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New Sustainability Research by MIT Sloan Management Review and The Boston Consulting Group Reveals a Troubling Gap

90 Percent of Executives Think Sustainability Is Essential, but Only About Half Are Addressing the Most Material Sustainability Issues They Face

CAMBRIDGE, MA -- (Marketwired) -- 12/17/13 -- Companies have largely accepted the importance of addressing sustainability issues, yet a large gap persists in translating that awareness into action. So says a new global study by MIT Sloan Management Review (MIT SMR) and The Boston Consulting Group (BCG). The study is being released today in a report titled "Sustainability's Next Frontier: Walking the Talk on the Sustainability Issues that Matter Most."

The study, based on a survey of more than 1,800 executives and managers from companies around the world, found that the stated importance of sustainability has remained largely constant since 2010. Close to 90 percent of respondents believe that sustainability-oriented strategies are essential for current and future competitive advantage.

The research, however, highlighted a disconnect between belief and action. For example, two-thirds of executives rated environmental or social issues as significant or very significant, yet only 40 percent reported their companies were "largely" addressing them. Just 10 percent reported their companies were "fully" addressing these issues.

Companies that take effective action on the sustainability issues that they identify as important to their organizations -- those that walk the talk, in the report's parlance -- differ in several ways from companies that merely tout the importance of sustainability issues but do little to address them. The study suggests that "walkers" articulate a clear sustainability strategy, place these issues permanently on the top-management agenda, develop a clear business case for sustainability-related initiatives, and change their business models to address the material sustainability issues they face.

"Walkers go beyond general pronouncements and assign operational responsibility," noted report coauthor Holger Rubel, a BCG senior partner and the global leader of BCG's sustainability efforts. "They're also much better about measuring progress."

"Most industries tend to focus on immediate business-related sustainability issues," said Rubel. "For instance, energy efficiency appears to be the most salient environmental issue, and, indeed, resource-intensive companies, such as industrial goods makers or utilities, are much more likely to have invested in these issues and made them pay off. Resource-light industries, such as media and entertainment, have done relatively little on sustainability as a whole."

Issues more likely to affect industries in the medium to long term, by contrast, get little attention. Climate change is the clearest example. Around 90 percent of surveyed managers believe that climate change is real and significantly influenced by human action. Yet, "only 11 percent of respondents rate climate change as a major issue for their companies," remarked David Kiron, report coauthor and executive editor of MIT SMR.

Geography also matters. Globally operating companies -- with businesses across three or more regions -- are more likely to be concerned about and to address these issues. Companies focused on developed economies, especially in North America, are at the opposite end. Companies focused on Europe, often seen as the vanguard, are only in the middle. Interestingly, South American companies are almost as vigilant here as their global counterparts, Kiron said.

To illustrate how organizations are employing these practices, the report cites numerous company examples, including Swiss Re, Crédit Agricole, Domtar, Avis Budget Group, General Electric, Hilton Worldwide, Dell, Kaiser Permanente, Nestlé, General Motors, Honda, Ocean Spray, and Tropicana.

For more details on the report's findings and interview transcripts, please visit the Sustainability & Innovation website or download a copy of the full report.

To arrange an interview with one of the MIT SMR authors, please contact David Kiron at +1 617 253 8071 or dkiron@mit.edu.

To arrange an interview with one of the BCG authors, please contact Eric Gregoire at +1 617 850-3783 or gregoire.eric@bcg.com.

About the research methodology
For the fifth year, MIT Sloan Management Review, in partnership with The Boston Consulting Group (BCG), conducted a global survey, to which more than 5,300 executives and managers responded. The report's analysis is based on a smaller subsample of 1,847 respondents from commercial enterprises, with respondents from academic, governmental, and nonprofit organizations excluded. A wide variety of industries are represented. The sample was drawn from a number of sources, including BCG and MIT alumni, MIT Sloan Management Review subscribers, BCG clients, and other interested parties. In addition to the survey results, the authors interviewed practitioners and experts from a number of industries and disciplines to understand the practical issues facing organizations today.

About the Sustainability & Innovation project
MIT SMR's Sustainability & Innovation project is an exploration, in partnership with BCG, of how sustainability pressures are transforming the ways we all work, live, and compete. S&I's research, reporting, and community help managers to better understand the new forces that will affect their organizations, to navigate through the overwhelming mass of information about sustainability, and to fend off the threats and capitalize on the opportunities that sustainability issues present.

About MIT Sloan Management Review
MIT Sloan Management Review leads the discourse among academic researchers, business executives, and other influential thought leaders about advances in management practice that are transforming how people lead and innovate. MIT SMR disseminates new management research and innovative ideas so that thoughtful executives can capitalize on the opportunities generated by rapid organizational, technological, and societal change.

About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 78 offices in 43 countries. For more information, please visit bcg.com.

About bcgperspectives.com
Bcgperspectives.com features the latest thinking from BCG experts as well as from CEOs, academics, and other leaders. It covers issues at the top of senior management's agenda. It also provides unprecedented access to BCG's extensive archive of thought leadership stretching back almost 50 years to the days of Bruce Henderson, the firm's founder and one of the architects of modern management consulting. All of our content -- including videos, podcasts, commentaries, and reports -- can be accessed via PC, mobile, iPad, Facebook, Twitter, and LinkedIn.

The Boston Consulting Group
Eric Gregoire
Global Media Relations Manager

Tel +1 617 850 3783
Fax +1 617 850 3701
gregoire.eric@bcg.com

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