The Business of Sustainability


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The Business of Sustainability

  1. 1. The Business of Sustainability Imperatives, Advantages, and Actions
  2. 2. This report is published by The Boston Consulting Group MIT Sloan Management Review on the Sustainability Initiative, a joint undertaking MIT Sloan Management Review MIT Sloan Management Review
  3. 3. The Business of Sustainability Imperatives, Advantages, and Actions Maurice Berns Andrew Townend Zayna Khayat Balu Balagopal Martin Reeves Michael Hopkins Nina Kruschwitz September 2009
  4. 4. © The Boston Consulting Group, Inc. 2009. All rights reserved. For information or permission to reprint, please contact BCG at: E-mail: Fax: +1 617 850 3901, attention BCG/Permissions Mail: BCG/Permissions The Boston Consulting Group, Inc. One Beacon Street Boston, MA 02108 USA
  5. 5. Contents Preface 4 Executive Summary 5 Survey and Interview Findings 7 The Consensus: Sustainability Matters 7 Sustainability Is Not a “Topic du Jour” 7 Opinions Differ on Certain Aspects of Sustainability 8 Some Companies Are Acting Decisively and Winning 12 Many Companies Are Moving Slowly or Struggling with Execution 12 Challenges to Decisive—and Effective—Corporate Action 14 Three Major Barriers Impede Decisive Corporate Action 14 Necessary Capabilities 18 Looking Ahead: Seizing Opportunities and Mitigating Risks 20 Lessons from Leading Companies 20 Peering over the Horizon 21 Appendix I: Methodology for the Sustainability Survey and Interviews 23 Appendix II: The Sustainability Audit 24 Appendix III: Thought Leader Interviewees 27 For Further Reading 31 Note to the Reader 32 The Business of Sustainability 3
  6. 6. Preface S ustainability is garnering ever-greater public This report presents high-level findings from the survey attention and debate. The subject ranks high responses and thought leader interviews and offers inter- on the legislative agendas of most govern- pretation and analysis of the results, along with a diag- ments; media coverage of the topic has prolif- nostic tool to help companies assess where they stand erated; and sustainability issues are of increas- with their own sustainability efforts. We hope to provide ing concern to ordinary citizens around the world. executives food for thought as they consider how—or whether—they can take their sustainability efforts to the However, the business implications of sustainability mer- next level. it greater scrutiny. Will sustainability change the compet- itive landscape and reshape the opportunities and threats For more about this work in sustainability, including that companies face? If so, how? How worried are execu- detailed results from the survey, please see the online tives and other stakeholders about the impact of sustain- exploration at MIT Sloan Management Review’s Sustain- ability efforts on the corporate bottom line? What—if ability Initiative Web site, anything—are companies doing now to capitalize on sus- busofsustainability/. tainability-driven challenges? And what strategies are they pursuing to position themselves competitively for About the Authors the future? Maurice Berns is a partner and managing director in the London office of The Boston Consulting Group. To begin answering these questions, The Boston Consult- Andrew Townend is a principal in the firm’s Dallas ing Group and MIT Sloan Management Review are collabo- office. Zayna Khayat is a principal in BCG’s Toronto of- rating on a project called the Sustainability Initiative. As fice. Balu Balagopal is a senior partner and managing part of that effort, we recently launched a global survey director in the firm’s Houston office. Martin Reeves is of more than 1,500 corporate executives and managers a senior partner and managing director in BCG’s New about their perspectives on the intersection of sustain- York office and leads the firm’s Strategy Institute. ability and business strategy.1 (We plan to make this an annual survey.) We separately conducted more than 50 Michael Hopkins is the editor in chief of MIT Sloan in-depth interviews with a broad mix of global thought Management Review. Nina Kruschwitz is the sustainabil- leaders. Our interviewees included executives whose ity editor. companies are at the cutting edge of sustainability (in- cluding General Electric, Unilever, Nike, Royal Dutch Shell, and BP) and experts from a range of disciplines such as energy science, civil engineering, and manage- ment. The insights of both the survey respondents and 1. We received an additional 462 survey responses from academics, the thought leader group yielded a fascinating glimpse of government officials, executives of nonprofits, and others. The data and analysis in this report reflect the survey responses from 1,560 sustainability’s current position on the corporate agen- business leaders. For more information on the survey methodology, da—and where the topic may be headed in the future. please see Appendix I. 4 The Boston Consulting Group
  7. 7. Executive Summary T here is a strong consensus that sustain- ◊ More than 70 percent of survey respondents said that ability is having—and will continue to their company has not developed a clear business case have—a material impact on how compa- for sustainability. nies think and act. A small number of companies, however, are acting aggressively on sustainability—and reaping substan- ◊ Ninety-two percent of survey respondents said that their tial rewards. company was addressing sustainability in some way. ◊ Once companies begin to pursue sustainability initia- ◊ There was also a strong consensus that the underlying tives in earnest, they tend to unearth opportunities to drivers of sustainability are highly complex, interrelat- reduce costs, create new revenue streams, and develop ed, and lasting, and that the corporate sector will play more innovative business models. a key role in solving the long-term global issues related to sustainability. ◊ The early movers’ approaches have several key char- acteristics in common: they incorporate a comprehen- Sustainability is surviving the downturn. sive set of data into a robust business case, which they then integrate throughout all relevant aspects of their ◊ Fewer than 25 percent of survey respondents said that operations to deliver measurable financial results. their company had decreased its commitment to sus- tainability during the downturn. Thought leaders and survey respondents with experi- ence in sustainability interpreted sustainability con- ◊ Respondents in some segments, such as the automo- cerns (and their management implications) far more tive industry and the media and entertainment indus- broadly than did survey respondents lacking such ex- try, reported an increased company commitment to perience. This understanding can open sometimes sustainability relative to the average. surprising opportunities for capturing advantage. Although almost all the executives in the survey ◊ While sustainability’s novice practitioners thought of thought that sustainability would have an impact on the topic mostly in environmental and regulatory their business and were trying to address this topic, terms, with any benefits stemming chiefly from brand the majority also said that their companies were not or image enhancement, practitioners with more knowl- acting decisively to fully exploit the opportunities edge about sustainability expanded the definition for and mitigate the risks that sustainability presents. sustainability well outside the “green” silo. They tend- ed to consider the economic, social, and even political ◊ The majority of sustainability actions undertaken to impacts of sustainability-related changes in the busi- date appear to be limited to those necessary to meet ness landscape. Simply put, they saw sustainability as regulatory requirements. an integral part of value creation. The Business of Sustainability 5
