More Companies Are Committing to Sustainability Initiatives

Effective sustainability strategies also provide huge opportunities for operational improvements and cost savings.

CEOs can take advantage of a growing number of possible routes to achieving sustainability gains for their companies, including effective partnerships with “non-governmental organizations” (NGOs) that also are some of the biggest activist organizations behind sustainability concerns.

The mainstreaming of sustainability pursuits is illustrated by a recent McKinsey survey in which the overall goals of sustainability strategy have been evolving. This year, 43% of companies surveyed said they were looking primarily to align sustainability with their overall business goals, mission or values—up from 30% who said so in 2012. That points to an increasing integration of sustainability strategy with overall business strategy.

“Whatever the impetus,” as McKinsey put it recently, “sustainability has become sufficiently pervasive that defining it and executing business programs, products and practices with an eye to their environmental and social implications has become a demanding managerial exercise.”

Unilever CMO Keith Weed explained to WARC: “We wanted [sustainability] to be an integral part of our business, embedded in everything we do, and so activities formerly isolated within [corporate social responsibility] became strategic initiatives directed toward nutrition, water, hygiene, health and self-esteem.”

CEOs can’t count on winning brownie points for making such efforts, however, as customers and shareholders often see a sustainability policy as a necessary price of entry for their loyalty.

One-third of consumers regularly consider sustainability in their purchasing decisions, according to a global study by Accenture and Havas Media. The survey of 30,000 consumers in 20 countries showed that 73 percent believe businesses are failing to take care of the planet and society. And more than 80 percent of CEOs in the research said that their company’s reputation for sustainability is important to consumers. Roughly one-quarter, or 23 percent, of consumers surveyed regularly seek information on the sustainability performance of the brands whose products they purchase.

One path chosen by more CEOs is to partner with NGOs that provide much of the social impetus behind rising sustainability concerns in the first place. Often, these organizations are simply trying to “hold up” companies and are hostile and even intransigent in terms of providing meaningful cooperation with a company or industry that may be a target.

But more business chiefs are finding ways to work with these organizations to help achieve the sustainability goals that their companies increasingly are embracing. For example, General Mills has just joined the Business for Innovative Climate and Energy Policy coalition, with CEO Ken Powell saying that the partnership will be key as General Mills advocates for “large-scale progress” on the climate-change issue.

Among the important considerations in forming partnerships for sustainability, McKinsey said, are identifying clear reasons to collaborate, setting simple and credible goals, dedicating truly good people to the cause, being flexible in defining success, and preparing to “let go” after the partnership has served its best purposes. Companies should also consider the ROI, as many sustainability initiatives can reduce, rather than increase, costs.