Is the “craze” with SUSTAINABILITY justified?

The hotly debated topic of sustainability draws more and more attention from a wide range of stakeholders and makes companies increasingly concerned about their “sustainability” stance. What do we mean by sustainability? Here we are not talking just in environmental terms as the common misconception around sustainability goes. Sustainability is not just about ensuring biodiversity, healthy ecosystems and environment, but a comprehensive consideration about environmental, social and governance issues, which drive strategic thinking and competitiveness in the current corporate environment. With the recent publication of the 2015 ranking of the world’s most sustainable companies – to be officially released at the World Economic Forum in Davos, Switzerland – the interest in sustainability reaches new heights. The idea of sustainable, and responsible, modus operandi has been consistently at the forefront of the discourse, capturing the interest of the corporate world. Now investors request information on sustainability performance and the so-called “key performance indicators” are the new guiding principles used to measure how “sustainable” your company is.

As it happens to be at the beginning of 2015 it is all about sustainability and everyone seeks the sustainable route. However, is the change to sustainability worth it? Or is it all about keeping pace with the world’s corporate trends? Our experts have very convincing answers to these questions and much more…

Your Company’s Transition: From Traditional to Sustainable

Despite the fact that there is a plethora of companies established with no or minimal concern about sustainability issues, with the new global corporate trends, companies slowly but certainly shift their future outlook towards sustainability. EcclesMiller and Serafeim discuss here the transition from traditional to sustainable company and provide in-depth insights into the know-how of turning your company into a sustainability champion. A little hint on the proposed transformation framework by our experts is the focus on leadership commitment and external engagement in the first stage and, later on, emphasis on employee engagement and the pertinent mechanisms of execution. Additionally, they argue that the organizational culture of the company can play a significant role in the transition from traditional to a sustainable company; high levels of trust, innovation and change capabilities have the potential to facilitate this transition process even to a further extent. This framework can guide the transformational journey of companies towards the goal of placing sustainability at the forefront of their operations.

The drive towards sustainability definitely comes across as the global corporate trend, but what do companies gain from this transition to sustainability?

How to Outperform? – Be Crazy about Sustainability

With a sound empirical basis EcclesIoannou and Serafeim argue here that companies that have already embraced sustainability at the core of their operations significantly outperform in the long-term their counterparts in stock market and accounting performance. Some other intriguing points from this study include the fact that the executive body of High Sustainability companies is highly likely to be very engaged with sustainability issues and that the decision-making at the top leadership level is greatly influenced by sustainability metrics. The outperformance of High Sustainability companies can also be attributed to their established stakeholder engagement practices, their long-term outlook in terms of their business ventures and their commitment to accountability and transparency with disclosures of nonfinancial information.

It appears sustainability is not a new corporate “craze”, but a warranted innovation in the way companies think about and operate their business. Becoming a High Sustainability company not only transforms the firm in a positive way, but also guarantees strong performance in the long-term, better brand image, and higher chance to be the next world’s sustainability leader.