Summary Report: Forum on Valuing Business Sustainability

Summary Report: Forum on Valuing Business Sustainability

Opportunities for managers to make the case for sustainability to senior management are rare. Prepare for those rare opportunities with this forum report.
NBS July 20, 2011
Summary Report
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Managers trying to advance sustainability rarely have the opportunity to make their case to senior management, unless they are supported by a senior champion. So what can managers do?

On January 25, 2008, sixty-five managers, academics, policy-makers, and experts gathered to discuss how to value sustainability and make a strong case for business sustainability. Discussions identified the importance of building sustainability into standard managerial accounting practices and aligning sustainability with corporate strategy.

The resulting report, Knowledge Forum on Valuing Business Sustainability, recaps these discussions and outlines research findings, which consistently reveal how good corporate social performance (CSP) is associated with modest financial gains. More importantly, researchers also point out how the risk of sudden damage from failing to uphold social and environment responsibilities can have long-lasting effects on firms.

Move away from "feeling good" to step towards the future.

Two major themes emerged from the Forum:

Sustainability must move from ‘feel-good’ discussions into the practical realm of measurement and implementation.

There is no doubt that environmental and social issues are and will be increasingly important for all stakeholders and society at large. Next steps include translating items generally considered external in the classic economic sense (e.g. a company's carbon emissions) into a hard figure on the balance sheets. These 'externalities' must be labelled, measured, recorded, and reflected in internal performance measures and financial reports.

Indications point to investors and stakeholders taking well-reasoned arguments about sustainability into account in their decision-making. The forum discussion also highlighted that systems are evolving to assist with this challenging process, in which government must undoubtedly play a large role. Corporate executives must also take leadership to shift culture, strategy, and practice, in pursuit of both financial and sustainability success, and to resist short-term pressures and allow lag-effects to expire.

Research must inform future-oriented and actionable strategies for companies, large and small.

Scenario-based case studies are just one example. This theme calls into question the current relationship of business research and practice. Academic research is rarely translated for practitioners. What is translated often takes years to filter through consultants, executive education outlets, or media to the business decision-makers who need it most.

The flow in the other direction is even more problematic. Best practices emerge from practical experiences; academic research is slow to identify these to incorporate emerging wisdom and lessons learned. Increasing the amount of useful research will require motivation on the part of researchers and corporations, to build relationships that facilitate access to data and allow for implementation of findings. Partnerships between academics and consulting firms are beginning to play a role, and the Research Network for Business Sustainability is working to address this challenge.

Research must move beyond its narrow focus of proving the link between corporate investment in sustainability and financial performance or competitive advantage. There are many areas to expand research including the value chain, life-cycle analysis, specific inter-industry and company complexities of sustainability, and the role and power of consumers, investors, and other stakeholders.

Highlights from Forum Sessions

The Challenges of Valuing Business Sustainability: An Executive Perspective

Claude Ouimet, Senior Vice President and General Manager, InterfaceFLOR Canada and Latin America Read page 9 of the full report Download the presentation slides  

Tools for Valuing Business Sustainability: A Systematic Review

John Peloza, Assistant Professor, Simon Fraser University and Ron Yachnin, Principal, Yachnin & Associates Read page 11 of the full report Download the presentation slides  

Non-Financial Information for Valuing Business Sustainability: An Accounting Perspective

Alan Willis, President, Alan Willis & Associates Read page 13 of the full report Download the presentation slides  

Valuing Business Sustainability: An Investor’s Perspective

Michael Jantzi, CEO, Sustainalytics Read page 16 of the full report Download the presentation slides  

Technology and Environmental Sustainability: Improving Business Performance

Robert D. Klassen, Professor, Ivey Business School
Read page 18 of the full report Download the presentation slides

Additional Resources

Reports and Articles

Companies want to achieve a sustainable competitive advantage. Caroline Flammer’s work shows how corporate social responsibility (CSR) can help.

Maya Fischhoff
Case Study

Learn how Frontiers North Adventures, a Canadian travel company, identified the risks and looked for opportunities in the face of climate change.

Topic Blog

Research shows sustainability's 'warm glow' wanes in tough economic times. How can managers respond to these changes in consumer behaviour?

John Peloza