Thursday, February 07, 2013

(BN) One-Third of Companies Report Profits From Sustainability: Survey

Bloomberg BNA -- More than one-third of companies are reporting a profit from their sustainability efforts, a 23 percent increase from the previous year, according to an annual study by the Massachusetts Institute of Technology and the Boston Consulting Group.

A total of 37 percent of companies surveyed reported profits from their sustainability efforts, compared to 31 percent the previous year, according to the 2012 research report, The Innovation Bottom Line, which was released Feb. 5.

Researchers from the MIT Sloan Management Review and BCG analyzed the responses from 2,600 executives and managers from companies around the world for the fourth annual study.

48 Percent of Companies Changed Practices

Nearly half, or 48 percent, of companies surveyed have changed their business models as a result of sustainability opportunities, a 20 percent increase from last year, according to the study.

Companies in developing countries are more likely to change their business models due to sustainability, possibly due to challenges arising from resource scarcity and population growth in those regions, the study states.

North America has the lowest percentage of companies changing their business models as a result of sustainability, as well as the lowest percentage of companies reporting profits after changing their business models due to sustainability. The researchers said this was because many demands of sustainability have not taken hold in the region or spurred companies to translate pressures related to sustainability into profitable initiatives.

More than 60 percent of respondents at companies that had changed their business model and also had sustainability permanently on their management agenda said they had increased profits from pursuing sustainability.

Sixty-two percent of respondents said their company CEO has a strong commitment to sustainability, while only 16 percent said their company has a chief sustainability officer.

Increased Investment Expected in Future

Seventy percent of respondents said they expected their company's commitment to sustainability, through investment and management attention, to increase in the next year. Improved brand reputation was cited as the greatest benefit for addressing sustainability, according to the study.

In order to profit from sustainability, researchers recommend that executives change business models, measure and track sustainability goals and performance, and understand what customers are willing to pay for sustainable products and services.

Companies that changed their business models due to sustainability did so by taking actions such as sourcing sustainable goods in their supply chains, offering sustainable products and services to consumers, switching to more lightweight packaging, and improving water efficiency and reducing waste in business operations, according to the study.

A total of 78 percent of respondents said energy scarcity and energy price volatility is the most "critical sustainability trend" over the next three years, ranking above waste and waste management (52 percent), resource scarcity (51 percent), climate change (37 percent), and concerns over water scarcity and food security. Respondents selected their top three "critical trends" in order of significance for the survey.

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