Despite the new administration’s efforts to rollback Obama Era environmental regulations, most businesses in the U.S. are maintaining their commitments to sustainability. According to Lucid’s 2017 Sustainability Outlook Report, only 5% of private companies surveyed expect to decrease their commitment to sustainability programs in 2017, while 74% expect no change and 21% expect an increase in their commitments. Growing concern about climate change have presented companies with the opportunity to lead the way by increasing their sustainability efforts. Major companies are taking the threat of climate change more seriously, and already are developing solutions to reduce their greenhouse gas (GHG) emissions.
Opportunities abound for U.S. businesses to get involved in corporate sustainability. For those businesses that are up to the challenge, the MIT Sloan Management Review’s 2017 Research Report offers eight evidence-based factors to consider. First, articulate a practical sustainability vision and ambition that lays the foundation for new business practices. Second, identify and prioritize material issues to focus resources. For example, following its Environmental Sustainability Plan’s goal "to provide clean, fuel-efficient and dependable power for our customers with the least environmental impact possible,” Cummins Inc. recently decided to expand a wind farm in northern Indiana by adding an additional 75 megawatts of capability.
Third, embed sustainability organizationally through cross-functional teams, clear targets, and key performance indicators. As noted in the Journal of Accountancy, it is important that the chief financial officer (CFO) be part of and buy into the sustainability initiatives in order to facilitate an integrated company perspective. Fourth, innovate on multiple dimensions of your business model. Nestlé, for example, recently began placing “How2Recycle” labels on its half-liter bottles manufactured in North America. This activity is in line with the company’s sustainability target to “find a compelling and simple way to educate and encourage all Americans to recycle the bottle.” Not only does Nestlé’s How2Recycle project encourage recycling plastic bottles, but it also instructs consumers to empty and replace caps on bottles, resulting in fewer caps ending up in our waterways and oceans.
Fifth, develop a clear business case, and sixth, get the board of directors on board. Sustainability, while beneficial to the environment, also can be a business driver. As pointed out by the Journal of Accountancy, sustainability-related risks – extreme weather events, water crises, and climate change – are business risks. Furthermore, corporate sustainability have been proven to result in economic efficiency. For example, Unilever found that its “Sustainable Living” brands have grown 50% faster than the rest of its business because of consumer demand for sustainable products.
Seventh, communicate a sustainability value-creation story to your shareholders. Eighth, collaborate with a variety of stakeholders to drive strategic change. For example, 62 percent of Exxon Mobil Corporation’s shareholders recently voted for a resolution that requires the company to annually disclose how it will be affected by global efforts to mitigate the effects of climate change. Similarly, Occidental Petroleum Corp.’s shareholders recently approved a proposal requiring the company to report on climate change impacts to business.
Although President Trump has denied the impact of human activity on climate change and is actively seeking to resurrect the fossil fuel sector, nonetheless, it appears that U.S. businesses are maintaining their commitments to sustainability.