  8. 8. ◊ Self-identified experts in sustainability believed more ◊ Consumer concerns were viewed as a relatively more strongly in the importance of engaging with suppliers critical force in sustainability among companies based across the value chain. Sixty-two percent of these re- outside the United States and Europe. spondents considered it necessary to hold suppliers to specific sustainability criteria; only 25 percent of nov- Sustainability will become increasingly important to ices felt the same way. business strategy and management over time, and the risks of failing to act decisively are growing. ◊ There was a high correlation between the depth of a business leader’s experience with sustainability and ◊ Our research indicates that companies need to devel- the drivers and benefits that he or she perceived. For op a better understanding of the implications of sus- example, 68 percent of business leaders with sustain- tainability for their business—and that the companies ability expertise cited improved financial returns as a already doing so are seeing significant benefits. benefit from their organization’s investments in sus- tainability initiatives, compared with only 32 percent ◊ Companies will need to develop new capabilities and of novices. This suggests that the more people know characteristics, including the ability to operate on a about sustainability, the more thoughtfully they evalu- systemwide basis and collaborate across internal and ate it and the more opportunity they see in it—and the external boundaries; a culture that rewards and en- more they think it matters to how companies manage courages long-term thinking; capabilities in the areas themselves and compete. of activity measurement, process redesign, and finan- cial modeling and reporting; and skills in engaging and According to survey respondents, the biggest drivers communicating with external stakeholders. of corporate sustainability investments—that is, the forces that are having the greatest impact on compa- nies—are government legislation, consumer con- cerns, and employee interest in sustainability. ◊ Government legislation was cited as the principal driver of sustainability efforts by nearly all the industries we analyzed—with the exception of agriculture, mining, and water companies, which cited concerns about envi- ronmental pollution, and companies in both the media and entertainment industry and the technology and telecommunications industry, which identified global political security as being of greatest concern. 6 The Boston Consulting Group
  9. 9. Survey and Interview Findings F irst and foremost, our survey revealed that In the last year or two, everything has changed. Peo- there is no single, established definition for ple are starting to suspect that these are really stra- sustainability. Companies view it in myriad tegic issues that will shape the future of our busi- ways—some focusing solely on environmen- nesses. The specifics are different depending on tal impact, others incorporating the numer- industry and context, but we’re in the beginning of ous economic, societal, and political implications. Yet a historic wake-up. while companies may differ in how they define sustain- — Peter Senge, senior lecturer, MIT Sloan School ability, our research indicates that they are virtually of Management; founding chair, Society for united in the view that sustainability, however defined, Organizational Learning is and will be a major force to be reckoned with—and one that will have a determining impact on the way Sustainability Is Not a “Topic du Jour” their businesses think, act, manage, and compete.2 A good indication that sustainability is here to stay is the I think that the world has reached a tipping point fact that fewer than one-fourth of the survey respondents now. We’re beyond the debates over whether [ad- told us that their companies have pulled back on their dressing sustainability] is something that needs to commitment to sustainability during the downturn. (See be done or not—it’s now mostly about how we do it. Exhibit 1.) In fact, respondents in some segments, such as And from the perspective of ecomagination, it’s not the automotive industry and the media and entertain- about altruism, it’s about creating value. ment industry, reported an increased company commit- — Steve Fludder, vice president, ecomagination, ment to sustainability relative to the average. General Electric A number of corporate executives in the thought leader The Consensus: Sustainability Matters group also shared their belief that the downturn has accelerated a shift toward a greater corporate focus on Indeed, the overwhelming majority of the respondents in sustainability—particularly toward sustainability-related the corporate survey group—as well as nearly all the cor- actions that have an immediate impact on the bottom porate executives interviewed in the thought leader line. At the same time, several respondents in the corpo- group—told us that sustainability-related issues are hav- rate survey group lamented having to meet higher-than- ing or will soon have a material impact on their business. normal criteria for sustainability investments. They told For example, 92 percent of the survey respondents told us that the current financial environment has made it in- us that their company was already addressing sustainabil- creasingly difficult to maintain investments—not only in ity in some way. Furthermore, there was a strong consen- sustainability but also more fundamentally in the busi- sus that the underlying drivers of sustainability are high- ness—because of limited access to capital. ly complex, interrelated, and lasting, and that the corporate sector will play a key role in solving the long- 2. For a discussion of the many ways in which companies are defin- term global issues related to sustainability. ing sustainability, see the Sustainability Initiative Web site. The Business of Sustainability 7
  10. 10. Exhibit 1. At Respondents’ Companies, the Downturn Has Had Little Effect on the Commitment to Sustainability How has the current economic downturn affected your organization’s commitment to addressing sustainability issues? 60 percent of respondents said that they have maintained or increased their commitment to sustainability Overall 10 15 35 17 7 11 5 Agriculture, mining, and water 8 12 45 18 4 8 4 Automotive 18 8 34 21 3 5 11 Conglomerate 18 9 35 21 3 9 6 Construction 4 14 35 24 12 10 2 Consumer products and retail 7 16 33 27 7 8 3 Energy 11 7 52 9 6 12 4 Financial services 7 14 31 16 7 16 7 Health care 9 11 38 13 10 17 3 Industrial goods and services 8 18 32 19 11 9 3 Media and entertainment 20 13 30 13 8 3 15 Technology and 7 18 35 16 6 12 6 telecommunications 0 25 50 75 100 Commitment to sustainability has Percentage of respondents increased most among media and entertainment companies (33 percent) Commitment increased significantly Commitment increased somewhat Business as usual, no changes Commitment decreased somewhat Commitment decreased significantly No basis for making judgment Organization does not address sustainability Source: The Sustainability Initiative 2009 Survey, BCG and MIT Sloan Management Review. Note: Data reflect 1,560 responses from business leaders; because of rounding, the percentages for some industries do not total to 100 percent. The issue we have this year is this: how do you con- a number of cases, the perspectives held by these three tinue to make progress without the capital that groups were at odds. you’ve had in the past? — William O’Rourke, vice president of sustain- ◊ Experts defined sustainability more comprehensively ability and environment, health, and safety, than novices did. While a significant proportion Alcoa (40 percent) of novices defined sustainability simply as “maintaining business viability,” nearly two-thirds Opinions Differ on Certain Aspects (64 percent) of experts used one of two widely accept- of Sustainability ed definitions: the so-called Brundtland Commission definition or the Triple Bottom Line definition, both of Although the points above reflect a strong convergence of which incorporate economic, environmental, and views on the overarching question of sustainability’s im- social considerations.3 pact on business, significant divergence in opinion arose regarding particular aspects of sustainability. We highlight ◊ Whereas 50 percent of the experts we surveyed said some of the most noteworthy differences below. that their company had a compelling business case for Self-identified sustainability experts viewed the topic 3. The Brundtland Commission wrote in its 1987 report, Our Com- differently from those who considered themselves mon Future, that “sustainable development seeks to meet the needs novices in the area. We asked respondents in the corpo- and aspirations of the present without compromising the ability to rate survey group to rate their experience with sustain- meet those of the future.” The Triple Bottom Line, also known as “people, planet, profit,” is a term coined by John Elkington in 1994. ability by classifying themselves as either sustainability It expands traditional financial-reporting frameworks to include experts, individuals with some experience, or novices. In ecological and social performance. 8 The Boston Consulting Group
