Question for Corporate Leaders: Is Your Company’s Sustainability Journey Based on Key Strategies? Is There Clear Alignment of Foundational Strategies with Sustainability?




Question for Corporate Leaders:
Is Your Company's Sustainability Journey Based on Key Strategies? Is There Clear Alignment of Foundational Strategies with Sustainability?

HBR Authors Share Some Research Findings Of Importance to Corporate Leaders and Asset Managers...

Strategy – the familiar word comes down to us over the eons from the language of ancient Greece. The roots of the original word (translated to “stratagem”) mean “the work of the generals, or generalship” which is to clearly say:  to lead from the front..or the top! 

In 2019, “strategy” and “sustainability” should be clearly linked, right?  In the corporate sector, setting strategies is at the heart of the work of the men and women at the top, in the board room and in the C-suite.  So what does that mean to us in terms of the intensive focus today on corporate sustainability and ESG performance? (And, the impacts positive and negative in the capital markets?)

The corporate enterprise that is seeking to excel among its peers, and clearly demonstrates leadership in sustainability matters (that encompasses a broadening range of ESG issues today) surely has the leaders at the top crafting, innovating and sharpening the leadership strategy…and driving the foundational elements down into the depth and breadth of the enterprise.  Typically, universal understanding helps to drive competitive advantage and creates a moat more difficult for peers to cross.

And so in this context, what about the “corporate sustainability laggards”?  Often in our ongoing conversations with a wide range of corporate managers – and with investment managers evaluating corporate ESG performance – the companies not yet well along in the journey or perhaps not even started on the journey, lack of sustainability strategy sends a signal of “silence” from the top ranks.  What it says to stakeholders:  ESG and strategy = not connected yet, there is a lack of quality in our management and board.  Don’t look to our firm for signals of sustainability leadership.

We find that most large-caps “get it” and it is the resource-challenged small-cap and mid-cap firms that are not yet started or not far into the sustainability journey. 

The topic of corporate sustainability strategy gets a good overview in the pages of the Harvard Business Review by the outstanding ESG / sustainability experts, George Serafeim and Ioannis Ioannou.  Their post is based on their new 45-page paper (“Corporate Sustainability: A Strategy?”) and their co-authored HBR management brief is our Top Story for you.

They recently published the paper using data from MSCI ESG Ratings for 2012-to-2017 (looking at 3,802 companies); among the approaches was to separate “common practices” (across many companies) and “strategic” (those not so common to most companies).

Your key takeaway from their work:  “Our exploratory results confirm that the adoption of strategic sustainability practices is significantly and positively associated with both return on capital and market valuation multiples, even after accounting for the focal firm’s past financial performance.”

And…”the adoption of common sustainability practices is not associated with return-on-capital, but is positively associated with market valuation multiples.” There’s more for your reading in the Top Story below.

You could share these findings upward in your organization if your firm’s executives are not quite tuned in yet to the importance of having a clear strategy that factors ESG factors and sustainability into account.

Notes:  George Serafeim is Professor of Business Administration at Harvard B-School and Ioannis Ioannou is Associate Professor of Strategy and Entrepreneurship at London Business School.  They frequently collaborate and both write extensively on topics related to corporate sustainability and sustainable investment. And both are frequent speakers and panelists at trade and industry conferences and workshops.

This Week's Top Story

Yes, Sustainability Can Be a Strategy
(February 11, 2019) Source: Harvard Business Review - In recent years, a growing number of companies around the world have voluntarily adopted and implemented a broad range of sustainability practices. The accelerating rate of adoption of these practices has also provoked a debate about the nature of sustainability and its long-term implications for organizations. Is the adoption of sustainability practices a form of strategic differentiation that can lead to superior financial performance? Or, is it a strategic necessity that can ensure corporate survival but not necessarily outperformance?

Sustainability: Continuing Forward Momentum!

Some of the news captured for you by our Editor-in-Chief Ken Cynar have focus on “where the rubber meets the road” – company and industry activities and the direct impact on the consumer market:

How Fashion Brands Can Create A More Sustainable End-To-End Retail Economy
(Monday - February 04, 2019) Source: Fashionista - With the realization that today's shoppers quite literally wear their values on their sleeves, the fashion industry spent 2018 getting more serious about sustainability. From real fur becoming a fashion faux pas to the rise of... 

How Sustainable Are Bioplastics?
(Wednesday - February 06, 2019) Source: Physics World - At face value, taxing consumption of materials derived from petrochemicals and subsidizing production of bioplastics both sound like they’d encourage sustainable consumption. But applying these policies to meet a hypothetical 5%... 

10 Takeaways From the UN’s — Yes, the UN’s — Sustainable Streetwear Conference
(Wednesday - February 06, 2019) 
Source: highsnobiety - Last Friday, sustainable streetwear went global. In a special event hosted at the United Nations, everyone from Dapper Dan to NASA astronauts dropped knowledge as part of The Study Hall Summit, a one-day conference devoted to... 

6 Brands Proving Sustainability Is Anything But Basic
(Friday - February 08, 2019) Source: papermag.com - Using materials treated without chemicals, working with non-toxic dyes, sourcing from local farmers to eliminate unnecessary transportation, and reducing waste through small production runs are a few ways the brand is addressing... 

What's Needed For A Sustainable, Equitable And Healthy Food System
(Friday - February 08, 2019) Source: Phys.org - Today, we are trapped in a situation where one billion people are underfed and facing stunted growth, while more than two billion are overfed and suffering from obesity and related diseases.  

