Surveys of corporate executives consistently find that sustainability is now viewed as a core business issue. Recently, McKinsey released the results of another such survey that opened: “Company leaders are rallying behind sustainability, and executives overall believe the issue is increasingly important to their companies’ strategy.” Other surveys, such as those regularly undertaken by GlobeScan and SustainAbility, consistently offer broadly similar conclusions. Findings like this show that the debate has largely shifted from whether corporations should address sustainability to how they should do so. The questions asked in sustainability surveys should better reflect this shift.
There are many challenges to addressing sustainability in a corporate setting. The McKinsey survey briefly acknowledged some of those, including reputation management and embedding sustainability in key organizational processes. Depending on the corporation, there are many other challenges, such as engaging stakeholders in a meaningful way, reducing consumption of natural resources, and determining the appropriate time horizon for evaluating sustainability initiatives. However, there is one fundamental challenge that is frequently overlooked: connecting the corporation’s performance to the broader sustainability context in which it operates. Surveys on corporate sustainability must do a better job of capturing how executives are doing so.
The need to connect performance to the broader sustainability context is one of the core principles of the world’s most widely used corporate sustainability reporting guidelines, the Global Reporting Initiative (GRI). The principle states, in part, that corporations must consider “the performance of the organization in the context of the limits and demands placed on environmental or social resources at the sector, local, regional, or global level.” Moreover, it is not enough to focus only on “trends in individual performance.” In order to be sustainable, corporations must move beyond a focus on incremental, efficiency-oriented improvements.
There is clearly value in making incremental improvements. Efforts to reduce a corporation’s carbon dioxide emissions, for example, are to be commended. This is a common goal that rightly belongs in a corporate sustainability program. However, a goal focused on improving a corporation’s performance relative to itself is not enough if it is truly interested in pursuing a commitment to sustainability. In the case of carbon emissions, it is not possible to assess whether a corporation’s performance is sustainable without reference to the planet’s ability to absorb those emissions. Going forward, surveys on corporate sustainability should probe the extent to which executives are making these connections.
There are several reference points available for determining the level of corporate activity that nature and society can sustain. For environmental resources, the Planetary Boundaries concept developed by Johan Rockstom and colleagues provides one starting point. This concept identifies nine interlinked environmental thresholds, including climate change, ocean acidification, and biodiversity loss. For social resources, Oxfam has built on the Planetary Boundaries concept to identify 11 social foundations, such as education, gender equality, and food. Since these concepts are relatively new, it is debatable whether they will be the right reference points for every corporation. Future sustainability surveys should explore the resonance of these boundaries with corporate executives.
Translating global concepts, such as Planetary Boundaries, into corporate-level measures will undoubtedly prove to be a challenge. If, for example, the planet can only sustain a certain level of annual global CO2 emissions, how do we determine the emissions any one corporation can emit? Examples could include assignments based on contribution to GDP or workforce size, but no standard currently exists. As Mark McElroy and Jo van Engelen explain in their seminal textbook on the subject, Corporate Sustainability Management, allocation is one of the key challenges in developing context-based metrics of sustainability performance. Given that such decisions would currently be left to the discretion of corporate executives, future sustainability surveys should explore views on potential allocation methods.
Surveys on sustainability have consistently shown that it is viewed as a legitimate corporate priority. This is reflected in the sustainability commitments made by many sincere corporate executives. However, the great majority of efforts made under the sustainability banner to date have been self-referential in nature. While efforts to incrementally improve performance should be viewed positively, they alone are not necessarily sustainable. Without a clear link to the broader context, it is impossible to know. Despite encouragement (though limited) by the GRI, there are relatively few efforts to connect corporate performance to the broader context in which sustainability operates.
There is a need to understand the barriers executives face in making connections between their corporate sustainability programs and the broader sustainability context. There is also a need to explore executive views on how this could be done going forward. Surveys by McKinsey, Globescan/SustainAbility, and others have shed invaluable light on corporate views of sustainability. While previous surveys have explored views on the urgency of sustainability challenges faced by society at large and corporate priorities relative to such challenges, questions more explicitly focused on connecting corporate activities to these issues are needed.
Example questions could be modelled on the following:
- Please indicate your familiarity with context-based sustainability concepts (e.g., Planetary Boundaries, ecological footprint, etc).
- Please rate the relevance of the following key sustainability issues (e.g., the nine Planetary Boundaries, Oxfam’s eleven social foundations, etc) to your corporation.
- Please identify the ways (e.g., goals and targets, reference to the status of the stocks of resources drawn upon, etc) your corporation is linking its sustainability initiatives to those key issues.
- Please rate how well your corporation is linking its sustainability initiatives to those key issues.
- Please identify the challenges (e.g., determining appropriate reference points, data availability, allocation methods, etc) your corporation faces in linking its sustainability initiatives to those key issues.
These examples are not meant to be exhaustive and it is recognized they will require some refinement. Answering these types of questions, however, will provide a needed basis for linking corporate sustainability activities to the larger local, regional, and global contexts within which they occur.