  11. 11. sustainability, only 10 percent of the novices we sur- be the sustainability-related issue with the greatest im- veyed said the same. Further, when asked about the pact on their business. (See Exhibit 2.) Sixty-seven per- logic underlying their organization’s investments (or cent said that this issue had a significant impact on lack thereof ) in sustainability initiatives, 68 percent of how their organization was approaching sustainabili- experts cited improved financial returns, compared ty.4 By contrast, the thought leader group placed far with only 32 percent of novices. less emphasis on government legislation as a driving force in sustainability. Further, many of the thought ◊ Experts believed more strongly in the leaders we interviewed cited instances in importance of engaging with suppliers which companies had played a role in across the value chain. Sixty-two per- The more people know shaping the regulatory framework rather cent of the experts surveyed considered about sustainability, than simply reacting to it. (For more about it necessary to hold suppliers to specific one company that actively shapes the reg- sustainability criteria; only 25 percent the more opportunity ulatory environment and partners with of surveyed novices felt the same way. they see in it. government and other stakeholders, see the sidebar “Better Place: Enabling the It is noteworthy that surveyed experts’ Global Transition to Electric Vehicles.”) views on the points above were largely consistent with those of the corporate executives in the thought leader ◊ Consumer Concerns. Fifty-eight percent of respondents group, with experience being the common denominator in the corporate survey group cited consumer concerns between the groups. Simply put, we conclude that the as having a significant impact on their companies.5 By more people know about sustainability, the more thought- contrast, although interviewees in the thought leader fully they evaluate it and the more opportunity they see group acknowledged that consumer awareness is a in it—and the more they think it matters to how compa- reality that businesses must confront, they cited other nies position themselves and operate. drivers—such as climate change and other ecological forces—as more pressing. The essence of environmental strategy is to make it an issue for your competitor, not for your own com- ◊ Employee Interest. Rounding out the top three drivers pany...because you’ve already made sustainability was employee interest in sustainability; 56 percent of an integral part of your business. respondents in the corporate survey group selected it — Amory Lovins, chairman and chief scientist, as an issue having a significant impact on their com- Rocky Mountain Institute pany.6 Yet among the thought leader group, employee interest was deemed to be a far less significant issue. All the benefits of sustainability are only possible if Corporate interviewees in this group, however, consis- you tackle the issues on the supply chain. If you don’t, it’s greenwashing. 4. When we examined sustainability drivers by industry, we found — Dierk Peters, director, World Wildlife Fund that government legislation also led among nearly all the industries we analyzed, with a few exceptions. Survey respondents from agri- Sustainable Seafood Initiative culture, mining, and water companies cited environmental pollu- tion as the issue having the greatest impact; for the media and en- Overall, the opinions of the respondents in the corpo- tertainment industry and the technology and telecommunications industry, respondents identified global political security as having rate survey group were different from those of the the greatest impact. thought leaders we interviewed. Perhaps because of 5. Consumer concerns were viewed as a relatively more critical their comparatively greater experience with sustainability, force in sustainability among companies based outside the Unit- the thought leaders’ views on several aspects of sustain- ed States and Europe. In Australia and New Zealand, Africa and the Middle East, and Latin America, 73 percent, 68 percent, and ability diverged from those of the survey respondents— 67 percent of survey respondents, respectively, identified con- particularly with regard to the topic’s drivers and benefits. sumer concerns as an issue having a significant impact on their The main points of contention included the following: company. 6. The topic was markedly more significant to respondents from Africa and the Middle East (where it was cited by 70 percent of re- ◊ Government Legislation. Overall, respondents in the cor- spondents) and Australia and New Zealand (where 76 percent of porate survey group deemed government legislation to respondents cited it, deeming it the region’s top driver overall). The Business of Sustainability 9
  12. 12. Exhibit 2. Companies Are Influenced by a Wide Range of Sustainability-Related Issues How much impact will the following sustainability-related issues have on your organization? Respondents who rated an issue Top drivers for as having a significant impact1 (%) A top driver for the agriculture, 100 A top driver for the automotive and mining, and water consumer and energy industries companies 90 automotive industries 80 70 67 60 58 56 50 51 50 49 43 45 40 41 41 30 20 Government Increasing interest Depletion of Water supply Population legislation related in sustainability nonrenewable or access growth to sustainability among employees resources (such as oil) issues Increasing concern for Air, water, or other Societal pressures— Global political Climate sustainability issues environmental social license to operate security change among consumers pollution a business Technology and telecommunications Media and entertainment Industrial goods and services Health care Financial services Energy Consumer products and retail Construction Conglomerate Automotive Agriculture, mining, and water Overall Source: The Sustainability Initiative 2009 Survey, BCG and MIT Sloan Management Review. Note: Data reflect 1,560 responses from business leaders. 1 Respondents were asked to rate the issues on a scale of 1 (no impact) to 5 (major impact); this exhibit reflects the percentage of respondents who rated each issue with a 4 or 5. Better Place Enabling the Global Transition to Electric Vehicles No one ever catches the back of the wave and sumer demand for such vehicles. Better Place has made reaches the shore. You must start paddling be- particularly impressive inroads in Australia, Denmark, fore the wave comes in. and Israel and has established itself as a bona fide driver —Shai Agassi, founder and CEO, Better Place and shaper of progress and policy. In Israel, for example, the company has formed a partnership with the Renault- Better Place is one of the world’s leading suppliers of ser- Nissan Alliance and the government of Israel to advance vices to the electric-vehicle industry. Founder and CEO the adoption of electric vehicles. There, the government Shai Agassi launched the company in 2007. Agassi envi- has committed to developing an infrastructure that sup- sions Better Place as a key part of the solution to the en- ports electric vehicles, and Better Place will play a lead vironmental and other problems generated by fossil-fuel- role in developing that infrastructure. based vehicles. By identifying and seizing promising opportunities and The company has operations in Australia, Canada, Den- forming strong partnerships with stakeholders, Better mark, Israel, Japan, and the United States—countries Place is both accomplishing its mission of advancing the chosen for having government policies that support the global adoption of electric vehicles and positioning itself adoption of electric vehicles and relatively strong con- as a primary beneficiary of that growth. 10 The Boston Consulting Group
