Discovering Why Sustainability Is Good Business...................................
Businesses cannot operate as they did a generation ago. Until recently, corpo-
rations could operate with the attitude famously summed up by economist
Milton Friedman, “The business of business is business.” Of course, the busi-
ness of business is stillbusiness — but the story doesn’t end there. Now they
operate in a more complicated, interconnected global economy. Businesses
must integrate social and environmental concerns into their operations in
order to be successful. In short, they must manage the “triple bottom line.”
In the old fashioned view, the bottom line referred to only economic indicators
like wages, profits or taxes. The new formula recognizes role of social factors
such as investment in the local community, employee benefits or antidiscrim-
ination policies and environmental ones like carbon emissions, the balance of
renewable versus non-renewable energy sources and water consumption.
Say you’re the CEO of a multinational corporation who’s evaluating perfor-
mance of plants in Latin America. The factory is no longer evaluated purely
on productivity or profitability. Now executives ask new questions: What are
its social investments in the surrounding community? What are its emissions
of carbon dioxide and other greenhouse gases? What is the ethnic and gender
diversity of the workforce? And how do all these things factor into the overall
enterprise with 50 factories around the world?
Do you think these executives are doing this just to pander to the Sierra Club?
Think again. Nearly three quarters of executives say economic factors are the
leading drivers behind CSR. According to AMR Research, 51 percent of com-
panies with sustainability initiatives reported gains in competitive advantage.
Managers recognize sustainability as a top priority .....................
The changing ethos of business is reflected in the 2006 Global Survey of
Business Executives conducted by the prestigious consulting firm McKinsey
and Co. In the survey, only 16 percent of those surveyed said that the sole
role of the corporation was to generate the highest returns. In contrast, 84
percent said companies should balance the quest for profits with contributions
to the broader public good. Yet these same executives said the business world
still hadn’t lived up to the challenge: 70 percent agreed that “significant” or
“substantial” improvements were needed.
250 Part IV: Managing the Flow of Information
