McKinsey has a unique ability to frame a conversation. During the last decade when a price on greenhouse gases seemed imminent, every Fortune 500, government or startup’s GHG strategic plan featured McKinsey’s GHG Cost Curve. While the argument for carbon abatement may have fallen out of favor, leading companies discovered that sustainability initiatives create value beyond GHG reductions and positive PR. By capturing these trends in their latest report, The Business of Sustainability, McKinsey has once again created a framework that facilitates value driven discussions about sustainability and the triple bottom line.
The report includes extensive survey results and highlights a number of interesting findings. For example, in past years respondents identified reputation as the leading driver for pursuing sustainability, while this year concern for costs emerged as the leading motivation. Today “More companies are managing sustainability to improve processes, pursue growth, and add value to their companies.” Perhaps unsurprisingly, McKinsey found that the companies which found the most value in pursuing sustainability had devoted the most efforts to integrating sustainability into their business mission and operations.
The report includes an insightful section on implementation including tools for those companies seeking to create value through sustainability. The section argues that “Companies should integrate environmental, social, and governance issues into their business model – and act on them.” The report finds that leading companies who connect these issues to their core strategy and operations attain value from three primary drivers highlighted in Exhibit 1. Corporations such as Waste Management found Growth by adding waste reduction and waste-to-energy solutions to their core offerings. Dow and Walmart increased Return on Capital by reducing expenses through improved global-supply chains, facility improvements and manufacturing waste reduction efforts. Nestlé launched a program to promote sustainable cocoa as a Risk Management effort.
As believers in the triple bottom line, each of us now has another resource to convince key decision makers that it is possible and perhaps imperative to pursue strategies that make money while making a difference.
Craig Isakow began his career at McKinsey as a Business Analyst before sustainability was percieved as profitiable. He currently works for Johnson Controls as Program Director, Global Energy and Sustainability.