CEO’s are often understandably skeptical about the various management “movements” that come and go over the years. However, if I were running a company today, I would be totally embracing the so-called “sustainability” movement—not because it’s the latest rage but because it makes fundamental long-term business sense.

The movement arguably originated in 1983 when the U.N.’s Bruntland Commission was formed to address what was called “the accelerating deterioration of the human environment and natural resources and the consequences of that deterioration for economic and social development”. They later defined sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.

After getting relatively little serious attention from most companies, especially in the U.S., for many years, sustainability seems to finally be coming of age. In a winter 2012 study conducted by the MIT Sloan Management Review and the Boston Consulting Group entitled “Sustainability Nears a Tipping Point”, 70% of surveyed companies “have put sustainability permanently on their management agenda”. In fact, two-thirds felt it is a necessity to be competitive today and in the future.

Pressure from consumers has clearly been one of the driving forces. A 2011 Nielsen survey of 25,000 consumers globally revealed a high and in many cases rising degree of concern about sustainability issues such as water shortages and pollution, packaging waste, pesticides, air pollution, and climate change. It is true that while consumers may be favorable towards companies who adopt sustainability practices, they aren’t necessarily willing to pay a price premium. 83% of consumers surveyed wanted to see companies implement programs to improve the environment. However, only 23% would pay more for eco-friendly products. Nonetheless, green concerns are clearly influencing purchase decisions. While I couldn’t find a breakout specifically for parents or grandparents of young children, this target market for juvenile products would logically be especially concerned about “. . . the ability of future generations to meet their own needs.”

These same consumer concerns as well as visible environmental issues such as air and water pollution and water shortages have resulted in an increase in federal and local government as well as public interest group involvement worldwide. Past history tells us this will only increase as we go forward much like child safety regulatory activity over the past 40 years.

On the self-serving side, raw material price increases and volatility have also spurred business interest in sustainability initiatives such as energy and material use reduction that directly improve the bottom line. Not surprisingly, Wal-Mart has been leading the sustainability for cost reduction charge since 2005. The cost reduction aspects of sustainability fall right into Wal-Mart’s business model wheelhouse and, if you’re a Wal-Mart supplier, you have no doubt already been coaxed into making packaging changes that have reduced material usage or shipping costs.        

While responding to consumers and government agencies and reducing costs have been the primary factors driving companies towards the adoption of sustainability principles, I believe there’s actually an even more basic reason to incorporate these concepts into your management system. The fact is that the principles of sustainability represent a perfectly logical and desirable enhancement of a company’s business model development process. Embracing sustainability will cause you to take a broader view of the “system” in which your business operates resulting in the creation of a more robust and effective business model and resultant increased long-term business success.

In my next post, I’ll describe how you can embrace sustainability in a way that makes sense for your company. I’ll also talk about the role JPMA as a trade association might want to play in educating and supporting its members as well as interfacing with government agencies and NGO’s in the same way it has with safety issues.    

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