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The importance of sustainability as a business issue has steadily grown over the past two decades. Most businesses understand that their sustained success depends upon the economic, social and ecological contexts in which they operate. But the stability of those contexts can no longer be taken for granted. The physical environment is becoming more unpredictable, a more interconnected global economy is altering social conditions, and technological innovation is transforming the nature of consumption and production.
Sustainability has got to be something that we all care about. We need groups to collaborate that never have … everybody’s got to work together. We need to begin to manage this planet as if our life depended on it — because fundamentally, it does.
— Jason Clay, senior vice president, WWF
Corporate sustainability has evolved from expressing good intentions and looking for internal operational efficiencies to addressing critical business issues involving a complex network of strategic relationships and activities. As sustainability issues have become more global and pivotal to success, companies are realizing that they can’t go it alone. Through their strategic networks, business can, and arguably must, tackle some of the toughest sustainability issues, such as access to stressed or nonrenewable resources, avoiding human rights violations in value chains2 or moderating climate change.
Given the implications of sustainability’s evolution within the corporate sector, we — MIT Sloan Management Review (MIT SMR) and The Boston Consulting Group (BCG) — focused this year’s research on the critical role of sustainability collaborations that address systemic issues, and on the role of the board of directors in guiding their companies’ sustainability efforts. To better understand these two topics, we surveyed nearly 3,800 managers and interviewed sustainability leaders from around the world (see About the Research).
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1. Institute of Directors in Southern Africa. “The King Code of Governance for South Africa,” http://c.ymcdn.com/sites/http://c.ymcdn.com/sites/www.iodsa.co.za/resource/collection/94445006-4F18-4335-B7FB-7F5A8B23FB3F/King_Code_of_Governance_for_SA_2009_Updated_June_2012.pdf.
2. Jaeggi, O. “Human Rights: The Next Frontier.”https://stagingsloan.wpengine.com/article/human-rights-the-next-frontier/.
3. “New UN program tasks corporate boards with heading sustainability efforts,” The Guardian, November 19, 2014, http://www.theguardian.com/sustainable-business/2014/nov/19/united-nations-boards-directors-sustainability/.
4. Food and Agriculture Organization of the United Nations. The State of Food Insecurity in the World 2014. http://www.fao.org/publications/sofi/en/.
5. Macondo. Global Compact International Yearbook 2010. New York: United Nations, 2010: 72.
6. Transformational collaborations were defined in the survey as “changing rules and markets, i.e., engagement that changes the rules of the game.”
7. Survey respondents who characterized their collaborations as strategic or transformational “to a great extent”
8. Kiron, D., Kruschwitz, N., Haanaes, K., Reeves, M., Goh, E. “The Innovation Bottom Line: Findings from the 2012 Sustainability & Innovation Global Executive Study and Research Report.” https://stagingsloan.wpengine.com/reports/sustainability-innovation/.
9. Sustainable Food Laboratory. “Bringing Value Closer to the Farm: The CAPE Project.” http://www.sustainablefoodlab.org/newsletter/17-news-spring10/242-newsletter-may-2013.
10. Turner, W., Kruschwitz, N. “Working Toward Totally Transparent Yogurt.” https://stagingsloan.wpengine.com/article/working-toward-totally-transparent-yogurt/.
11. Blaisdell, B., Kruschwitz, N. “New Ways to Engage Employees, Suppliers and Competitors in CSR.” https://stagingsloan.wpengine.com/article/new-ways-to-engage-employees-suppliers-and-competitors-in-csr/.
12. Jaeggi, O. “Human Rights: The Next Frontier.” https://stagingsloan.wpengine.com/article/human-rights-the-next-frontier/.
13. The Thun Group. UN Guiding Principles on Business and Human Rights: Discussion Paper for Banks on Implications of Principles 16–21 (October 2013). http://www.menschenrechte.uzh.ch/publikationen/thun-group-discussion-paper-final-2-oct-2013.pdf.
14. Roundtable for Human Rights in Tourism: About Us. http://www.menschenrechte-im-tourismus.net/en/ueber-uns.html.
15. Unruh, G. “The Sustainability Insurgency” [series]. https://stagingsloan.wpengine.com/tag/sustainability-insurgency/.
16. Jaeggi, O. “How Nonprofit Organizations Use Reputational Risk Management.” https://stagingsloan.wpengine.com/article/how-nonprofit-organizations-use-reputational-risk-management/.
17. Senge, P., Smith, B., Kruschwitz, N., Laur, J., Schley, S. The Necessary Revolution. New York: Crown Publishing/Random House, 2007; p. 234.
18. Post, R. “For BASF, Sustainability Is a Catalyst.” https://stagingsloan.wpengine.com/article/for-basf-sustainability-is-a-catalyst/.
19. United Nations Environment Programme (UNEP). Integrated Governance: A New Model of Governance for Sustainability. June 2014. p.6. http://www.unepfi.org/fileadmin/documents/UNEPFI_IntegratedGovernance.pdf.
20. UNEP, Integrated Governance, p. 15.
21. From a total universe of about 60,000 companies, only 3,512 companies reported on at least one ESG measure [Ibid, p. 15].
22. Paine, L.S. “Sustainability In the Boardroom: Lessons from Nike’s Playbook.” Harvard Business Review 92, no. 7–8 (Jul–Aug 2014): 87–94.
23. UNEP, Integrated Governance, p. 15.
24. Heracleous, L., Lan, L.L. “The Myth of Shareholder Capitalism,” Harvard Business Review 88, no. 4 (April 2010): 24. https://hbr.org/2010/04/the-myth-of-shareholder-capitalism/ar/1.
25. Stout, L.A. The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public. San Francisco: Berrett-Koehler Publishers, 2012.
26. Gore, A. The Future: Six Drivers of Global Change. Random House, 2013: p. 35. The given source for this factoid is: Henry Blodget, “You’re an investor? How Quaint,” Business Insider, August 8, 2009. http://www.businessinsider.com/henry-blodget-youre-an-investor-how-quaint-2009-8.
27. Rose, J.M. “Corporate Directors and Social Responsibility: Ethics versus Shareholder Value,” Journal of Business Ethics, 73 no.3 (July 2007) 319-331.
28. Ibid, p. 319.
29. This is adapted from the UNEP Integrated Governance Report.
30. “Cermaq presents solid sustainability results.” http://www.wallstreet-online.de/nachricht/3140551-cermaq-presents-solid-sustainability-results.
31. Paine, “Sustainability In the Boardroom,” p. 90.
32. Ibid, p. 88.
33. Eccles, R.G., Krzus, M.P., Ribot, S. “The Integrated Reporting Movement: Meaning, Momentum, Motives, and Materiality.” New York: John Wiley and Sons, 2014.
34. UNEP, Integrated Governance, p. 8.
35. “Corruption: Less Party Time,” The Economist, January 25, 2014. http://www.economist.com/news/china/21595029-communist-partys-anti-graft-campaign-has-had-surprising-impact-new-report-shows-how.
36. Kruschwitz, N. Is Hostility to Blame for Sustainability’s Leadership Gap? https://stagingsloan.wpengine.com/article/is-hostility-to-blame-for-sustainabilitys-leadership-gap/.
37. Watson, B. “Siemens and the Battle Against Bribery and Corruption,” The Guardian, September 18, 2013. http://www.theguardian.com/sustainable-business/siemens-solmssen-bribery-corruption.