Why are so Many Companies Missing their Own Sustainability Targets?

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While an increasing number of companies are successfully implementing sustainability policies, some of their employees remain skeptical that management really cares. And such doubts, whether justified or not, could explain why many businesses are continuing to fall short of their own sustainability goals, according to new research.

Lower-than-expected sustainability outcomes are touching the vast majority of American businesses, according to Bain & Co. After interviewing managers at 300 companies, the consultancy found that just 2% either met or exceeded their sustainability targets, even as the need for change accelerates.

“Just 2% either met or exceeded their sustainability targets, even as the need for change accelerates.

Of course, the results could partly come down to some companies prioritizing other important responsibilities. These could include increasing shareholder returns or excelling at other components of corporate social responsibility programs, such as community development, health initiatives and support for education and the arts.

And it’s not as if company leaders have been sitting on their hands. The likes of Biogen, Nike, Coca-Cola, Dell and Microsoft regularly occupy the upper rungs of global corporate sustainability ranking tables. Dell, for example, just won the Best Sustainability Initiative category of Chief Executive’s 2017 Corporate Citizenship Awards for creating a “smart hive” of more than 20,000 bees that demonstrates how the Internet of Things can help the economy and nature.

Many companies produce annual sustainability reports these days and dozens remain outspoken supporters of action on sustainability issues, such as climate change. But the sheer scope of failure to reach internal targets evident in Bain’s research indicates that even companies with the very best intentions are still falling short of their own, sometimes lofty expectations.

A major problem, according to Bain, is that many survey respondents cited “public reputation” as the key driver of their company’s efforts, rather than a genuine desire to help the environment or improve workplace safety and conditions. “Employees also deprioritize sustainability because of perceived business trade-offs and an absence of incentives,” it said.

A lack of resources and competing priorities were selected as the two top obstacles to achieving sustainability goals, while less than a quarter of respondents said they were held accountable to sustainability via performance targets.

If they want to raise the bar, Bain said CEOs must be prepared to lead by example. “Our research shows senior leadership support is the most important factor contributing to success, and visible actions—not just words—make the difference,” Bain said.

It suggests executives shouldn’t be afraid to make their goals public, even if that means extra scrutiny from third-party watchdogs and wearing criticism if they fail. Explaining the business case for sustainable practices is also crucial, it suggests. After all, acting more sustainably can actually help reduce costs by securing higher-quality supply chains, while improving employee satisfaction.

To work sustainability into performance targets, Bain suggests changing capital-approval processes to include sustainability factors.

Ross Kelly
Ross Kelly is a London-based business journalist. He has been a staff correspondent or editor at The Wall Street Journal, Yahoo Finance and the Australian Associated Press.

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