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Carbon Market

Sustainability-savvy businesses get more profit, competitive edge – M.I.T.

By Jhoanna Frances S. Valdez

Sustainability-savvy businesses get more profit, competitive edge – M.I.T.
Thirty-one percent of the companies said sustainability is boosting their profits.

Corporations that are regularly practicing sustainability measures stand to gain more, a recent report from businessjournal MIT Sloan Management Review and The Boston Consulting Group showed.

The study, which involved 2,874 executives in 113 countries, found that two-thirds of global companies see sustainability as a competitive necessity in today's marketplace, up from 55 percent a year ago.

Thirty-one percent of these companies in turn said sustainability is boosting their profits and 70 percent reported that sustainability has a permanent place in their management agenda, with managers paying attention more to and investing more in sustainability than they were a year ago.

This trend is especially present in resource-intensive industries - energy and utilities, consumer products, commodities, chemicals and automobiles.

"Although many companies are still struggling to define sustainability in a way that is relevant to their business, the attention and investment we see indicate the here-to-stay nature of sustainabilityfor organizations everywhere," said MIT Sloan Management Review executive director David Kiron, co-author of the report.


For his part, Boston Consulting Group partner Knut Haanaes, also a co-author, said, "There's a learning curve to incorporating sustainability into strategy. Companies that have had it on their agenda and have worked on it for years are now seeing tangible results."


"Our research suggests a pattern: first a company focuses on reducing costs, boosting efficiency, and enhancing its corporate reputation. Then, after a while, it takes a broader view, becoming innovative with products and processes, and gaining access to new markets," he added.


Nick Robbins, head of the climate change center of excellence at London-based bank and financial services organization HSBC, said: "You would expect people to say 'Sorry, sustainabilityis nice, but it's only really appropriate for boon times'. Actually the perception has been the other way around. People are seeing sustainability is part of that next phase of development, and that it will be disruptive and structural rather than an incremental change here and there."


Business sense


According to the report, the reasons for strengthening the trend toward sustainability include customer preference for sustainable products and services; a necessity for accurate sustainability measures as a result of companies being publicly compared to competitors; and sustainability's connection with innovation.


Mike Parker, president and chief executive of Nike, at the launch of the company's corporate sustainability report last year said sustainability was key to Nike's growth and innovation.


"Making our business more sustainablebenefits our customers who expect products and experiences with low environmental impact, contract factory workers who will gain from more sustainable manufacturing, and our employees and shareholders who will be rewarded by a company that is prepared for the future," Mr. Parker said.


As a sustainability measure, Kimberly-Clark has added a net sales goal of 25 percent of 2015 sales from environmentally innovative products, according to Peggy Ward, director of the company's enterprise sustainability strategy team.


Both Nike and Kimberly-Clark were once the recipients of the most blistering criticisms to ever hit consumer companies - the former for sweatshops and alleged human rights violations, the latter for cutting down boreal forests.


Andreas Regnell, head of strategy and environment for Vatenfall, one of Europe's leading energy companies, said, "Sustainability allows us to continue to profit and grow, it helps us to be a responsible business, and it is crucial to our competitive advantage."

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