Question for Corporate Leaders:
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
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
How Sustainable Are Bioplastics?
10 Takeaways From the UN’s — Yes, the UN’s — Sustainable Streetwear Conference
6 Brands Proving Sustainability Is Anything But Basic
What's Needed For A Sustainable, Equitable And Healthy Food System
Sustainable Supply Chain: Why Thinking Green Isn't Enough
And by extension, factory floor-to-consumer shelves impacts…
Manufacturers Increasingly Are Dropping Suppliers That Fail To Meet Sustainability Goals, CDP Reports
Corporate Giants’ Suppliers Have Saved $19.3B by Reducing CO2
And other news…
Local Companies Saving Millions Of Dollars Through Sustainability Efforts
Ingersoll Rand Recognized for Outstanding Business, Social and Environmental Sustainability
Manufacturing Matters! 2019 Adds Focus On Sustainability
Top 12 Sustainable Construction Technologies Used In Green Construction
Can We Talk? Changing the Sustainability Conversation Between Investors and Companies
Culprit Found For Honeybee Deaths In Almond Groves
NASA Just Announced 2018 Was the Fourth-Hottest Year on Record
AAA Confirms What Tesla, BMW, Nissan Electric Car Owners Suspected — Cold Weather Saps EV Range. Even Turning On The Car Drains Power
Business Ethics And Integrity: It Starts With The Tone At The Top
Tesla’s Free-To-Use Patents Are All About Sustainability – And Strength
AT&T: Sustainability On A Massive Scale
Future Food Initiative: Bühler, Givaudan and Nestlé collaborate to boost healthy and sustainable innovation
Carlsberg Attributes Strong 2018 Financial Results to Sustainability
GM Plant Closings Will Hit Parts Suppliers Far And Wide
Amazon Names Black Starbucks Exec Rosalind Brewer To All-White Board In 'Barrier-Breaking' Appointment
News & Opinion: Asset Managers, Sovereign Wealth Funds, Pension Funds
CalPERS, Other Big Pension Funds Are Getting More Conservative, Report Says
Chairman of Libyan Investment Authority Arrested in Tripoli
The Next Financial Crisis May Come Soon – Are We All That Safe?
Commentary of Interest...
Fed’s Powell Reveals What He Thinks Is The Biggest Challenge Over The Next Decade
New Governance & Accountability
G&A Institute Sustainability Update™
Louis Coppola from G&A Institute Goes In Depth on How to Improve ESG Performance
G&A Institute is the Data Partner for the Global Reporting Initiative's (GRI) in the USA, UK and Republic of Ireland. We identify, receive, collect, analyze, database, and communicate about every report issued in any of the 3 countries. Over the past 6+ years, G&A analyzed 6,000-plus sustainability reports in this pro bono role and databased 100+ important data points for each report. Find out more @ G&A's What's A Data Partner
Navigating the way to sustainability...
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