Has the long sought after business case for sustainability finally been discovered?Not only am I a ‘corporate responsibility’ professional, I am also a huge fan of Indiana Jones and while he gets to wear a cool hat to work and I don’t, our paths do seem common and our predicaments familiar.
In the last ten years, it has not been unheard of when providing a ‘business case for sustainability’ to senior executives, for a CR professional to be met with, at the very least, mild skepticism or, at the very worst, outright dismissal. It was during these times that we could best relate to Indiana: wandering through some dark, subterranean maze and finding a golden treasure placed ever so carefully on a pedestal; easy for us to see, but nearly impossible to seize – we knew we had a solid business case and it was obvious to us that it would be good for business, but it probably didn’t contain the financial bottom line positives that would resonate with senior management concerned with shareholder demands.
There were also times when, like Indiana, we thought we had not only found the ‘holy grail’ but were successful in removing it from it’s hidden chamber and about to show it to the world only to be chased down by a band of fearsome finance natives or stopped by a clever legal booby trap at the very last moment and our prize denied – not only had a solid business case been found, but we had enlisted some senior executives to be the champions of our sustainability agenda only to be challenged by the ROI argument and our sustainability initiative minimized or eliminated.
But like Indiana, we knew there would be another episode, a sequel where we would finally get the grail and retire to our mundane existence. However, like many Hollywood franchises, this story was beginning to feel like it had no end, that we would be searching for a business case forever with the increasing possibility that perhaps we’d been wrong along, that our search was in vain: perhaps there is no business case for sustainability that can satisfy the senior executives charged with such important fiduciary duties.
The search is over!
Along comes three professors from the Harvard Business School (Robert G. Eccles, Ioannis Ioannou, and George Serafeim) and our story may now have a happy ending.
…sustainable firms generate significantly higher profits and stock returns…
—HBS “The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance
In their working paper titled “The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance” the professors unequivocally state that “… firms in the High Sustainability group are able to significantly outperform their counterparts …” and “… that companies can adopt environmentally and socially responsible policies without sacrificing shareholder wealth creation. In fact, the opposite appears to be true: sustainable firms generate significantly higher profits and stock returns, suggesting that developing a corporate culture of sustainability may be a source of competitive advantage …”. What this paper has done, I submit, is to provide a rational business case for any company to embark on a building a culture of sustainability; a business case that any executive can understand and support even given all the pressure from shareholder demands.
It appears that the search is over. We can now all go back to our mundane existence, right? Not quite, Indy. What this article also conveys is that while we may have finally unearthed a rational business case that fortifies environmental and social components of an overall business strategy, it is without question that building a culture around these additional components is required to ensure the success we anticipate. A business case that is supported by the CEO and the CFO will hopefully ease the creation of that new culture and in fact it could be the building blocks of a legacy that many executives would like to leave behind.
What are your senior leaders looking for in a business case? Is it sufficient to ‘do the right thing’ from a shareholder perspective? I would love to hear your experiences with a sustainability business case.