For three years now the MIT Sloan Management Review has worked with the Boston Consulting Group to survey executives on the implementation of sustainability practices. Covering a vast swath of sectors the report provides insight into how things are moving generally with regard to sustainability and also serves as a reason to reflect on how the construction industry is facing the issue in relative terms. The report, titled “Sustainability Nears a Tipping Point” can be found here: http://sloanreview.mit.edu/feature/sustainability-strategy/
The first thing that jumps out to me in the study is how recent the engagement with sustainability is for so many companies. Seventy percent say they’ve added sustainability to their agenda in the last six years and 20 percent of those say this has happened in the last two. This is remarkable given the poor state of the economy over much of this period. Clearly a lot of corporations don’t see embracing sustainability as a cost burden but as a necessity. Nick Robbins, head of the Climate Change Centre of Excellence at HSBC is quoted, “People are seeing that sustainability is part of the next phase of development and that it will be disruptive and structural, rather than incremental.” I love that phrase, disruptive and structural, because that’s what sustainability needs to be to enjoy any kind of success. This new engagement is evidenced by the rapidly growing number of media outlets that deal directly with these issues, from magazines, to blogs, to white papers from DC think tanks and policy directives from a huge number of municipalities.
Also striking is the percentage of companies that say sustainability is a permanent part of their agenda, 70 percent. And almost no one indicates plans to lower their commitments in the years ahead. Rather remarkable “stickiness” for an issue that elicited a lot of eye rolling in the corporate crowd only a few years ago. Lots of folks, both proponents and detractors, saw the OPEC crisis of the 70s come and go without much in dramatic policy change and assumed that the “whole green thing” would blow over. You don’t hear so much from these folks anymore – they can tell which way the wind is blowing and how strongly. Better to turn your sails than wait around for conditions to change.
The report groups companies into “embracers” and “harvesters” which is both useful and the kind of annoying management consultant jargon that makes people stop reading their reports. In any case, both groups of companies have been driven to a sustainability agenda by their customers and clients, whether these are consumers or institutions like universities and pension plans. It remains true that customers aren’t generally willing to pay a sustainability premium, but they are listing it as a preference and it is driving change across all business sectors. This tracks well with our experience in the building sector where one of the major factors in building owners pursuit of green building measures are related to tenant demands – and those demands are in turn driven by the demands of the tenants “customers” – the staff they want to retain and the graduates they want to hire. Not surprisingly, those companies whose CEOs heard these demands and have made strong commitments in this area are the ones with sustainability most deeply and successfully embedded.
Still, all is not rosy in the building industry. While the report found that construction sector companies that think sustainability is “necessary to be competitive” rose about 20 percent, the percentage of companies who feel it is “permanently on the agenda” actually fell a few points – the only sector in which this happened. This is maybe not so surprising. No sector has been hit as hard as the building industry by the recession. With jobs disappearing and little positive prospects on the horizon we can hardly blame the industry for not knowing what, exactly, the future holds.
There is much more nuance in the report than I’ve outlined here – especially as regards the financial implications of these sustainability commitments. If these issues and their role in our economy are of any interest to you at all it’s well worth your time.
