report, Corporate Sustainability at a Crossroads, and outlined below.

Set your sustainability vision and ambition

  • For the most advanced companies, their sustainability strategy istheir business strategy
  • Companies struggle to make sustainability profitable until they develop a true sustainability strategy (beyond tactical efficiencies) and build a solid business case

Focus on material issues

  • Companies with more developed sustainability strategies view sustainability as a necessity and a business opportunity
  • Sustainability activities are up to 50% more profitable when they are connected to issues and activities that are important to the business

Set up the right organizational structure to achieve your ambition

  • Changing the business model, without changing the way sustainability is integrated into the business, won’t achieve the desired goal, and could result in negative consequences
  • Building sustainability into business units doubles an organization’s chance of profiting from its sustainability activities

Explore business model innovation opportunities

  • Sustainability activities that are reactive responses to risk, reputation, and regulatory compliance won’t contribute to making a strong business case for sustainability
  • View sustainability activities as proactive opportunities for market share, potential efficiencies, competitive advantages, and innovation

Develop a clear business case for sustainability

  • Avoid building a business case that justifies only incremental sustainability investments
  • Focusing on incremental improvements to an existing business model may overlook broader, more systematic innovation opportunities that promise a bigger impact and returns

Get the board of directors on board

  • Boards of directors can and should play a central role in supporting sustainability strategies, but they often don’t due to conflicting interests, short-termism, lack of sustainability expertise, and unclear financial impacts of sustainability activities
  • Training, drafting new board members, and using outside experts can improve board members’ knowledge of sustainability
  • Short-termism can be overcome by recognizing that integrating sustainability into business creates long-term value for all stakeholders (not just the shareholders), which is in the best interest of the company, the shareholders, and society

Develop a compelling sustainability value creation story for investors

  • 75% of executives in investment companies think sustainability performance should be considered in investment decisions, but only 60% of corporate executives think investors care about sustainability performance
  • Investors do care about sustainability performance; they’re interested in growth, efficiency, and risk, 3 elements that sustainability is central to
  • Sustainability creates value when used to manage risks, reduce costs, and identify opportunities for revenue growth, all of which should be reflected in a business’ share price

Collaborate with a variety of stakeholders to drive strategic change

  • 90% of executives believe collaboration is essential to sustainability success, but only 47% say their companies collaborate strategically
  • Collaboration helps companies increase their knowledge and motivates innovation and value creation

Though some companies have made significant progress in implementing corporate sustainability strategies, these companies remain the minority. The eighth and final study in the MIT/BCG series concludes that the business world has learned a lot about the value of sustainability management, but as a whole, still has a long way to go to implement the strategies laid out above and reap that value.

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