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Businesses that are leaders in sustainability practices have seen positive effects on their bottom line but also less tangible benefits, according to a report from the journal MIT Sloan Management Review.
The report, released Feb. 10, analyzed a 2010 Boston Consulting Group survey of about 3,000 business executives and managers located throughout the world.
Authors of the report split respondents who have implemented sustainability-driven actions into “cautious adopters” and “embracers.” The former category includes “those whose activities are made up of short-term, strictly measurable investments such as resource efficiency.” The latter group consists of those who say “they have established a business case for sustainability, have put it permanently on their agenda and maintain that it is necessary to remain competitive.”
The embracer category includes companies such as Unilever--which released a Sustainable Living Plan in November that sets a wide range of goals to lessen the environmental impacts of its products--and Clorox, which announced Feb. 8 that it is disclosing information about all preservatives, dyes, and fragrance ingredients in its cleaning products, allowing consumers to make more fully informed choices.
Embracers were more likely than cautious adopters to describe their companies as successful, with 70 percent of embracers saying they outperformed their industry peers compared to 53 percent of cautious adopters. Of the embracers, 66 percent said sustainability and environment efforts increased their profits, while 23 percent of cautious adopters saw the same link.
Both embracers and cautious adopters have increasingly implemented sustainability initiatives, the report found. In the 2009 survey, 25 percent of all respondents reported they were increasing their sustainability efforts. In the latest survey, that portion jumped to 59 percent.
Clorox representatives interviewed for the report said that investments in waste reduction and efficiency and in environmentally friendly product lines not only boosted profits but also affected employees' attitudes.
“They're proud of the company,” Beth Springer, Clorox's executive vice president of international and personal care, is quoted as saying about the employees. “And that to me is proof positive that this helps you attract, retain and engage employees.”
The report lists employee engagement as one of the lessons to be learned from embracers about how to implement sustainable programs, saying it is important to value intangible benefits as well as tangible ones. The report recommends that companies offer financial and promotion incentives to encourage lower-level employees to suggest and lead sustainability initiatives. Further, companies should integrate sustainability into their culture rather than making it a separate initiative, the report recommends.
Other recommendations include acting early even if potential benefits have not yet been fully analyzed.
“Embracers are not paralyzed by ambiguity, and instead see action as a way to generate data, uncover new options and develop evidence iteratively that makes decision making increasingly effective. Momentum decreases uncertainty,” the report says.
The report recommends that companies measure the effects of their initiatives, designing metrics to do so if none are readily available.
It also recommends implementing a mix of programs with immediate payoffs such as reduced electricity usage and longer-term results, such as making products that consumers will embrace as they become more environmentally aware or investing in efficiency technology that will pay off over many years.
By Leora Falk
The report, Sustainability: The 'Embracers' Seize Advantage, is available at http://c0426007.cdn2.cloudfiles.rackspacecloud.com/MIT-SMR-BCG-sustainability-the-embracers-seize-advantage-2011.pdf.
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