90% of Executives and Managers Say That Sustainability Requires Collaboration — With Other Businesses, NGOs, Government Entities and/or Others — to Be Successful; Only 42% Report That Their Boards of Directors Are Actively Involved in Sustainability Efforts
CAMBRIDGE, MA–(Marketwired – January 13, 2015) – Companies are increasingly recognizing that they cannot go it alone when it comes to sustainability, opting instead to pursue strategic and transformational collaborations that engage multiple entities.
Corporate sustainability is moving away from its old model, comprised primarily of ad hoc or opportunistic efforts that tended to produce strained relationships with the public sector, according to a new study by MIT Sloan Management Review (MIT SMR), The Boston Consulting Group (BCG) and the UN Global Compact. The survey and accompanying report, titled Joining Forces: Collaboration and Leadership for Sustainability, includes responses from over 3,795 executives and managers from 113 countries.
Companies say that corporate boards of directors remain largely under-involved, according to the Joining Forces survey and report. Despite the fact that 87% of managers and executives say that boards of directors should be engaged in sustainability, only 42% report that their boards are active in them.
Examples of Successful (and Sustainable) Collaborations
Executives and managers cite various reasons for developing sustainable collaborations. 88% point to reputation management or brand building as “somewhat,” “quite” or “very” relevant when building sustainability initiatives. The next two most-cited reasons were the production of innovative products and services (82% of companies) and the transformation of markets towards sustainability (78% of companies).
The study points to numerous cases of companies’ collaborative and sustainable partnership — with NGOs, other for-profit firms, academics, governments and industry groups:
- Intel’s education partnerships. Global technology company Intel has long championed the social value of education; since 2001, the firm has invested nearly $500 million in literacy and education projects around the world. But Intel understands that it can’t solve these problems alone. It partners with teacher groups to provide training and conduct research on the most effective education methods. It also joins forces with other for-profit entities that depend on educated populations, such as publishers and broadband providers in underserved regions.
- BASF, a German chemicals firm committed to fighting malnutrition. One in nine of the world’s population lacks enough food to live a healthy life, and one in three people lacks essential vitamins and minerals in their diet. German chemicals company BASF became a founding member of the Strategic Alliance for the Fortification of Oil (SAFO), which works with NGOs, local governments and for-profit firms to add important nutrients to basic foods.
- Stonyfield, a yogurt company that changed how bananas are grown. This Vermont-based yogurt manufacturer faced a strategic challenge: uncertainty in its supply of organic banana puree. Stonyfield responded with transformational collaborations that have changed the face of how the company’s suppliers go to market, working with the nonprofit Sustainable Good Lab to develop small-scale fruit-processing operations.
- Netafim – drip irrigation to fight water scarcity. This Israeli-based company became the world’s largest drip irrigation company while simultaneously addressing a key sustainability: water scarcity. Netafim introduced drip irrigation to agriculture, but when they started out, the concept was unknown and barely developed. To make progress, the firm partnered with government agencies, academia, NGOs — and now that they are expanding into India, their fastest-growing market, they are reliant on partners who know the farmers and the culture, and can help them sell to and train them.
- Timberland’s contribution to transforming the leather supply chain. This outdoor apparel company works closely with the Leather Working Group, a multi-stakeholder organization, to ensure that the company sources leather from environmentally responsible tanneries. In addition to ensuring the sustainability of its supply chain, the partnership also reduced complexity in sourcing materials.
- The Electronic Industry Citizenship Coalition (EICC), an industry association that developed a sustainable supply chain for its members. This organization facilitates collaboration and dialogue between companies, workers, governments, civil society, investors and academia. In doing so, it brings together companies across industries, in order to pressure suppliers to develop a responsible global electronics supply chain.
Sustainability’s Importance Continues Meteoric Rise
This new, collaborative approach to corporate sustainability comes as sustainability efforts move to the top of businesses’ lists of priorities. Most businesses understand that their sustained success depends upon the economic, social and ecological contexts in which they operate. The report found that 65% of companies name sustainability as a top management agenda item — a drastic increase from 46% in 2010. Other key findings from the study include:
- Companies prioritize sustainability and note the effectiveness of collaboration. 39% of respondents say their companies publicly report their sustainability initiatives — a 15% increase since 2010 — and between 2009 and 2014, the number of companies without a sustainability business case dropped from 42% to 23%. And a majority of businesses (61%) currently participating in collaborations acknowledge their effectiveness, assessing their experiences as “quite” or “very” successful.
- But only a minority of companies actively engages in sustainability partnerships. Despite nearly unanimous consensus on the importance of sustainability collaborations, practice lags behind belief; only 47% of businesses are engaging in sustainable collaborations. Likewise, though 86% of companies believe that their boards of directors should play a strong role in driving sustainability initiatives, only 42% of boards are perceived to be actively engaged in those efforts.
- Active board support and engagement are key to collaboration success, but most boards remain uninvolved. Even though sustainability has become a top management agenda item, only 22% of managers perceive that their board substantial oversight on sustainability issues. However, in companies where boards are perceived as active supporters, 67% of respondents say that collaborations are very or quite successful — compared to just 32% of respondents in companies whose boards are not supportive.
The survey finds a number of factors that can help ensure the effectiveness of sustainability collaborations. They are:
- Successful internal collaboration.
- Having a shared language.
- Active, enthusiastic board engagement.
- Timely engagement.
- Choosing the right people.
- Due diligence.
- Well-developed entrance and exit strategies.
For more details on the report’s findings and interview transcripts, please visit the Sustainability & Innovation website or download a copy of the full report.
Join the authors of the sustainability research report on January 28 at 11:00am ET for a free, live webinar and Q&A. Register for the free webinar now at http://mitsmr.com/SUWebinar15.
Methodology
The survey response set of the 2014 Sustainability & Innovation Survey and Report, conducted by the MIT Sloan Management Review, in partnership with The Boston Consulting Group and the United Nations Global Compact, included more than 3,795 executive and manager respondents from 113 countries. The report is based on a subsample of 2,587 respondents from commercial enterprises located around the world and representative of a wide variety of industries.
