After myriad proclamations over the past decade that the notion/concept of sustainability as a corporate imperative had crossed the Rubicon and entered the mainstream, it appears that maybe a destination of sorts has been reached. A recent panel of senior executives from consulting, banking and the chemical industries sat down to debate and discuss this critical shift during the recent Wharton Social Impact conference and generally agreed that the movement has finally become a central part of the mission statement at many enterprises.
If building a sustainable enterprise was a fashionable trend five years ago, today it is a business imperative. Forward-looking corporations have figured out that a focus on environmental, social and governmental (ESG) factors is not just a bid to burnish their image, but rather it is a necessity in today's marketplace. And if done well, it is a true competitive advantage.
An important, and critical, divide seems to be opening between those companies that get it and those that don’t. Despite protestations from a sub-stratum of firms that view an embrace of the green/sustainable strategy as a cost rather than an opportunity, more and more high-profile enterprises are engaging at varying levels of investment.
In fact, for savvy companies, a strategy built around sustainability can be a critical advantage, Boston Consulting Group senior partner Martin Reeves pointed out. Even when government action puts more burdens on business, Reeves said there can be an upside. When you change the rules of the game, you "are putting a floor on certain behaviors [and] raising barriers to entry." Case in point: the establishment of the Food and Drug Administration, which Reeves contended "essentially took a snake oil industry and turned it into an industry with very strict scientific standards."
When anticipating the learning curve for macro level changes in behavior, it is generally believed that it requires a generation for new behaviors to achieve mainstream acceptance and incorporation into strategic and tactical decision making going forward. As the tail end of the Boomers and Generation X ascend to leadership positions in business, it would appear that sustainability will be a fundamental consideration for the most savvy and market attuned enterprises moving forward.
Among the panel's key messages was that the need to address ESG issues will only intensify over time, in part because the next generation of business leaders is demanding it. One of the audiences most keenly interested in the report Citigroup puts out annually on its sustainability record, Eubank noted, is the company's recruiting operation. "Students these days are much more environmentally aware, and they want to know what a company's sustainability policies are," Eubank said. "Bankers want to know that they are working for a company that is being responsible."