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Essay: Is there an optimal degree of sustainability?

Posted by Robert G Eccles and Ioannis Ioannou and George Serafeim [1] on Feb 4, 2012

Corporate sustainability is not a one size fits all concept. Successful strategy balances all business pressures

In a recent paper – The Impact of a Corporate Culture of Sustainability on Corporate Behaviour and Performance [2] – we reported on astudy of a matched sample, two virtually identical sets of firms in terms of size, financial performance and growth prospects, of 180 US

companies over the period from the beginning of 1993 to the end of 2010.

We classified 90 of these companies as High Sustainability firms because long ago they adopted corporate policies regarding commitmentsto enhance environmental and social performance, while the other 90 we classified as Low Sustainability firms because they had not. TheLow Sustainability firms correspond to the traditional model of profit maximisation in which social and environmental issues arepredominantly regarded as “externalities” created by the firm’s actions.

The High Sustainability firms, in contrast, take into account these externalities in their decisions and operations; this is manifested in their

relationships with stakeholders such as employees, customers and NGOs representing civil society. In other words, the notion of“sustainability” appears to be embedded in a holistic and multidimensional manner within and throughout the organisation.

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Links:

[1] http://www.ethicalcorp.com/users/robert-g-eccles-and-ioannis-ioannou-and-george-serafeim

[2] http://www.hbs.edu/research/pdf/12-035.pdf[3] file:///C:/Users/Hayle/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/2VHDMM6A/S+M_essay_IW_sjb_IW.docx#_edn1

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