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he performance frontier

By now most companies have sustainability programs. They’re cutting carbon emissions, reducing waste, and otherwise enhancing operational efficiency. But a mishmash of sustainability tactics does not add up to a sustainable strategy. To endure, a strategy must address the interests of all stakeholders: investors, employees, customers, governments, NGOs, and society at large. To do that, it has to increase shareholder value while at the same time improving the firm’s performance on environmental, social, and governance (ESG) dimensions. This article outlines a process that can be used to execute a sustainable strategy and extend the boundaries of The Performance Frontier.

Robert Eccles, George Serafeim, "The Performance Frontier", Harvard Business Review, May 2013

 

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How to become a sustainable company

Combining survey data with interviews, we construct an “Identity and Cultural Model” for how to transform a “Traditional” company, which is solely focused on profit maximization, to a “Sustainable” company, which maximizes profits while trying to both eliminate negative externalities and positively impact society. The first stage of the framework is “Reframing the Company’s Identity” through Leadership Commitment and External Engagement; the second is “Codifying the New Identity” through Employee Engagement and Mechanisms of Execution. An organizational culture with strong change capabilities for transformational as well as transitional change, the ability to innovate, and high levels of trust in the organization makes this transformation easier. When such a culture does not exist, becoming a Sustainable company is more difficult. Nevertheless, by moving through the two stages, these cultural characteristics are likely to emerge in those companies where they are not present at the outset and get stronger in those companies that start with a strong cultural foundation.

Eccles, Robert G., Kathleen Miller Perkins, and George Serafeim. "How to Become a Sustainable Company." MIT Sloan Management Review 53, no. 4 (Summer 2012).