Sustainability Innovation- Addressing a Misperception

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Been there; heard that.

There is no debating that sustainability is high on the agenda of every major corporation today. However, while many companies aspire to develop more sustainable products/processes, the reality is that these initiatives are often slow to take off. A recent BCG study reported that 70% of respondents claimed their organization did not have a compelling business case for sustainability, and for this reason, sustainability objectives aren’t always executed against.[1] Why is this?

Dr. Sam Kogan argues that this is because the “no business benefit to sustainability” perception is actually a misperception—and points to the historical record to make his case. He asks us to look at the implementation of child labor laws in the 1910’s, industrial safety regulations in the 1960’s and ISO quality standardizations in the 1970’s; all similar paradigm shifts that were likewise rejected by conventional wisdom as being business nonstarters, but which in fact turned out to be anything but.

• Child Labor Laws (1910s) -
  Industry fought child labor laws, fearful that the cost of eliminating children from the workforce would cause a huge economic blow. In retrospect, the short-term cost was minimal and in the longer-term, the reverse was actually true: the less child labor, the greater GDP.[2]
• Safety Regulations (1960s) - Amid controversy, the Occupational Safety and Health Act of 1970 created OSHA as part of the U.S. Department of Labor. After OSHA’s launch, annual productivity gains were seen (fewer production labor hours for the same level of output) which, in effect, lowered total payroll costs.
• Quality Standards (1970s) – Firms that forewent ISO 9000 certification experienced substantial deteriorations in their ROAs relative to their competitors who did not.

These three movements had staying power and achieved business as usual status ultimately because they had an economic basis to do so. And, just as the above industrial movements evolved past initial narrow thinking as “cost added” requirements, time will prove that innovating for sustainability is a “value add” as well.

Dr. Kogan further contends that planning to win on sustainability in the long run does not mean having to suffer through elusive business results in the short run. In fact, companies can innovate against their sustainability objectives and win, now.  The tools and processes to innovate for sustainability without sacrificing cost and/or performance are readily available today. To learn more download “Innovating for Sustainability, from Aspiration to Implementation”, a white paper that demonstrates how a systematic approach to innovation can help companies meet their sustainability targets with a clear line of sight to profitability.