February 28, 2017
Corporate Sustainability is defined as “a more strategic approach to business innovation and optimization in a world of rising resource constraints” (based upon the Dow Jones Sustainability Index (DJSI) definition – see our blog, An Unprecedented Opportunity & Moment for CRE). As such, it is no surprise that Corporate Sustainability is now a mainstream management strategy framework among large companies, public and private:
For those awake to this opportunity, most of the above is not really news, but rather a continuation of a megatrend that has been building steam for years. However, as an “approach to business”, what is remarkably NOT often reported is the financial impact of pursuing this management approach to business. We are not talking about the payback on LED investment, or the ROI for installing a solar array, or even the business case for LEED or BREAM certification for a building. Rather, we are referring to the investible business case for integrating Corporate Sustainability into how an enterprise operates, replete with cost efficiency, process/product/service design, talent attraction and retention, customer acquisition, retention and spend share, investor risk/return assessment and future regulator risk impact.
This lack of communication may reflect that companies may not fully understand the business case and impact of bringing this management approach to their business strategy and operations. At least in part as a result of this lack of broad financial impact communication, there is still a longstanding perspective – far more prevalent outside of our clients than within – that Corporate Sustainability is just “the right thing to do”, but that it “costs money”. It also may help explain why only 31% of middle managers (who largely are responsible for implementation) believe that investors care about Corporate Sustainability (when in fact more than 80% of investors do) (same Sloan Business School and Boston Consulting Group study). This gap is furthered likely by one side of the national political news these days which mirrors this perception that “it is a drag on our economy”.
So, why is it that all of these leading corporations are putting so much behind their corporate sustainability efforts? Are they doing this to hurt their shareholders returns? Are they doing this to weaken their competitive cost structures? Are they doing this because those burdensome regulations are forcing them to (show me the regulation requiring commitment to 100% renewable energy)? Anyone who is in business today knows that the answer to all the above is “not a chance”. While many examples exist today of the financial impact from Corporate Sustainability, we share what should catch the attention of corporate executives and managers:
Companies are about sustained shareholder value and profit growth, and any strategy they implement is going to need to accomplish that. The Corporate Sustainability growth highlighted above is driven by sustained financial impact far more than by simply being “the right thing to do.”
[1] Today some 5,800 companies, representing close to 60% of global market capitalization, disclose through CDP.
[2] The GRI Disclosure Database contains 2,261 GRI reports for 2016; GRI reports include a GRI Content Index and do not include GRI reports that reference the guidelines but do not include a GRI Content Index (“GRI-referenced reports”) or those sustainability reports that do not reference GRI Guidelines.
David Osborn is an accomplished corporate sustainability advisor serving dozens of SR Inc’s Fortune 500 and mid-sized client companies as they drive significant operational efficiencies and better align with talent, customers, investors, and regulators through corporate sustainability strategy. From his career in business consulting and executive leadership, David brings to SR Inc over 25 years of experience in building professional services and technology-driven businesses serving a broad range of client industries. David graduated from Dartmouth College where his studies concentrated in Economics and Geology. He received numerous academic honors highlighted by a citation in mathematics from the then college President, John G Kemeny. After IT systems experiences at Arthur Anderson (now Accenture) and Wang Labs, David graduated from Northwestern’s Kellogg Graduate School of Management with honors, a member of the Beta Gamma Sigma Honor Society and in the top 3% of his class.
After receiving his MBA, David cut his teeth at Bain & Company in their Boston office and then progressed up to Managing Partner at Booz, Allen & Hamilton (BAH) where he was ultimately elected by his Partners to head their Australasian business. After helping to grow that business from a very early stage to a staff of more than 100, David returned to the US to head BAH’s Retail Financial Services practice in North America. After a few years back in the US market, David transitioned out of his highly successful consulting career and served as Managing Partner / EVP at two innovative business service companies: the first a 150 employee, VC-backed innovative technology services provider in Boston, and the second a high-end, 200+ employee proprietary marketing services provider located in Princeton and New York. In both companies, David led over 200% growth within 2-3 years while substantially building the companies’ delivery teams and capabilities.
