Ninety Percent of Executives Agree That Businesses Need to Collaborate to Address the Sustainability Challenges They Face. Eighty-Six Percent Say That the Board Should Play a Strong Role in a Company’s Sustainability Efforts
(Boston, 13 January 2015)—The practice of corporate sustainability is moving beyond ad hoc, opportunistic efforts to embrace a more holistic, strategic approach that pursues transformational goals, frequently through partnerships that engage multiple entities, including competitors, suppliers, governments, and NGOs. So says a new global study by MIT Sloan Management Review (MIT SMR), The Boston Consulting Group (BCG) and the UN Global Compact. The study results are being released today in a report titled Joining Forces: Collaboration and Leadership for Sustainability.
On the basis of a survey of more than 3,795 executives and managers from 113 countries, the study found that 61 percent of executives whose companies participated in sustainability-related partnerships view these collaborations as quite or very successful. But collaboration is not yet common practice. While 90 percent of respondents recognize the importance of sustainability collaboration—only 47 percent of respondents reported that their companies are actively collaborating.
“While collaboration is not yet the norm, among those who are doing it, we are increasingly seeing a focus on transformational, strategic results,” said coauthor David Kiron, executive editor of MIT SMR. “More than half of reported collaborations aspire to fundamentally change the market in which the business operates, so sustainability efforts are much less likely to be discrete projects and much more likely to engage a company’s entire ecosystem—from suppliers and customers to governments and academic institutions.”
Sustainability collaborations often bring together diverse stakeholders, and the research suggests that there is a learning curve for companies: the more collaborations a respondent’s company has engaged in, the more likely respondents are to rate their collaborations as successful. For example, among respondents whose organizations currently have one to three sustainability collaborations, 43 percent say that these collaborative ventures are very or quite successful. Of those that have engaged in more than 50, 95 percent report the same degree of success.
The study also looked at board engagement as a driver of sustainability success. Overall, 86 percent of respondents believe that the board of directors should play a strong role in driving their company’s sustainability efforts. But only 42 percent of respondents see their boards as moderately or more engaged with the company’s sustainability agenda. This disconnect affects performance: in companies whose boards are perceived as active supporters, 67 percent of respondents rate collaborations as very or quite successful. In companies whose boards are not engaged, the reported rate of success is less than half that.
“We identified several ways to overcome the barriers to board participation,” said coauthor Knut Haanaes, a Geneva-based senior partner at BCG. “They include appointing members with sustainability expertise, creating an external advisory board, integrating sustainability into the duties of the overall board and established board committees, and establishing a broader vision of the board as steward of all stakeholders and managers of risk versus the traditional maximizing only of shareholder financial value.”
As a whole, the study finds progress in companies making the fundamental shift in how they organize themselves and how their boards of directors act to address the profound challenges and risks that issues of sustainability present. But it also indicates that many business leaders have some distance to go to understand that the path to sustainability success is best traveled with others.
Coauthor Georg Kell, executive director of the UN Global Compact, aptly sums it up: “With commercial activities and investments reaching every corner of the earth, companies increasingly face complex uncertainties and risks related to social, environmental, and governance issues. Many of these challenges—such as corruption, climate change, and discrimination—cannot be tackled by a single organization, making it critical for companies to join together as never before. Companies are starting to see that when they provide a collective voice, share risks, and pool resources, they can deliver transformative solutions that benefit both business and society.”
Join the authors of the sustainability research report on January 28 at 11:00am ET for a free, live webinar and Q&A. Register for the free webinar now at http://mitsmr.com/SUWebinar15.
About the Research Methodology
For the sixth consecutive year, MIT Sloan Management Review, in partnership with The Boston Consulting Group (BCG), conducted a global survey to which more than 3,795 executives and managers responded. This year, the UN Global Compact joined the partnership for the first time. The report’s analysis is based on a smaller subsample of 2,587 respondents from commercial enterprises, with respondents from academic, governmental, and nonprofit organizations excluded. A wide variety of industries are represented. The sample was drawn from a number of sources, including BCG and MIT Sloan School of Management alumni, MIT Sloan Management Review readers, BCG clients, UN Global Compact members, and other interested parties. To illustrate the study findings, the report cites numerous company examples, including Intel, BASF, Asia Pulp & Paper, Stonyfield Farm, Netafim, Sprint, Timberland, WWF Switzerland, Unilever, Yara International, and Kimberly-Clark.
About the Sustainability & Innovation Project
MIT SMR’s Sustainability & Innovation project is an exploration, in partnership with BCG, of how sustainability pressures are transforming the ways we all work, live, and compete. S&I’s research, reporting, and community help managers to better understand the new forces that will affect their organizations, to navigate through the overwhelming mass of information about sustainability, and to fend off the threats and capitalize on the opportunities that sustainability issues present.
About MIT Sloan Management Review
MIT Sloan Management Review leads the discourse among academic researchers, business executives, and other influential thought leaders about advances in management practice that are transforming how people lead and innovate. MIT SMR disseminates new management research and innovative ideas so that thoughtful executives can capitalize on the opportunities generated by rapid organizational, technological, and societal change.
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients in all sectors and regions to identify their highest-value opportunities, address their most critical challenges, and transform their businesses. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. BCG is a private company with 81 offices in 45 countries. For more information, please visit www.bcg.com.
About the UN Global Compact
The UN Global Compact is a call to companies everywhere to voluntarily align their operations and strategies with ten universally accepted principles in the areas of human rights, labor, environment, and anticorruption, and to take action in support of UN goals and issues. Endorsed by chief executives, the UN Global Compact is a leadership platform for the development, implementation, and disclosure of responsible corporate policies and practices. Launched in 2000, it is the largest corporate-sustainability initiative in the world—with more than 12,000 signatories from business and key stakeholder groups in 150 countries, and more than 80 local networks.
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