The sustainability agenda’s place in academic debate, framing public policy and spiritual corporate leadership
Pushing the frontier
May 2013’s Harvard Business Review provides further proof of sustainability’s place in mainstream academic debate. This issue of the prestigious US management journal devotes its “Big Idea” section to the theme, homing in on the area of strategy innovation. The clever folk at HBR claim have come up with an econometric analysis of more than 3,000 companies to show the correlation between environmental, social and governance (ESG) issues and financial returns. They have dreamt up a name for it too: the “performance frontier”. Too many companies miss out, apparently. That is, they invest in ESG at the cost of economic performance.
To ensure you’re pushing the frontier and not stumbling around behind the lines, corporate strategists should focus on the “most material” issues to their business. No real surprises there. If a car manufacturer focuses on saving the whale rather than cutting exhaust emissions, its long-term shareholder value is in for a shaky ride. If you’re unsure about defining what’s material and what’s not, then the authors point you to a new framework being developed by the Sustainability Accounting Standards Board, a US non-profit group.
Establishing a materiality matrix is one half of the battle. Companies then need...