  13. 13. tently cited enhanced recruitment, retention, and en- a broad continuum of rewards that were grounded more gagement—among other employee-related issues—as in value creation—particularly sustainability’s potential major benefits of addressing sustainability. to deliver new sources of competitive advantage. Several thought leaders offered other provocative ideas about the People (in our company) are thrilled when they feel potential benefits of addressing sustainability. For exam- that they can be part of the solution. ple, some suggested that leadership in sustainability — Chris Page, director of climate and energy might be viewed as a proxy for management quality. strategy, Yahoo! A small core of skeptics did not share the views I think that the first reward is around the ability to espoused by the majority of the respondents in the attract and motivate the very best people. It is ex- corporate survey group. Most survey respondents were traordinary how attractive BP’s alternative-energy convinced that sustainability is currently relevant to their business is for people coming into the company. And companies. But depending on the questions asked, ap- where—certainly up until very, very recently—many proximately 5 to 10 percent of the survey respondents good graduates would not consider a career in the expressed doubts.7 Those doubts were centered largely oil industry, they will consider a career in an alter- on the following three basic arguments: native-energy business, even if it is inside an oil company. ◊ Sustainability issues are not real or material. “All groups — Vivienne Cox, former executive vice president, talk about the issue, but solely from a politically cor- BP; former chief executive officer, BP rect viewpoint,” said an executive at a midsize multi- Alternative Energy national company. “Behind the sustainability ‘chatter,’ no one is willing to take any action or invest any time By a wide margin, respondents in the corporate survey in the matter.” group identified the impact on a company’s image and brand as the principal benefit of addressing sustainability. 7. This percentage may underrepresent the number of skeptics and (See Exhibit 3.) But corporate executives in the thought critics in the market since there could be an inherent self-selection bias among survey respondents. That is, those who took the time to leader group rarely cited this factor (or else they de- respond to our survey may be more likely to believe that sustain- scribed it as a second-order benefit), emphasizing instead ability is having or can have an impact. Exhibit 3. Respondents Cited—by a Wide Margin—an Improved Image as the Principal Benefit of Addressing Sustainability What are the greatest benefits to your organization in addressing sustainability issues? Improved company or brand image Cost savings Competitive advantage Employee satisfaction, morale, or retention Product, service, or market innovation Business model or process innovation New sources of revenue or cash flow Effective risk management Enhanced stakeholder relations Other 0 10 20 30 40 Percentage of respondents Source: The Sustainability Initiative 2009 Survey, BCG and MIT Sloan Management Review. Note: Data reflect the top-ranked responses from the 1,560 business leaders who participated in our survey. The Business of Sustainability 11
  14. 14. ◊ Business does not have a role, in general, in addressing sus- Many Companies Are Moving Slowly or tainability issues. The chairman of a Latin American Struggling with Execution consumer-retail company told us, “My only objective is [a high] return on equity, and I hope that the CEOs Our survey and interviews demonstrated that there is a who manage the companies in which I invest my sav- large degree of consensus regarding the potential busi- ings reason just as I do.” ness impact of sustainability. Our research further con- firmed that there are stirrings of activity throughout the ◊ Sustainability presents no material oppor- business realm. But we found a material tunities (or threats) to the company. gap between intent and action at most of Another argument we heard was that We found a material the companies we examined. On one even if sustainability presents opportu- gap between intent hand, more than 60 percent of the respon- nities or threats, they are minor—par- dents in the corporate survey group said ticularly when compared with those re- and action at most that their company was building aware- lated to other investments that companies. ness of its sustainability agenda. On the companies could make. An executive at other hand, most of these companies ap- a European financial-services company peared to lack an overall plan for attack- explained simply, “Sustainability has no impact on our ing sustainability and delivering results. Many of their business.” actions seemed defensive and tactical in nature, consist- ing of a variety of disconnected initiatives focused on These views may reflect legitimate doubts; they may also products, facilities, employees, and the greater commu- reflect a misunderstanding or misinterpretation of sus- nity. While these efforts might be impressive on some lev- tainability. For example, we have met with several com- els, they largely represented only incremental changes to panies that voice many of the arguments listed above— the business. but that are nonetheless redesigning and repositioning their products to have a lighter environmental footprint Clearly, companies can do more to connect their stated because it “makes good business sense.” intent in sustainability with business impact—and they can do it in a way that maintains explicit links to the bot- Some Companies Are Acting Decisively tom line over both the short and long term. But why and Winning aren’t they doing more, given that they believe sustain- ability will materially affect their business? While the vast majority of companies have yet to com- mit aggressively to sustainability, our survey and inter- views confirmed that there are some noteworthy excep- tions. The group of so-called first-class companies in sustainability, as identified by survey respondents, is populated by the usual suspects that are often highlight- ed in business articles, reports, books, and sustainability indexes. The five cited most often by our survey respon- dents were General Electric, Toyota, IBM, Royal Dutch Shell, and Wal-Mart.8 But some lesser-known names also surfaced, such as Rio Tinto, Better Place, and IWC (International Watch Company). In aggregate, these companies are demonstrating that a sustainability strat- egy can yield real results. (For more about Nike—anoth- er one of the companies that many of our survey re- spondents also cited as a first-class company—and the steps that it has taken in the area of sustainability, see 8. See the Sustainability Initiative Web site for the full list of organi- the sidebar “Nike: Moving from Operating Defensively zations identified by survey respondents as first-class companies in to Capturing Advantage.”) sustainability ( 12 The Boston Consulting Group
