InsightaaS: McKinsey & Co. is a world-leading management consulting firm, known for advising senior management within the world’s largest enterprises. Its website is a font of thoughtful perspective, a source that we read (and highlight on Across the Net) often.
Today’s post concerns sustainability, a topic that InsightaaS’s principals follow keenly (we are regular columnists on sustainable IT for Bloomberg BNA – itself an august source!). It can be difficult to find sustainability-related posts that have appeal beyond ‘the choir,’ but McKinsey takes an intriguing approach, using data from an annual global survey to illustrate trends in executives’ reasons for addressing sustainability. The research finds that 43% of the 2,904 businesspeople surveyed focus on sustainability because it is in alignment with their companies’ business goals, missions or values, leading the authors of the post to conclude that “sustainability is becoming a more strategic and integral part of their businesses.” This is an encouraging conclusion – as is the finding that CEOs are three times more likely than other survey respondents to cite sustainability as their “most important priority” – but it is not without challenges. The authors observe that “as sustainability rises in significance, capturing its full value grows more challenging–perhaps because the more that companies prioritize sustainability, the more it needs to be integrated into (and even change) the core business,” and note that organizations that are taking action on sustainability are having issues with effective execution and have too few people accountable for sustainability outcomes.
Other data points included in this post highlight differences in approaches across industries, and dig into the characteristics that separate sustainability leaders from other firms; at the conclusion of this analysis, the authors report that they “identified four distinct approaches to the sustainability organization: leader supported, execution focused, externally oriented, and deeply integrated.” The post closes by urging readers to “extend the product life cycle,” “focus your strategy” and “look to technology.” We wholeheartedly agree, especially with the connection between sustainable business activity and technology!
Company leaders are rallying behind sustainability, and executives overall believe the issue is increasingly important to their companies’ strategy. But as it continues to grow into a core business issue, challenges to capturing its full value lie ahead. These are among the key findings from our most recent McKinsey survey on the topic,1 which asked respondents about the actions their companies are taking to address environmental, social, or governance issues, the practices they use to manage sustainability, and the value at stake.
One such challenge is reputation management. Year over year, large shares of executives cite reputation as a top reason their companies address sustainability; of the 13 core activities we asked about, they say reputation has the most value potential for their industries. However, many of this year’s respondents say their companies are not pursuing the reputation-building activities that would maximize that financial value.
Comparing companies with the most effective sustainability programs (our sustainability “leaders”) with others in their industries highlights another obstacle: incorporating sustainability into key organizational processes, such as performance management, one area where the leaders report better results than others. Beyond strong performance on processes, the leaders share other characteristics that are keys to a successful sustainability program–among them, aggressive goals (both internal and external), a focused strategy, and broad leadership buy-in.
Sustainability rising
According to executives, sustainability is becoming a more strategic and integral part of their businesses…
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