Increase revenues, engage employees by taking a leadership role in sustainability

By Andree Gosselin O'Meara

In the spring of 2013, I conducted a research project, titled “Key Factors Motivating Canadian Companies to Show Leadership in Sustainability,” to fulfill the requirements of a master’s degree at the University of Guelph’s College of Management and Economics.

I created a dataset of the top 30 companies (by revenues) of the largest six sectors of the Canadian economy (180 companies in total) and assembled and tabulated their sustainability activities on a massive spreadsheet.

The study used datasets from The Globe and Mail’s Report on Business Magazine, from Corporate Knights, and a review of each company’s Web site and/or Corporate Social Responsibility (CSR) report. All the Canadian data reviewed were for activities that occurred in 2011.

An increase in staff productivity? In this post I will review one of the findings: Revenues per employee are higher for companies taking an active role in sustainability activities – such as a Web site-dedicated section, awards, CSR report, and/or officially reporting on specific sustainability metrics – as reviewed and analysed for activities alone, not performance.

Below, I reproduced one of the charts showing revenues per employee for each of the six sectors under study. Our industry, news media, is part of the Consumer Discretionary sector, is one of the least active sectors in terms of “reporting activity.”

Nevertheless, the sector’s most active companies (top 20%) are still making about 20% more per employee than their sector peers.

Taken together, all 90 companies that form the leaders group (top 50%) earn an average of 16% more in revenues per employee than the non-leaders in sustainability activities. Not too shabby.

Sustainability-focused organisations might be able to attract and retain key talent. Companies that led the pack in sustainability activities confirmed that one of their key motivators was employees. Indeed, employees were important internal forces for the most active sustainability leaders (top 20%).

Greening and Turban wrote in the Business & Society Journal in 2010 that corporations’ sustainability activities can attract top talent, often at a lesser cost, and thus gain a competitive advantage.

The same authors also found that, especially with younger talent, corporate reputation and vision are often key components to a successful talent war. Millennials are often looking for clear leadership from the companies they decide to associate with.

Do companies need to be good at sustainability to reap the rewards?

Although their environmental or social performance might be hit-and-miss at the beginning, companies should reap the short-term benefit of reduced costs and the long-term benefit of higher employee engagement potentially leading to higher productivity.

Sheer activity alone might be beneficial in the long run for an organisation. Writing in the Business Journal of Ethics in 2010, researcher Jorge Arevalo suggested voluntary engagement in CSR activities was having a transformative effect on people and their organisations.

Sustainability is a complex objective that focuses organisational attention on balanced progress toward social, environmental, and economic goals. Despite the challenge this poses, organisations should choose to move to a leadership role toward more sustainable business practices.

To loosely borrow from Nike, the research says “Just do it.”

About Andree Gosselin O'Meara

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