  15. 15. Nike Moving from Operating Defensively to Capturing Advantage Today, Nike is a leader in sustainability—in terms of both Nike changed its design principles. When Nike started the company’s initiatives and the value that those initia- to examine its design processes, the footwear group real- tives create for the company. Yet Nike “bumped into” sus- ized that it was wasting materials. It found that for every tainability long before the company attempted an active two pairs of shoes that the company was producing, an transformation to the strategy. In the early 1990s, when additional third pair, on average, could have been pro- Nike was vilified for its labor practices, it undertook steps duced from the materials that were being incinerated or that have led to sustainable practices. How did the com- discarded in a landfill. This insight and the company’s so- pany travel along the arc from operating defensively to lution led to positive impacts on the environment and on capturing advantage? Nike’s bottom line. Nike set ambitious goals grounded in facts. In the late As Winslow explained, “We started to create an overarch- 1990s, Nike set ambitious long-term goals for the year ing strategy of what it meant to be a more sustainable 2020: zero waste and toxins, fully closed-loop systems, and company.” Today, Nike uses its own index to provide prod- sustainable growth and profitability. According to Darcy uct teams real-time feedback on how much waste a prod- Winslow, a former general manager for women’s fitness at uct is creating. The company also maintains a broad li- Nike, it was “very difficult to really grasp and understand brary of environmentally preferred materials that have what we were attempting, much less to get buy-in on it.” been analyzed using “zero toxics” principles. It has creat- Back in 2001, Nike estimated that annual footwear pro- ed restricted-substances lists that its vendors now adhere duction created $700 million of waste in materials alone. to. It has well over 50 closed-loop systems within its man- Having that information for the first time triggered the ufacturing and materials processes. And its product teams creation of “design for environment” principles and the have something tangible that they can measure their work development of closed loops and recycling efforts (among against: real decision-making tools. other initiatives). The goal was to reverse the trend and point Nike toward ambitious goals for 2020. By aiming high and pursuing its goals thoughtfully and aggressively, the company is proving that success in sus- Nike sought engagement with its partners. In 2000, tainability not only is compatible with bottom-line suc- Nike started looking at its major supply-chain partners cess but also contributes directly to it. and asking them where they sourced their materials. It forged deep relationships with The Dow Chemical Com- pany, DuPont, and BASF, among others; shared its goals with these suppliers; and asked for their support in achiev- ing its ambitious goals in sustainability. Nike also took this approach with its manufacturing partners. The company tailored the definition of sustainability to its own organization. Ultimately, Nike discarded pre- vailing notions of sustainability for a definition that fit its own culture and environment. The company’s initial ef- forts to catalyze action failed when it framed sustainabil- ity in terms of “natural capital” and the Triple Bottom Line. And it wasn’t until the footwear group started to translate its 2020 goals into dollars and cents that it be- gan to capture the attention of top management. Accord- ing to Winslow, “One of the reasons we have been so suc- cessful is that the language is congruent with the Nike slogan ‘Just Do It.’” The Business of Sustainability 13
  16. 16. Challenges to Decisive— and Effective—Corporate Action T he thought leader group and the survey re- The best way to get people to take sustainability spondents alike viewed sustainability as a seriously is to frame it as it really is: not only a chal- unique business issue, both strategically and lenge that will affect every aspect of management economically. They embraced the following but also, for first movers, a source of enormous com- principles: petitive advantage. — Richard Locke, deputy dean and professor ◊ Sustainability has the potential to affect all aspects of of entrepreneurship, MIT Sloan School of a company’s operations—from development, manu- Management facturing, and distribution to sales and support func- tions. Three Major Barriers Impede Decisive Corporate Action ◊ Sustainability also has the potential to affect every value-creation lever over both the short and longer There are many reasons why companies have difficulty term. Rarely has a business issue been viewed as hav- tackling sustainability more decisively. But our research ing such a broad scope of impact. points to three root causes. First, companies often lack the right information upon which to base decisions. Sec- ◊ There is mounting pressure from stakeholders—em- ond, companies struggle to define the business case for ployees, customers, consumers, supply chain partners, value creation. Third, when companies do act, their exe- competitors, investors, lenders, insurers, nongovern- cution is often flawed. mental organizations, media, the government, and so- ciety overall—to act. Some companies don’t understand what sustainabil- ity is—and what it means to the enterprise. Many ◊ The solutions to the challenges of sustainability are in- business leaders do not have a full understanding of what terdisciplinary, making effective collaboration with sustainability really means to their company, largely stakeholders particularly critical. because of some key underlying information gaps. ◊ Decisions regarding sustainability have to be made ◊ Managers lack a common fact base about the full suite against a backdrop of high uncertainty. Myriad factors of drivers and issues that are relevant to their compa- muddy the waters because their timing and magni- ny and industry. More than half of the respondents in tude of impact are unknown. Such factors include gov- the corporate survey group stated a need for better ernment legislation, demands by customers and em- frameworks for understanding sustainability. ployees, and geopolitical events. ◊ As noted earlier, companies do not share a common These principles make sustainability a uniquely challeng- definition or language for discussing sustainability— ing issue for business leaders to manage and address some define it very narrowly, some more broadly, and effectively. others have no corporate definition at all. 14 The Boston Consulting Group
  17. 17. ◊ The goal or “prize” of concerted action is often defined tions even around the oil and gas business. And sus- too loosely and not collectively understood within the tainability efforts are therefore opening up a differ- organization. And there is often very little understand- ent dialogue than the one that would occur if we ing of how to measure progress once actions are un- were just a traditional oil and gas company. dertaken. — Vivienne Cox, former executive vice president, BP; former chief executive officer, BP All of these issues point to a critical need for a thorough Alternative Energy and structured gathering and sharing of basic facts about sustainability as a first step toward helping managers to Some companies have difficulty modeling the busi- be more decisive in the choices they face. To aid manag- ness case—or even finding a compelling case—for ers in this difficult task, we have developed a simple sustainability. Most survey respondents who considered framework for understanding the drivers and impacts of themselves experts in sustainability, as well as most of sustainability efforts and for helping to add clarity to the the corporate executives in the thought leader group, said boardroom discussion on the appropriate actions for each that their company had found a compelling business company. (See the sidebar “One View on Framing Sus- case—one that reflected multiple tangible and intangible tainability for Business.”) costs and benefits—for sustainability. (See Exhibit 4 for a summary