ISSUE: Sustainability

Sustainability

By Pamela J. Black

Are businesses looking beyond profit?

Executive Summary

Many companies, mostly large multinationals, are adopting sustainability programs and delivering annual reports on their progress toward creating a new kind of business. Within this burgeoning movement, sustainable companies give the environment and human rights the same priority as profits. Their goals include protecting the Earth to reduce the effects of climate change while innovating new products. Some of the biggest companies have succeeded in integrating sustainable principles into their corporate DNA and say that it gives them a competitive edge. Is sustainability really making a difference? Can a company go “green” and remain profitable? Will the movement spread or fade away? Many of these companies have been accused in the past of degrading the environment and depleting natural resources, and critics say they are only changing their ways because of pressure from regulators, investors, activists, communities and consumers. Others, often with the help of nonprofits, have voluntarily instituted change across their business model. But so far progress is slow.

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Resources

Bibliography

Books

Elkington, John, “The Zeronauts: Breaking the Sustainability Barrier,” Routledge, 2012. The creator of the “triple bottom line” looks at a new five-prong paradigm that moves well beyond incremental change to transformation.

Hart, Stuart L., “Capitalism at the Crossroads: The Unlimited Business Opportunities in Solving the World's Most Difficult Problems,” Wharton School Publishing, 2005. The creator of the Sustainable Entrepreneurship MBA at the University of Vermont explains the history of sustainability and its possibilities.

McDonough, William, and Michael Braungart, “Cradle to Cradle: Remaking the Way We Make Things,” North Point Press, 2002. The originators of circular or closed-loop production describe a seminal process of eliminating waste altogether.

Winston, Andrew S., “The Big Pivot: Radically Practical Strategies for a Hotter, Scarcer, and More Open World,” Harvard Business Review Press, 2014. A business strategist gives a blueprint for how to incorporate sustainability in a business context.

Articles

Bardelline, Jonathan, “How UPS makes the business case for sustainability projects,” Greenbiz.com, May 6, 2013, http://tinyurl.com/ofk9xmc. UPS successfully argued for alternative fuel or advanced technology to power its fleet.

Davis, Grant, “The Triple Bottom Line Goal of Sustainable Business,” Entrepreneur, March 2013, http://tinyurl.com/pe36caw. Entrepreneurs have successfully used the principle of the triple bottom line—profit, planet and people.

Kaye, Leon, “The Business Case for Sustainability Is Becoming Easier to Make,” TriplePundit, March 15, 2013, http://tinyurl.com/bb4yy29. The editor of GreenGoPost, a website devoted to sustainability, describes how “green” efforts have helped the bottom line.

Kelly-Detwiler, Peter, “The Upside and Waging Peace Through Commerce: William McDonough Wants Us to Design Our Way to Abundance,” Forbes, Nov. 20, 2013, http://tinyurl.com/mbqet6w. Architect William McDonough discusses the concept of closed-loop manufacturing, where everything gets recycled.

Kiron, David, et al, “Sustainability's Next Frontier: Walking the Talk on the Sustainability Issues That Matter Most,” MIT Sloan Management Review, Dec. 15, 2013, http://tinyurl.com/lxxtfro. Boston Consulting Group and editors at MIT Sloan Management Review present research on how companies are faring with integrating sustainable values and practices.

Rajaram, Dhiraj, “Making the Business Case for Sustainability,” The Harvard Business Review, May 2, 2011, http://tinyurl.com/krn33z8. CEO of an analytics firm explains companies can measure the financial impact of sustainability strategies.

Scott, Ryan, “The Bottom Line of Corporate Good,” Forbes.com, Sept. 14, 2012, http://tinyurl.com/8uy49tk. CEO of Causecast, a firm that markets a technology platform to social cause-oriented organizations, explains the people, planet, profits framework.

Reports and Studies

“The Business Case for Sustainability,” International Finance Corp., 2012, http://tinyurl.com/mhhodsd. A report from a World Bank affiliate puts the business case for sustainability in an international context.

“Planning for a Sustainable Future,” National Association for Environmental Management, 2012, http://tinyurl.com/n364e4g. Twenty-five sustainability leaders and experts discuss their current thinking about sustainability.

Makower, Joel, et al., “The State of Green Business 2014,” GreenBiz and Trucost, 2014, http://tinyurl.com/kqcpcep. The editors of GreenBiz, a leading website about sustainable business, discuss trends in everything from chemical transparency to corporate leadership.

The Next Step

Accountability

Conti, David, “Center for Sustainable Shale Development aims to raise standards,” Pittsburgh Tribune-Review, Jan. 11, 2015, http://tinyurl.com/o32g39t. The Pittsburgh-based Center for Sustainable Shale Development, created in 2013 to certify natural gas companies for sustainable standards, aims to broaden its regulation of Pennsylvania's energy industry in 2015.

Leinaweaver, Jeff, “Might new financial tools translate ESG data into real-world loss and profit?” The Guardian (U.K.), Nov. 25, 2013, http://tinyurl.com/o2osvoh. Bloomberg and Thomson Reuters have created databases containing economic, social and governance data from thousands of businesses to enable reporters and organizations to hold companies accountable for sustainability initiatives.

