MIT Sloan: Two Thirds of Companies Will Up Environmental Efforts This Year

by | Feb 11, 2011

More than two-thirds of companies plan to increase their commitment to sustainability this year, despite the stuttering economic recovery, according to a study by the MIT Sloan Management Review and Boston Consulting Group.

The study found that 69 percent of companies plan to increase their investment in and management of sustainability this year. Just over one-quarter (26 percent) plan no change, and only two percent plan to cut back on their commitment.

The report finds that corporate approaches to the environment tend to fall into two camps, with a gap between sustainability “embracers” and “cautious adopters”. Embracers place sustainability high on their agenda, and cautious adopters have yet to focus on sustainability measures besides energy energy cost savings, material efficiency and risk mitigation.

Nearly three times as many embracers (66 percent) as cautious adopters (23 percent) said that their organization’s sustainability actions and decisions have increased their profits.

Embracers are significantly more confident about their competitive position than nonembracers are, with 70 percent of embracers saying that their organizations outperform industry peers. Only 53 percent of cautious adopters described themselves as outperformers, and 14 percent admitted to lagging behind peers—more than twice the percentage of embracers who made the same claim (6 percent).

The report, the second annual Sustainability & Innovation Global Executive Study, was based on a survey of more than 3,100 corporate leaders representing every major industry and region of the world, and more than 30 in-depth interviews with experts from a range of disciplines, such as energy science, civil engineering, management, and urban studies.

“What’s fascinating is that our findings depict a business landscape in general that’s tilting hard toward where the embracers already are,” said Michael Hopkins, editor-in-chief of MIT SMR and a coauthor of the report. “So the embracers have handed us a kind of crystal ball. Their insights and behaviors suggest a blueprint for how management practice and competitive strategy will evolve.”

The report found that improved brand reputation is the biggest benefit of addressing sustainability, cited by nearly half of respondents.

Automotive is seen as the industry for which sustainability is most critical now: 80 percent of executives said sustainability-related strategies are necessary to be competitive in the auto sector.

But only 29 percent of respondents thought sustainability strategies are currently necessary for the media and entertainment industry. Another 51 percent said they will be necessary in the future.

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