of sustainability’s potential impact when [Pursuing sustainability] opens up a broader set of viewed through the lens of shareholder value creation.) options. For example, there are places where the fact that we have a solar business—or are involved in The majority of survey respondents overall, however, dis- carbon capture and storage—changes the conversa- agreed: almost 70 percent said that their company did Exhibit 4. Sustainability Efforts Could Influence All the Levers That Companies Use to Create Value Value creation The potential impact levers of sustainability efforts ◊ A stronger brand and Pricing power greater pricing power ◊ Greater operational efficiencies Margin improvement Cost savings ◊ More efficient use of resources ◊ Supply chain optimization Profits ◊ Lower costs and taxes Employee ◊ Enhanced ability to attract, recruitment and retain, and motivate employees engagement ◊ Greater employee productivity Total ◊ Improved customer loyalty; shareholder Market share lower rate of churn return Revenue growth ◊ Enhanced ability to enter New market new markets entry Free cash ◊ More potential sources flow of revenue ◊ Lower market, balance-sheet, and operational risks Valuation multiple Risk premiums ◊ Lower cost of capital ◊ Greater access to capital, financing, and insurance Sources: The Sustainability Initiative 2009 Survey, BCG and MIT Sloan Management Review; interviews with thought leaders. The Business of Sustainability 15
  18. 18. One View on Framing Sustainability for Business Many companies lack a clear, cohesive view of what sus- unique opportunities or mitigate unique threats posed by tainability is and how they should approach it. We offer a near-term sustainability issues. Examples in this category visual framework that can help these companies concep- include the $500 million energy-efficient retrofit of the tualize their efforts. (See the exhibit below.) Empire State Building in New York, along with improving resource productivity and eliminating waste across the The framework looks at sustainability through two lenses: supply chain as Unilever and Wal-Mart have sought to do. the time horizon for the sustainability effort and the degree to which the drivers and impacts of the effort are In the third quadrant are actions geared toward capturing specific to a company or are shared more broadly among competitive advantage via sustainability. These efforts in- the corporate community. This framework categorizes clude innovations and longer-term bets that are difficult sustainability efforts into one of four quadrants. for competitors to imitate and that often require organiza- tional rewiring so that a company can achieve the full im- In the first quadrant (lower left) are short-term actions pact of its sustainability efforts. Reimagining how prod- that we call table stakes: the minimum, lowest-cost sus- ucts are made and used and what happens to them when tainability actions that all companies can—and in many they expire is an example of a strategy in this category. cases must—take, such as complying with regulatory de- The fourth quadrant encompasses future innovations that mands or capturing easily attainable cost efficiencies. In all companies can undertake as long as they form broader the second quadrant are actions that go beyond the broad, alliances with external stakeholders and rethink econom- basic steps companies can take; these sustainability ic frameworks, because payoffs occur over a longer time efforts make good business sense because they capture frame. Our Framework Helps Companies Categorize Their Sustainability Objectives and Then Align Their Sustainability Efforts with Achieving Those Objectives II. Good business III. Competitive practices differentiation Specific to a company ◊ Transparency ◊ Product redesign (or industry) ◊ Supply chain ◊ New market entry productivity ◊ New organizational models Drivers and impacts of a sustainability effort I. Table stakes IV. Game-changing innovation for Shared ◊ Public relations the future universally among all ◊ Compliance ◊ Reframed economic companies ◊ Efficiencies models ◊ Partnerships with stakeholders Short term Long term Time horizon of a sustainability effort Sources: BCG and MIT Sloan Management Review. 16 The Boston Consulting Group
  19. 19. not have a strong business case for sustainability. Of these rate action, since it gets to the heart of how companies respondents, 22 percent claimed that the lack of a busi- decide where they will—and will not—allocate their re- ness case presented their company with its primary bar- sources and efforts. rier to pursuing sustainability initiatives. Green can save you a lot of money—not two or three Why do companies struggle in their efforts to develop the years from now, but now. business case for sustainability? Our survey uncovered —Catherine Roche, partner and managing director, three main challenges that trip up compa- The Boston Consulting Group nies. The first challenge is forecasting and planning beyond the one-to-five-year time Clarifying the business Execution is often flawed. Even compa- horizon typical of most investment frame- case for sustainability nies that have a solid understanding and works. It is easy to assert that sustainability can make a strong business case for sus- is about taking a long-term view. In prac- may be the best route tainability often stumble over execution. tice, however, calculating the costs and to decisive action. While it is still early days in terms of be- benefits of sustainability investments over ing able to judge the effectiveness of ex- time horizons that sometimes span gener- ecution in sustainability, our survey ations can be difficult with traditional economic ap- results and our interviews with thought leaders high- proaches. This is further exacerbated by the short-term lighted three significant challenges in executing sustain- performance expectations of investors and analysts. The ability initiatives. The first is overcoming skepticism in or- simple framework mentioned earlier can provide a com- ganizations. Indeed, respondents in the corporate survey pany’s board, shareholders, employees, and investors group cited outdated mental models and perspectives with a starting point for assessing the potential of short- as the top internal roadblock to addressing sustainabil- and long-term moves in sustainability to create value. ity issues. (See Exhibit 5.) Examples of entrenched mind- sets that respondents cited include views that sustain- The second challenge is gauging the systemwide effects of ability is solely “an additional cost” or “a green sustainability investments. Companies find it difficult utopia.” enough to identify, measure, and control all of the tangi- ble facets of their business systems. So they often do not The second challenge in execution is figuring out how to even attempt to model intangibles or externalities such institutionalize the sustainability agenda throughout the cor- as the environmental and societal costs and benefits of poration. Survey respondents and the thought leader their current business activities and potential moves in group alike were adamant that top-down vision, commit- sustainability. This hinders their ability to get a true sense ment, and leadership were critical for success—and that of the value of investments in sustainability. the absence of a top-down commitment was one of the greatest impediments to successful execution. What’s The third major challenge is planning amid high uncertainty. more, companies were often uncertain about where re- Factors contributing to uncertainty include potential sponsibility for achieving sustainability strategies should changes in customer preferences and regulation. Strategic or did reside, and whether that responsibility had the nec- planning, as traditionally practiced, is deductive—compa- essary scope. nies draw on a series of standard gauges to predict where the market is heading and then design and execute strate- The third major challenge cited is measuring, tracking, and gies on the basis of those calculations. But sustainability reporting sustainability efforts. These tasks involve seeking drivers are anything but predictable, potentially requiring complete transparency on sustainability. Companies are companies to adopt entirely new concepts and frame- often expected to share information such as their carbon works. footprint and the specifics of their manufacturing prac- tices. In general, both the thought leader group and the survey respondents with experience in sustainability believe Several of these barriers, it should be noted, are likely to that clarifying the business case for sustainability may be accompany any major change effort in corporate strategy the single most effective way to accelerate decisive corpo- and operations. But they are intensified in the case of sus- The Business of Sustainability 17
