What makes the difference between a sustainability program that produces business value and one that doesn’t? A new survey identifies practices that distinguish value-creating companies from others.
Amid widening recognition of how environmental issues such as climate change create business opportunities and risks, results from a McKinsey Global Survey 1 The online survey was in the field from January 21 to January 31, 2020, and garnered responses from 2,475 participants representing the full range of regions, industries, company sizes, functional specialties, and tenures. show that companies that generate value from their sustainability programs follow a distinctive set of management practices. Survey respondents say these companies are more likely than others to make sustainability a strategic priority and to set out specific aspirations and targets. Responses also suggest that value-creating companies are more likely than others to make sustainability an element of their corporate culture and train employees on how to integrate sustainability into their work.
Survey results indicate that value-creating companies are more apt to engage customers and business partners in their sustainability agendas. Compared with those at other companies, more respondents from value-creating companies say they collaborate with customers and suppliers on addressing sustainability issues, adjust product portfolios to be more sustainable, and account for sustainability factors when selecting and evaluating suppliers. Respondents from value creators are also more likely than others to report that sustainability issues inform how their company manages its facilities and its transportation networks.
Looking five years ahead, about two in five respondents to our survey say they expect their companies to generate value from sustainability. Understanding the distinctive practices of today’s value-creating companies could help others find a way to join their ranks.
An optimistic outlook. Sustainability endeavors often make good business sense, promising to deliver revenue gains, cost savings, and other benefits that lift enterprise value. In our survey, 22 percent of respondents—the value-creating group that this article focuses on—say their companies realized modest or significant value from sustainability in the past five years. Nearly as many respondents say their companies’ sustainability programs resulted in significant or moderate cost increases. About one-third say their companies’ sustainability programs have had minimal or no financial impact.
Respondents are also optimistic that their companies’ sustainability programs will yield value in the future. Compared with the proportion who say these programs have already created value, nearly twice as many respondents, or 40 percent, say they expect the programs to generate modest or significant value in the next five years. Respondents in a few specific industries are especially likely to predict that their companies will create value from sustainability during that five-year timeframe. These industries include some—such as automotive; electric power and natural gas; oil and gas; and travel, transport, and logistics—that play pivotal roles in curbing climate change.