What is a Sustainability Strategy?

One of the first findings from an eight-year-long research project run by MIT Sloan Management Review in partnership with the Boston Consulting Group was that corporate sustainability leaders articulate a clear sustainability vision for their business and then build that vision into strategy. But this is easier said than done. Our research found that 90% of managers agree that having a sustainability strategy is important to their business… yet only 60% claim that they have one.

What constitutes a sustainability strategy is an important starting question. For some companies, a “sustainability strategy” is really just a series of projects, anecdotes, and examples written into glossy sustainability reports. Our research showed that these companies rarely claimed that sustainability was creating business value. “Strategies” that focus on biking programs, recycling drives, or a CEO’s pet philanthropy have little impact on the business and won’t make the business sustainable over time. As one interviewee explained, these companies “are throwing things against the wall to see if they stick. They probably are losing money on sustainability.”

We found the baseline sustainability strategy in the chemicals, energy, utilities and industrial goods sectors. Companies in these industries are the most likely to report having a sustainability strategy. But, of course, these are highly regulated industries with substantial environmental and health and safety concerns, as well as significant resource needs or constraints. Sustainability issues are an inescapable fact of life in these industries, thus a sustainability strategy is basically mandatory. As one industrial CEO boiled it down, sustainability is, “the license for our asset base to operate.”

The reality is that many companies have not figured out how to integrate sustainability into their overall business strategy. Part of the reason why may be a misunderstanding of what strategy is all about. As Harvard Business School Professor Michael Porter explains, “The essence of strategy is choosing what not to do.” This is even more important in sustainability where the number of possible issues and concerns — everything from climate change to employee HIV awareness — can quickly spiral into the hundreds. How does a company decide what not to do?

This post is the first in a series of eight, representing key findings from a collaborative research report between MIT Sloan Management Review and the Boston Consulting Group.

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