Sustainability And The Industry

McKinsey's most recent Business of Sustainability survey explored why and how companies are addressing sustainability and to what extent executives believe it affects their companies' bottom line, now and over the next five years. Most executives say their companies are taking action are reducing energy usage and reducing waste in operations. Fewer respondents report that their companies are leveraging the sustainability of existing products to find new growth or committing R&D resources to bring sustainable products to market. Yet both of these are important ways sustainability can drive growth: organizations that act in these areas are the likeliest to say they're more effective than their competitors at managing any other sustainability initiatives. These results suggest that companies may be better able to find a competitive advantage when pursuing growth activities than operational activities.

Companies are also integrating sustainability across many processes, according to respondents: 57 % say their companies have integrated sustainability into strategic planning. The most integrated area is mission and values, followed by external communications, while the least integrated areas are supply chain management and budgeting.

Sustainability has stayed at about the same place on CEOs' agendas, and about the same share of respondents say they have formal programs to address it. The share of respondents saying their companies effectively manage sustainability has even shrunk somewhat. Starting last year, we used these three characteristics to define a group of "sustainability leaders," companies that are more adept at capturing value through sustainability along various measures that the survey asked about.

Respondents from companies in the leaders' group say their companies do more on every aspect of sustainability; this is especially true in the areas of growth and risk management that, along with return on capital, are three ways in which sustainability can create value. For example, 94 % say their companies have integrated sustainability into strategic planning, versus 53 % of all other respondents. Compared with the integration of sustainability into other processes, however, the leaders' supply chains and budgets are less integrated; respondents at other companies report this pattern as well. In addition, respondents in the leaders' group are more likely than other respondents to report that their companies are pursuing each of the 13 actions related to sustainability listed in the survey, more often than the rest of respondents do.

Source: McKinsey