Companies today are finding themselves at a crossroads with global implications, as increasingly, they are being required to reconcile business growth with the three pillars of sustainability: economic efficiency, ecological integrity, and social equity. If they fail to do so, they could face existential risks, such as runaway resource costs, consumer desertion, or exorbitant fines.
Many companies, however, are uncertain as to how best to go about improving their sustainability profile and deriving value from the process. A “fig-leaf” approach focused on initiatives that provide “green” credentials is no longer enough to show commitment to the sustainability agenda. Oliver Wyman’s research suggests that companies that take an active leadership position to harness the trends driving sustainability – rather than reactively implementing sustainability in response to regulation and public pressure – will reap the benefits of a new source of competitive advantage and long-term growth.
Major Sustainability Trends
There are a number of trends that are driving industries to establish more sustainable organizations, ranging from resource scarcity and expanding regulation, to increased investor and consumer focus on sustainability. The impact of these trends will vary by type of business and industry, but they are ultimately unavoidable and relevant for consideration by all business leaders.
1Why should companies invest in sustainability?
Developing a sustainable business is not just ecological, it’s also economical. Done right, a company can gain a significant and lasting competitive advantage by developing a more environmentally sensitive business model – which can enable a company to pursue new avenues of growth and avoid soaring resource costs, customer desertion, and unending regulatory pressure.
2What potential value can be realized from pursuing sustainability?
Even small and midsized companies in various industries can capture significant value by developing sustainability programs and incorporating them into operational and strategic objectives. The four case studies in From Green to Sustainable provide a concrete view of the many discrete opportunities that might exist, regardless of industry, to increase sustainability. Although several of these programs are still in their early phases and none of the companies described has yet reached a completely holistic level of sustainability, all of the companies have realized positive financial and environmental impacts while reducing their resource dependency.
3What are the main inhibitors to improving sustainability?
Oliver Wyman interviews with senior managers across industries and geographies determined that while many understand the importance of sustainability and its potential value, few felt they had sufficient information and insight into value levers, best practices, implementation, and developing a holistic approach. Most midsized to large companies have a corporate social responsibility report, consider their companies to be “somewhat” green, and believe more is being done with regard to sustainability than 5-10 years ago. But our interviewees also expressed uncertainty about whether their company’s current actions were sufficient for the future – and if sustainability could “do more” in terms of generating operational and financial improvements.
4What is Oliver Wyman’s approach to sustainability?
Oliver Wyman has developed a comprehensive, practical, and industry-focused approach that enables companies to extract value from a focus on sustainability. Our experience shows that taking a holistic approach to sustainability does not require complicated methodologies or overly expensive management systems. It does require that companies understand the trends and sustainability impacts most relevant to them, define a set of objectives and solutions, and establish a sustainability transformation plan that will become part of the long-term strategic and operational fabric of the company.