By Marianne Wilson
  
(September 24, 2009) An overwhelming majority of corporate executives believe that sustainability-related issues are having or will soon have a material impact on their business. Yet relatively few companies are taking decisive action to address such issues, according to a new study by MIT Sloan Management Review and The Boston Consulting Group.

The study, “The Business of Sustainability,” is based on a global survey of more than 1,500 corporate executives. The five companies cited most often by survey respondents as "world class" in addressing sustainability were General Electric, Toyota, IBM, Royal Dutch Shell, and Wal-Mart Stores.

Although almost all the executives in the survey (92%) said that they were trying to address the issue of sustainability, most said that their companies were either not taking bold action on sustainability or falling short on execution. But the majority of sustainability actions undertaken to date appear to be limited to those necessary to meet regulatory requirements. Less than a third of survey respondents said that their company has developed a clear business case for addressing sustainability.

Additionally, less than 45% said their organizations were pursuing basic sustainability strategies such as reducing or eliminating emissions; reducing toxicity or harmful chemicals, improving efficiency in packaging; or designing products or processes for reuse or recycling.

"What came across loud and clear is that sustainability is having an increasingly significant impact on business, and executives are placing it high on the corporate agenda," said Maurice Berns, a BCG partner and a lead author of the report. "But we also found a wide gap between intent and action. Simply put, a majority of companies are not acting decisively to exploit the opportunities and mitigate the risks that sustainability presents. The findings should be a wake-up call to executives that if they want to make progress on sustainability, it's time to get serious."

The research indicated that once companies begin to pursue sustainability initiatives in earnest, they tend to discover opportunities to reduce costs, create new revenue streams, and develop more innovative business models. Sixty-eight percent of business leaders with sustainability expertise cited improved financial returns as a benefit from their organization's investments in sustainability initiatives, compared with only 32% of novices.

“One of the most interesting findings was that the more you know about sustainability, the more it matters," said Michael Hopkins, editor-in-chief of MIT SMR and a coauthor of the report. "Executives who have been thinking and strategizing around the issues are much, much more likely to see the competitive advantage that a sustainability strategy can grant."

For more details on the study's findings and interview transcripts, go to http://sloanreview.mit.edu/busofsustainability.