Corporate Sustainability & Social Responsibility
A number of critical global trends, including the rising acute scarcity of natural resources, climate change and the massive demographic changes around the world, combined with increasing levels of income inequality and an unprecedented shift of middle-class consumption from the developed to the developing world, are radically shifting the world’s competitive landscape.
The winning Sustainable Organizations of the future will be the ones that acknowledge these tectonic shifts today, and are able to strategically and uniquely integrate such broader social and environmental issues into their business models, their corporate cultures and their strategies. They are the organizations that will be able to synergistically co-generate economic as well as social value, while remaining sustainable within their economic, their environmental and their social domains.
The emergence of Sustainable Organizations not only challenges but also redefines the role of the modern corporation in civil society and its contribution towards tackling the world’s biggest future challenges. It is therefore high time for bold, unique, innovative and sustainable business strategies and for rebuilding the trust between business and society.
Prof. Ioannis Ioannou
Ground-breaking research: The Impact of Corporate Sustainability on Organizational Processes and Performance (SSRN)
We investigate the effect of a corporate culture of sustainability on multiple facets of corporate behavior and performance outcomes. Using a matched sample of 180 companies, we find that corporations that voluntarily adopted environmental and social policies many years ago – termed as High Sustainability companies – exhibit fundamentally different characteristics from a matched sample of firms that adopted almost none of these policies – termed as Low Sustainability companies. In particular, we find that the boards of directors of these companies are more likely to be responsible for sustainability and top executive incentives are more likely to be a function of sustainability metrics. Moreover, they are more likely to have organized procedures for stakeholder engagement, to be more long-term oriented, and to exhibit more measurement and disclosure of nonfinancial information. Finally, we provide evidence that High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance. The outperformance is stronger in sectors where the customers are individual consumers instead of companies, companies compete on the basis of brands and reputations, and products significantly depend upon extracting large amounts of natural resources.
Prof. Ioannou describes how Sustainable Organizations are different and why they outperform: