Learning Objectives
• Understand that there is wide variation in the strategies which companies use to engage in responsible business practices or sustainability.
• One of the ways to distinguish strategies for responsible business practices is to ascertain how well companies adopt three principles of sustainability.
• Apply conventional notions of strategy to the three principles of sustainability to unveil five distinct strategies for sustainability adoption.
• Within each of these strategies, identify some of the key mechanisms that explain their adoption.
Introduction
The term ‘corporate sustainability’ has grown increasingly prevalent in corporate boardrooms and on executive agendas. In a study of 766 CEOs worldwide, it was concluded ‘that sustainability is truly top-of-mind for CEOs around the world’ (Lacy, Cooper, Haywood and Neuberger, 2010: 10). Growing pressure to respond to issues of climate change, the financial crisis, environmental degradation and increasing social inequality have precipitated the diffusion of sustainability in internal business text, company websites, CEO speeches and company reporting (KPMG, 2008, 2011; Lacy et al., 2010). CEO action on sustainability issues has shifted from being a discretionary choice to a corporate priority, with 93 per cent of executives claiming that sustainability issues will be critical to the future success of their business and 80 per cent saying that in fifteen years a majority of companies globally will have incorporated sustainability (Lacy et al., 2010). In a recent study, McKinsey concluded that ‘the choice for companies today is not if, but how, they should manage their sustainability activities’ (Bonini, 2011), with 96 per cent of CEOs believing that sustainability issues should be fully integrated into the strategy and operations of a company.
CEOs themselves regularly tout their efforts to ‘embed’ or ‘weave’ sustainability into their operations and culture as the ultimate commitment while scholars and practitioners have offered a number of prescriptions to achieve this objective (e.g. Andersson, Shivarajan and Blau, 2005; Aragon-Correa, Martin-Tapia and Hurtado-Torres, 2013; Benn, Dunphy and Griffiths, 2014; Ethical Corporation, 2009; