In 2008, when MIT Sloan Management Review and the Boston Consulting Group began their sustainability research program, it was the start of the Great Recession, and pundits were predicting the end of sustainability on the assumption that executives would turn away from corporate social responsibility initiatives in favor of "making money."
But our survey results in that first year held a surprise. Contrary to common wisdom, a large number of companies were doubling down on, rather than abandoning, their sustainability commitments.
Investing in business sustainability turned out to be a good bet. Today, more than a dozen companies, from Walmart to Toyota, have billion-dollar sustainable business lines — making money indeed.
But eight years on, these so-called "green giants" are still in the minority.
MIT SMR’s latest report, "Corporate Sustainability at a Crossroads," shows that most businesses have yet to crack the sustainability code. And now, after our eight annual surveys of tens of thousands of managers and more than 150 thought-leader interviews, we know why: Sustainability success requires a long-term, strategic-level commitment combined with business model innovation that goes way beyond changing light bulbs or charitable giving. Many managers understandably recoil from this level of sustainability commitment.
This brings us to the crossroads, because the election of Donald Trump seems to offer businesses a way out.
The temptation to maximize short-term returns at the expense of long-term sustainability gains is unmistakable. While our work shows progress over the last eight years, it is uneven and insufficient. Countering the risk of a sustainable business backslide requires helping executives see the business value in sustainability. While the path is not completely clear, we have learned a lot about what it takes to make sustainability pay off.
How to be sustainable As Michael Porter, founder of the Institute for Strategy and Competitiveness at Harvard Business School, stated, "The essence of strategy is choosing what not to do," and this applies to sustainability as well. We have found that companies profiting from sustainability preferentially focus on material sustainability concerns. Those doing so report 50 percent more profit compared with those that don’t.
This makes sense. It’s nice to sport pink ribbons or produce a glossy sustainability report, but these actions have little connection to the underlying business. Walmart’s fleet of 6,000 trucks, however, logs millions of road miles annually. By committing to double its fuel efficiency, Walmart not only halved their environmental impact, the company also saved $1 billion a year. That’s the power of a material focus.
If identifying material issues is the first step, acting on them is the second. However, we’ve found that many managers get tripped up on the so-called "business case for sustainability." Our work shows that companies with a business case are more likely to profit from sustainability, which is great, but only a quarter of businesses say they have one.
The solution lies in innovation, but not mere technological innovation. Our work shows that business model innovation is required. And more is better. Fifty-nine percent of companies that profited from sustainability had changed three or more aspects of their business model, most often in their value chain and customer offerings.
Business model innovation is a big step, but succeeding in sustainability doesn’t stop there. As Unilever’s Paul Polman explained in The Guardian, "The issues we face are so big and the targets are so challenging that we cannot do it alone. When you look at any issue, such as food or water scarcity, it is very clear that no individual institution, government or company can provide the solution.”
Increasingly, sustainability progress depends on transforming the way entire industries function. This requires going beyond business model innovation to business system innovation. A business system perspective takes into account the larger social and environmental context within which industry operates. Altering a business system is a team effort, relying on cooperative engagement with non-business stakeholders.
Executives recognize this, with 90 percent of companies saying collaborations are necessary to succeed with sustainability. But it’s hard: Less than half the companies we surveyed are collaborating, and of those, less than two-thirds say they are successful.
It’s not hard to understand why. Business-to-business collaboration is already challenging before you bring in politicians, union leaders, community groups and activists. Take the Roundtable Sustainable Palm Oil (RSPO), which is working to set global sustainability standards for palm oil production. The RSPO counts over 3,000 worldwide members encompassing the entire palm oil business system, from oil producers to consumer brands to retailers to bankers to regulators to community groups to NGOs and activists.
Navigating successfully in venues such as these requires a whole set of managerial skills not taught in business schools.
You can’t go home again. Despite the populist, deregulatory backlash, even once-skeptical groups are recognizing that sustainability is not going away. Our report last year showed that investors now recognize the role sustainability plays in financial returns and are bringing that understanding to investment decisions. Millennials too are famously seeking material gain, but also meaning in their work and careers. For many of this generation, sustainability is a baseline expectation of their employers. All of this means that backing off sustainability commitments is risky.
Worse, history shows that the deregulators may be setting themselves up for failure. In the 1980s, the Reagan administration pursued a similar deregulation path, getting government "off the backs of business." Many executives cheered, assuming that if the regulations went away, the sustainability problems would go away, too. But the problems didn’t go away. Instead, they festered, and new social forces arose to coerce companies to confront the problems.
Back to the future: Denying climate change will not cool the planet. Banning immigrants will not bring jobs back to a dying coal industry. And ignoring or suppressing scientific consensus may allow companies to dump toxic chemicals into a local river, but don’t imagine there won’t be a price to pay for the environmental damage (or its effects on public health and local economies).
Success in business sustainability is all about creating — and upholding — commitments that advance our common future.
HONG KONG, Dec. 30, 2016 /PRNewswire/ -- The Shantou New Oriental Hotel Amenities Company today released its first annual Sustainability Report highlighting progress made in 2015/2016.
The report published today shares specific progress and introduces the 3 pillars of the company's sustainability strategy - Sustainable Product, Producing Sustainability and People.
Sustainable Product - Over the past fiscal year, 30% of New Oriental Hotel Amenities raw materials are more sustainable and their plastic products degrade using compost treatment without polluting. They have developed products using organic ingredients and use of green chemistry for their formula. Their paper packaging material comes from a legal tree farm certified by FSC. They have used life cycle assessment to calculate their product carbon footprint.
Producing Sustainability - New Oriental Hotel Amenities Company has raised environmental and quality standards of their factory by engaging suppliers on green chemistry, installing LED lights in their factory, and reusing their production water in a cooling tower. Their factory has been awarded with ISO22716 and GMPC certification.
Our People - New Oriental Hotel Amenities enables their employees with career development, and end users have the choice to use environmental friendly products. They believe that diversity plays an important role in the success of their business. Their diversity and inclusive strategy outlines the commitment to create an inclusive work environment that respects, values, celebrates and makes the most of the individual differences the employees bring to the company.
The report also updates other areas of progress, including their new plant factory in Zhujin Industrial Park. New Oriental Hotel Amenities Company strives to be a green innovator, a responsible corporate citizen and a good employer.
To view the New Oriental Hotel Amenities Company's 2015/2016 Sustainability Report, please visit here.
Summary Report, please visit here.
About New Oriental Hotel Amenities Company
Headquartered in Shantou, Guangdong Province, China, New Oriental Hotel Amenities company is one of the leading hotel amenities manufacturers in the hotel industry. The company was founded in 2007, and the products have marketed to more than 38 major hotel groups around the world. New Oriental Hotel Amenities Company has liquid soap, tubes, toothbrushes, bottle injection & blowing, printing, amenity boxes and packaging production lines. The company believes a mix of quality and green innovation is needed to help hotels to reduce the environmental impacts of the products.
New Oriental Hotel Amenities Company
Bursa Malaysia has developed a Sustainability Reporting Guide (the “Guide”) . It is aimed at assisting listed issuers in improving their sustainability-related disclosures to meet the evolving information needs of various stakeholders (e.g. investors, customers, regulators). It is designed to provide listed issuers with information on, among others:
The Sustainability Toolkits support the Sustainability Reporting Guide and have been designed to provide more detailed guidance on some of the steps that listed issuers can take to embed sustainability into their organisation and meet their disclosure obligations.
When it comes to protecting your brand and image, choices used to be straightforward. The significant and steady growth in online retail and relative to the pace of change in global consumer product safety laws pose a serious challenge to protecting brands. While a brand may meet the regulations of its country of operation, should it be obliged to meet the regulations of the countries that it sells to – even if the regulations are vastly different and the volume of sales to these countries is low?
It may be prudent and wise to invest in ensuring that your brand’s products are in compliance with the local consumer product safety laws of any jurisdiction where they are sold – whether the laws be national, provincial (or state) or even municipal. With online retail, this becomes a rather large task as sales can happen anywhere in the world. On the other hand, it may be an unnecessary expenditure to devote resources towards compliance in regions that are unlikely to generate sales; most laws do not provide specific instruction on how online retailers are obliged to act, other than specify the rules in general for retailers in that jurisdiction. What stance works best for your business?
At the current time of writing, the U.S. Federal Trade Commission (FTC) suggests that consumers be informed of their buying decisions on their own accord. The onus being placed on the consumer, while relieving a business of liability, does not provide a legal safeguard to a brand or business – nor does it prevent damage to brand in the court of public opinion. Damage to a brand name and corporate image, may often have long standing effects – potentially leading to significant financial losses, fines or penalties. With more and more people connected to social media, even small defects in a product line can be hugely detrimental to a brand and having a good grasp on what your obligations are and how to develop an accurate response is paramount.
The U.S. census has reported significant, steady growth in ecommerce sales. Strong impetus from markets will drive governments towards more cohesive, stringent and harmonized regulations and, as a result, the burden of liability will shift to retailers from the consumer. Moreover as these changes happen, there is no telling how drastic or lax they will be.
Meanwhile as your business grows, navigating the thin line between moral and legal obligations is challenging and often confusing. While it may be difficult to develop a tailor-made solution for your business that leverages both moral and legal considerations, it is definitely possible and will save you a lot of worry in the future.