Roston, Eric, “Sustainable Companies Want to Be Transparent—But Not Too Transparent,” Bloomberg, Feb. 11, 2014, http://tinyurl.com/p6b95tn. Corporate counsel are wary of sharing too much information, as companies make environmental impact, social issue and corporate governance data more publicly accessible, according to the director of a sustainability consulting firm.

Environmentalism

Doyle, Alister, “IKEA may tighten carbon rules to protect environment,” Reuters, Oct. 13, 2014, http://tinyurl.com/l32rtbt. Swedish furniture retailer Ikea will shift energy investments away from fossil fuels and toward solar and wind power in 2015, while also purchasing more wood and cotton from sustainable sources.

Elgin, Ben, “No More Faking It: Companies Ditch Green Credits, Clean Up Instead,” Bloomberg Businessweek, Dec. 17, 2014, http://tinyurl.com/n9h2zu3. More companies are dismissing the positive effects of purchasing renewable-energy credits, each equating to one hour of renewable-energy supply, in favor of pursuing their own renewable energy.

Strom, Stephanie, “Walmart Aims to Go Greener on Food,” The New York Times, Oct. 6, 2014, http://tinyurl.com/mzb97jx. Walmart plans to collaborate with food suppliers to reduce its environmental footprint resulting from food production, to improve access to healthy foods and to reward farmers for sustainable practices.

Philanthropy

Kozlov, Klara, “New survey shows FTSE 100 companies have increased charitable giving,” The Guardian (U.K.), Aug. 14, 2014, http://tinyurl.com/nfwqyvm. Research by the U.K.-based Charities Aid Foundation shows charitable donations by companies in London's FTSE 100 stock exchange nearly doubled between 2007 and 2012.

Seervai, Shanoor, “Indian Companies and Charities Aren't Ready for New Giving Law,” The Wall Street Journal, April 11, 2014, http://tinyurl.com/pq864ju. India's nonprofits must learn to manage more philanthropic donations after a new law took effect requiring companies to give 2 percent of their profits to causes such as hunger, gender equality and environmental sustainability.

Shwab, Klaus, “Business in a Changing World,” Foreign Affairs, Jan. 6, 2015, http://tinyurl.com/ol6l4dt. Global business will benefit long-term if companies innovate in corporate governance, philanthropy, social entrepreneurship, citizenship and accountability, according to the executive chairman of the World Economic Forum.

Profitability

Grene, Sophia, The bottom line is a sustainability one,” Financial Times (U.K), Sept. 21, 2014, http://tinyurl.com/ps4vq22. A study by researchers from the University of Oxford's Smith School of Enterprise and the Environment indicates that practicing sustainability directly correlates to improved stock price performance for companies.

Kukil, Bora, “New Report On Global Corporate Sustainability Practices Shows Talkers Outnumber The Doers,” International Business Times, Dec. 18, 2013, http://tinyurl.com/p3cw572. According to research by the MIT Sloan Management Review and The Boston Consulting Group, there are more companies claiming to pursue sustainability for increased profits and reputational gains than companies that actually pursue those actions.

Miller, Joe, “War on waste makes sustainable business more profitable,” BBC, May 19, 2014, http://tinyurl.com/pevv485. International waste management companies and sustainability nonprofits working with major corporations advise their clients that sustainable disposal makes most businesses more competitive.

Organizations

American Sustainable Business Council
401 New York Ave., N.W., Suite 1225, Washington, D.C. 20005
202-595-9302
http://asbcouncil.org
A national advocacy group that works for a sustainable economy.

CDP (formerly the Carbon Discovery Project)
132 Crosby St., 8th Floor, New York, NY 10012
212-378-2086
www.cdp.net
Major nonprofit that works with companies and other stakeholders to transform business to prevent climate change.

Ceres (the Coalition for Environmentally Responsible Economies)
99 Chauncy St., 6th Floor, Boston, MA 02111
617-247-0700
www.ceres.org
Nonprofit for investors and businesses in sustainability that has numerous studies about industries, company rankings, and sustainability advice.

GreenBiz Group
350 Frank H. Ogawa Plaza, Oakland, CA 94612
510-550-8285
www.greenbiz.com
A varied and thorough source of news, reports and events.

International Institute for Sustainable Development
61 Portage Ave. E., 6th Floor, Winnipeg, Manitoba, Canada R3BOY4
204-958-7700
www.iisd.org
International public policy research and lobbying institute for sustainable development.

Sustainability Consortium
Arizona State University Global Institute of Sustainability, P.O. Box 873511, Tempe, AZ 85287-3511
480-965-1770
www.sustainabilityconsortium.org
Trade association seeking a scientific foundation for innovation to improve consumer product sustainability.

Sustainable Manufacturer Network
833 Featherstone Rd., Rockford, IL 61107
815-399-8700
http://sustainablemfr.com
Industry association that promotes “cost-effective, environmentally and socially responsible manufacturing.”

U.S. Forum for Sustainable and Responsible Investment
1660 L St., N.W., Suite 306, Washington, DC 20036
202-872 5361
www.ussif.org
Association for professionals, firms, institutions and organizations engaged in sustainable, responsible and impact investing.

DOI: 10.1177/2374556815574849