MIT Study Shows that Sustainability is Profitable

The Massachusetts Institute of Technology issued its third annual Sustainability and Innovation Global Executive Study. In a partnership with the Boston Consulting Group, the survey gathered more than 4000 responses from executives and managers across all industries and regions.

The overall results show that more companies are taking sustainability seriously and are even benefiting financially from sustainable business practices. The report demonstrates that while Europe may be the overall sustainability leader, emerging markets hold their own, and that more progressive organizations, or “harvesters,” are leading the way in making the business case of sustainability. Readers are also able to learn about the MIT/BCG findings through a series of interactive data visualization tools.

While traipsing through the data, the leaders and laggards may catch some industry watchers by surprise:

Who’s leading? Automakers narrowly edged out the energy and utilities sector when it came to answering the question whether their companies were making the business case for sustainability. At 41 percent, the affirmative response from respondents within the automobile industry was double that of the laggards, financial services and media companies. Considering some of the recent work of Ford and GM, perhaps this finding should not be a shock.

Size matters: The larger the company, the more likely the company has made sustainability a priority. The survey suggests a correlation between the size of the company and whether or not sustainability is on the agenda. Companies with over 100,000 employees are more likely to have a comprehensive sustainability strategy. According to MIT’s data, the case is especially true of companies within the commodities sector. Naturally larger companies have the resources to hire internal staff and consultants to advise them on making such a shift.

Sustainable business is profitable. With the exception of industrial services and media, survey respondents have indicated that sustainability related plans have contributed to their company’s profits. The survey data shows the opposite true: not making the business case for sustainability, but attempting such actions, results in a decrease in profits. Companies interested in sustainability have got to set clear goals and develop a targeted plan to see a link between more responsible business practices and profits.

Sustainability does not necessarily bring quantifiable results. What are the leading benefits from embracing sustainability? The most common outcomes stated in the survey were not necessarily related to reduced costs or improved margins. Instead, improved brand reputation, increased competitive advantage, and better innovation were the top three results that came from an agenda focused on sustainability.

Outside pressure leads to profitability. “Harvesters,” or companies defined as those clearly profiting from sustainability-related activities, did not necessarily make such changes out of altruistic motives. The top three factors that led to a shift in these companies business models, according to the survey, were customer preferences, resource scarcity and legislative or political pressure.

Are the days of making the excuse that sustainability is a luxury or only good for public relations reasons over? According to MIT’s researchers, the proof is in the profits. Read the entire report, learn the ties between sustainability and profitability and peruse through the data visualization tools here.

Leon Kaye, based in California, is a sustainability consultant and the editor of GreenGoPost.com. He also contributes to Guardian Sustainable Business and Inhabitat. You can follow him on Twitter.

Photo of Wall Street courtesy Leon Kaye.