  20. 20. Exhibit 5. Business Leaders Reported Various Internal Challenges to Sustainability Which internal challenges within your organization present the most significant roadblocks to addressing sustainability issues? Overall 21 20 18 14 10 8 5 4 Agriculture, mining, and water 27 14 18 16 4 10 8 2 Automotive 14 19 17 31 6 8 6 0 Conglomerate 24 26 9 9 6 18 3 6 Construction 22 14 26 16 10 6 4 2 Consumer products and retail 11 28 16 17 8 11 5 4 Energy 25 22 20 7 9 7 3 7 Financial services 21 22 18 12 11 6 6 4 Health care 28 20 14 20 5 4 4 3 Industrial goods and services 18 21 15 10 13 9 7 6 Media and entertainment 23 13 20 20 15 5 5 0 Technology and telecommunications 21 19 23 15 9 7 4 3 0 25 50 75 100 Percentage of respondents Health care Consumer companies Construction Automotive companies cited cited competing companies cited an companies cited outdated mental priorities as their unproven value insufficient models as their greatest challenge proposition as their resources as their greatest challenge greatest challenge greatest challenge Outdated mental models and Too many competing priorities Not convinced of the business perspectives on sustainability (don’t know what to do first) case or value proposition Insufficient resources Initiative stalled by the Inability to assess the tradeoffs to address these issues economic recession between short and long term Don’t know the most Other effective ways to take action Source: The Sustainability Initiative 2009 Survey, BCG and MIT Sloan Management Review. Note: Data reflect the top-ranked responses from 1,560 business leaders who participated in our survey; because of rounding, the percentages for some industries do not total to 100 percent. tainability in light of the topic’s unique economic and Necessary Capabilities strategic challenges and companies’ limited experience with it. Most of the survey respondents expressed relatively lim- ited concern about their companies’ having distinct gaps Sustainability must be an integral part of strat- in the technical or operational capabilities needed to ad- egy—not an add-on. dress sustainability. We believe, however, that those exec- —Ramón Baeza, senior partner and managing di- utives might have underestimated the challenge. Accord- rector and topic leader in the sustainable devel- ing to corporate executives in the thought leader group, opment sector, The Boston Consulting Group companies will need to develop and master a multitude of new capabilities and tools—and take a number of ac- We have specific metrics because in a culture of tions—if they are to successfully execute their sustainabil- execution, which is what GE is all about, the only ity strategies, as highlighted below: way that ecomagination could survive is if we put some hard metrics around it. ◊ Adopting a broad, systems-thinking approach to the — Steve Fludder, vice president, ecomagination, business. Actions could range from deploying frame- General Electric works that allow for modeling the systemwide effects 18 The Boston Consulting Group
  21. 21. of sustainability initiatives over the long term to form- We need to educate people about systems thinking ing more effective partnerships and alliances and and help them understand how all of these activities working in more concerted ways with stakeholders, are interdependent and affect each other. regulators, and other influencers. — Jeffrey Hollender, chief inspired protagonist and cofounder, Seventh Generation ◊ Adding scenario-planning capabilities that allow the company to build resilience to unpredictable future Anticipating what’s coming, such as new greenhouse- environments and external shocks, such as sharp gas regulations, is vital. Key energy technologies swings in commodity prices. need to move through the Four Ds: discover, develop, demonstrate, and deploy. ◊ Developing tracking, measuring, and reporting capa- — Graeme Sweeney, executive vice president of bilities, particularly as the bar for transparency contin- future fuels and CO2, Royal Dutch Shell ues to rise. Masdar’s typical engagement model is to partner ◊ Retooling R&D, product development, and sales and with more experienced organizations. Torresol En- marketing to reimagine how products are designed, ergy, London Array, or our Masdar Clean Tech Fund made, used, and recycled. with Credit Suisse are typical examples of such part- nerships. Our investment strategy is centered around ◊ Enhancing capabilities in innovating organizational “people, planet, profit. Besides the obvious commer- ” models and management practices. This includes reori- cial benefits that we expect to achieve, we also con- enting incentive and reward systems to promote long- sider the social and environmental impact of new term strategic and tactical thinking and multidisci- investments. plinary collaboration. It also includes knowing how and — Ziad Tassabehji, director of utilities and asset when to partner to achieve maximum advantage. management, Masdar In the near future, these capabilities and tools may rep- resent table stakes for managers and organizations. Al- ready, many leading companies possess these skills. The Business of Sustainability 19
  22. 22. Looking Ahead Seizing Opportunities and Mitigating Risks A s they confront the barriers to pursuing push suppliers to be better stewards of sustainability— and achieving sustainability, many—if not often even selecting them on that basis. And they form most—business managers are struggling to partnerships and alliances with critical influencer groups understand where their companies are, (such as regulators, nongovernmental organizations, ex- where they need to go, and how to get perts, communities, and other companies) so that they there. The examples of leading companies offer a blue- can learn about and jointly develop innovative solutions. print for how to proceed. Mining firm Rio Tinto, for example, leads an industry- wide initiative in sustainable development and has ties Lessons from Leading Companies to the International Council on Mining and Metals. (See the sidebar “Rio Tinto: Earning a Social License.”) There is much that can be learned about how to over- come the managerial obstacles to sustainability by exam- They create a robust business case for sustainability. ining the companies that are leading the way and—even In developing the financial case for sustainability, leading more important—that are creating value while doing so. companies speak the language of business: value cre- We asked respondents in the corporate survey group ation. They assess their sustainability strategies as they which companies they consider to have first-class capa- would any investment, systematically evaluating each bilities in sustainability and why. We also gathered deep value-creation lever—including the intangibles, which perspectives on these—and other—leading companies’ are more difficult to model. practices and key success factors through in-depth inter- views with corporate executives in the thought leader These companies also make effective tradeoffs between group. (In Appendix II, we synthesize the lessons from short-term expectations and longer-term impact, bringing leading companies into a proprietary audit that compa- the same long-term mindset to