Sustainable Supply Chain: Why Thinking Green Isn't Enough
(Tuesday - February 05, 2019) 
Source: Forbes - If you are running or working in a supply chain today, you have witnessed the rise of global mass production driven by increasing consumer demand. This era has introduced new business and supply chain practices such as... 

And by extension, factory floor-to-consumer shelves impacts…

Manufacturers Increasingly Are Dropping Suppliers That Fail To Meet Sustainability Goals, CDP Reports
(Friday - February 08, 2019) Source: Food Navigator USA - As consumers increasingly consider the environmental impact of the products they purchase, manufacturers are turning up the heat on suppliers to lower their emissions, manage water security risks and reduce deforestation, among...

Corporate Giants’ Suppliers Have Saved $19.3B by Reducing CO2
(Thursday - February 07, 2019) Source: Sustainable Brands - In 2018, 115 companies — wielding a combined purchasing power in excess of US$3.3 trillion — requested environmental information from 5,500+ of their key suppliers. This is an increase from just 14 companies ten years ago....  

And other news…

Local Companies Saving Millions Of Dollars Through Sustainability Efforts
(Monday - February 04, 2019) Source: Tulsa World - Sustainability has shifted from being a buzzword to becoming part of the corporate culture for many businesses. Local companies are saving millions of dollars while they are reducing their environmental impact. 

Ingersoll Rand Recognized for Outstanding Business, Social and Environmental Sustainability
(Tuesday - February 05, 2019) Source: BusinessWire - Ingersoll Rand (NYSE:IR), a world leader in creating comfortable, sustainable and efficient environments, was recently recognized for outstanding business, social and environmental performance by three prestigious organizations..

Manufacturing Matters! 2019 Adds Focus On Sustainability
(Tuesday - February 05, 2019) Source: BizTimes - Manufacturers are increasing their focus on sustainability as they realize that there is a strong business case that comes with the commitment. A primary contributor, from a financial perspective, is from improved resource... 

Top 12 Sustainable Construction Technologies Used In Green Construction
(Thursday - February 07, 2019) Source: MEP Middle East - he benefits of a green technology application in construction are far-reaching and comprehensive, offering significant advantages when used in new facilities as well as existing structures. 

Can We Talk? Changing the Sustainability Conversation Between Investors and Companies
(Friday - February 08, 2019) Source: Forbes - As investors increasingly come to grips with the challenging realities, risks and opportunities of a changing climate, resource depletion and human rights, we need to change the ways companies talk with them about these issues.

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ESG Topics & Issues Headlines

Culprit Found For Honeybee Deaths In Almond Groves
(Tuesday - February 05, 2019) Source: Ohio State University

NASA Just Announced 2018 Was the Fourth-Hottest Year on Record
(Thursday - February 07, 2019) Source: Mother Jones

AAA Confirms What Tesla, BMW, Nissan Electric Car Owners Suspected — Cold Weather Saps EV Range. Even Turning On The Car Drains Power
(Thursday - February 07, 2019) Source: CNBC 

Business Ethics And Integrity: It Starts With The Tone At The Top
(Friday - February 08, 2019) Source: Forbes 


Headlines From the Corporate Sector

Tesla’s Free-To-Use Patents Are All About Sustainability – And Strength
(Monday - February 04, 2019) Source: The Dirven - A reminder from Tesla CEO and founder Elon Musk late last week that the automaker’s electric car patents are open for anyone to use is not just timely, it is a critical nudge that the groundswell of electric cars being planned... 

AT&T: Sustainability On A Massive Scale
(Wednesday - February 06, 2019) Source: Energy Digital 

Future Food Initiative: Bühler, Givaudan and Nestlé collaborate to boost healthy and sustainable innovation
(Wednesday - February 06, 2019) Source: Food Ingredients

Carlsberg Attributes Strong 2018 Financial Results to Sustainability
(Friday - February 08, 2019) Source: Environmental Leader 

GM Plant Closings Will Hit Parts Suppliers Far And Wide
(Monday - February 04, 2019) Source: Wane.com

Amazon Names Black Starbucks Exec Rosalind Brewer To All-White Board In 'Barrier-Breaking' Appointment
(Tuesday - February 05, 2019) Source: USA Today

News & Opinion: Asset Managers, Sovereign Wealth Funds, Pension Funds

CalPERS, Other Big Pension Funds Are Getting More Conservative, Report Says
(Thursday - February 07, 2019) Source: Insurancenewsnet.com

Chairman of Libyan Investment Authority Arrested in Tripoli
(Thursday - February 07, 2019)  Source: The Libya Observer 

The Next Financial Crisis May Come Soon – Are We All That Safe?
(Wednesday - February 06, 2019) Source: The Guardian

Commentary of Interest...

Fed’s Powell Reveals What He Thinks Is The Biggest Challenge Over The Next Decade
(Thursday - February 07, 2019) Source: CNBC - Sluggish productivity and widening wealth gap are the biggest challenges facing the U.S. over the next decade, Federal Reserve Chairman Jerome Powell said Wednesday.

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Informative, insightful, thought provoking
Governance & Accountability Institute's blog focusing on the sustainable world evolving daily before our eyes. Read it, absorb it, question it and challenge.

The Ethical and Sustainable Supply Chain – Some Thoughts on This For You From Forbes

Davos 2019: The Conversation in Switzerland Ripples Out to The Rest of the World – News, Commentaries, Reports, Initiatives, For Your Consideration

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