Sustainable Business Strategies: Investors

Investors are one of the biggest, “below the radar”, drivers of sustainable business for the future, and are making slow and steady progress in sustainable and responsible investments.

The lessons for corporate sustainability champions are:

  1. While it may not seem that investors care about sustainability, their interest is steadily growing and will become very visible in a few years.
  2. The cost savings for companies from sustainability and rising expectations of limited partners are driving the interest in these investments.
  3. This trend will accelerate when the metrics for monitoring investments improve, which seems to be taking place now.  Nearly half of all shareholder resolutions typically have to do with sustainability.

Business Strategies: Sustainability Megatrends

As sustainable business strategies get revised for 2013, it is time to take an informed look at the sustainability megatrends highlighted in 2012.

The clear message of 2012 is that sustainability mega forces are accelerating in strength, which makes it a corporate strategy challenge and opportunity. One of the best reports on these megatrends describes a world in 2030 that is radically different from today: greater individual empowerment, shift in power to a multipolar world, much greater urbanization and migrations, and a demand-supply gap for food, water and energy that creates a dangerous nexus.

Corporate SoS: Business and Climate Change Impacts

Business risks from climate change impacts are getting more recognition, as risk analysis gets better and impacts of natural disasters show up larger on the business radar.

2013 will be the year in which the business risks of climate change impacts get understood much more clearly. This is a CEO-level issue because it affects corporate strategy and performance.

As a result, I expect widespread incorporation of risk management strategies for climate change into enterprise-level strategic planning, at least among the Global 500 corporations.

Corporate SoS: Integrated Reporting & Standards

Integrated reporting and sustainability standards landed on the corporate radar of global sustainability leaders in 2012.

The goal of integrated reporting is a more accurate and complete picture of the company’s performance, governance and strategy, and its future prospects.

To achieve this goal, integrated reporting tries to pull together financial information about the commercial, social and environmental context of the company in the same report.

The big problem with current reporting is that this information tends to be scattered across financial disclosures and corporate sustainability reports. Even if found together, the social and environmental aspects are not monetized.

Corporate SOS: Business Value of Sustainability

In 2012, there was a sea change in the evidence for sustainability’s business value, especially when it comes to the market value of the company.

Key Sea Change Takeaway: Sustainable companies perform better than other companies over the long-term. This is true whether you measure stock market or traditional P&L performance.

Clearly, the business case for a particular sustainability project depends very much on the project and the company. In particular, it’s easier to quantify the business value for many efficiency or waste reduction projects.

Succeeding on Sustainability (SoS): Innovation is Key

Innovation is the key to business success in corporate sustainability programs.

A recent report on corporate sustainability practices worldwide found that the most common theme among successful sustainability programs is innovation. This has been central to InnovaStrat’s approach for several years.

The kind of sustainable innovation we are talking about is not just research and development. While this is significant, what matters even more is sustainability-driven innovation around business practices. The report concluded that this kind of innovation is most important.