sustainability investment nies can use to assess their own progress.) decisions that they bring to other routine long-term bets. They take into account all external factors and system ef- While the particulars of each of these companies’ re- fects when analyzing the business case for sustainability, spective sustainability campaigns are unique, all first- assessing the full set of costs and benefits. class approaches have several notable characteristics in common. With a grounding in the facts and a solid business case, leading companies publicly commit to ambitious goals Leading companies understand and articulate sus- that they measure and report—and they demonstrate tainability’s impact on their organization. Leaders in that sustainability investments produce real business sustainability gather the full set of facts and incorporate results. this knowledge into how they frame and define sustain- ability strategically and economically. They also adopt a They holistically integrate their sustainability strat- systemwide view in understanding the relevant issues egy throughout the business. Leading companies be- and needs of all their stakeholders. For example, they lieve that sustainability is a source of value creation 20 The Boston Consulting Group
  23. 23. Rio Tinto Earning a Social License We have to create an environment in which lo- ◊ New technologies and training designed to enhance cal—and to some extent global—stakeholders employees’ skills and transform employees from man- can see us operating in a manner that is viewed ual laborers to skilled workers as sustainable and respectful to the community, science, the environment, and our employees. ◊ Policies that provide employment opportunities for Aus- —Tom Albanese, CEO, Rio Tinto tralia’s Aboriginal population Rio Tinto is a leading international mining group that ◊ A program that tests product safety finds, mines, and processes the earth’s mineral resourc- es. Its activities span the world but are strongly repre- ◊ Safety and sustainability metrics that are incorporat- sented in Australia and North America. The company’s ed into the company’s performance-management chief executive officer, Tom Albanese, seeks to minimize schemes the potential negative effects of its operations on local environments and populations. To achieve this goal, he is ◊ A “no ghost town” plan that calls for developing local committing the firm to adopting best practices in sus- communities after mines are closed tainability and earning what has been termed a social license—unwritten acceptance of the company’s opera- tions by local communities, governments, and society Rio Tinto is also leading an industrywide initiative in sus- overall. To achieve these goals, the company has under- tainable development. The initiative has, in turn, spawned taken a range of actions and initiatives that include the the International Council on Mining and Metals, which following: aims to advance the industry’s thinking on sustainability and encourage sustainable best practices. ◊ A program to reduce carbon emissions Rio Tinto aspires to be a leader in what the company calls “the global transition to sustainable development.” Its ◊ Policies to protect biodiversity and water quality successes to date demonstrate this commitment and have established the company as one of the early champi- ◊ Programs aimed at enhancing employees’ health, ons of sustainability. safety, and welfare rather than merely a legal imperative. They therefore Peering over the Horizon work to integrate it deeply into their culture and to embed it holistically into their strategy and all relevant Sustainability will have an increasingly large impact on aspects of their operations, while supporting it through the business landscape going forward. Companies that strong, top-down commitment from the executive lead- recognize this fact and position themselves at the fore- ership team. front stand to reap sizable competitive advantages. Con- sider the following emerging realities: In sum, the companies that are winning with their sus- tainability approaches are embracing aggressive strate- ◊ Prices for food, water, energy, and other resources gies, adapting their organizations, and creating new are becoming increasingly volatile. Companies that sources of advantage to deliver measurable business re- are able to optimize their sustainability profile and sults. practices will be less exposed to these swings—and more resilient. You cannot implement these kinds of programs bot- tom-up—it’s impossible. It’s always top-down, al- ◊ Stakeholders—including consumers, customers, share- ways. Because it’s such a cultural change, you cannot holders, and the government—are paying more atten- do it organically. tion to sustainability and putting pressure on compa- — Georges Kern, CEO, IWC nies to act. The Business of Sustainability 21
  24. 24. ◊ Governments around the world are becoming increas- The experiences of executives already wrestling with sus- ingly involved in developing policies that advocate sus- tainability-driven business issues suggest that companies tainability. Companies that are proactively pursuing do not need to make large, immediate investments in new sustainability initiatives will be less vulnerable to sud- programs. The findings reveal instead that what is essen- den regulatory changes. They will also be better posi- tial is that companies start to think more broadly and pro- tioned to have a voice in shaping policy—rather than actively about sustainability’s potential impact on their simply reacting to it. business and industry—and begin to plan and act. ◊ Capital markets are paying more attention to sustain- The time to take risks is when you’re successful, not ability and using it as a gauge to evaluate companies when you’re sliding down the slope. and make investment decisions. — Tim Mohin, principal consultant, Environmen- tal and Occupational Risk Management; ◊ First movers are likely to gain a commanding lead, and former senior manager for supplier responsibil- it may become increasingly difficult for competitors to ity, Apple; former director of sustainable catch up. development, Intel 22 The Boston Consulting Group
  25. 25. Appendix I Methodology for the Sustainability Survey and Interviews BCG and MIT Sloan Management Review developed a for-profit companies. (See the exhibit below.) The large 20-question electronic survey drawing on our interviews number of survey responses allows for statistical signifi- with more than 50 thought leaders in sustainability (listed cance across all of the major categories examined. in Appendix III). The survey was available online during March and April 2009. More than 2,000 respondents, repre- An additional 462 survey responses from academics, gov- senting a broad mix of companies and organizations, par- ernment officials, executives at nonprofits, and others ticipated in the survey. The data and analyses in this report were analyzed separately. This analysis is available at reflect the 1,560 survey responses from business leaders at A Diverse Mix of Business Leaders Responded to the Sustainability Survey C-level executive 34 Job position Senior manager 52 Other 14 Expertise in Expert 15 Novice 14 sustainability Some experience 72 Africa/Middle East 6 Asia-Pacific 13 Australia/New Zealand 3 Europe 14 Region Global 27 Latin America 6 North America 28 Other 3 Fewer than 10,000 employees 69 Size of the 10,000 to 100,000 employees 22 organization More than 100,000 employees 9 Agriculture, mining, and water 3 Automotive 2 Conglomerate 2 Construction 3 Consumer products and retail 9 Energy 7 Industry Financial services 11 Health care 6 Industrial goods and services 10 Media and entertainment 3 Technology and telecommunications 18 Other 26 0 20 40 60 80 Source: The Sustainability Initiative 2009 Survey, BCG and MIT Sloan Management Review. Percentage of respondents Note: There were 2,022 respondents to our survey; data and analysis in this exhibit reflect 1,560 responses from business leaders at for-profit companies. The Business of Sustainability 23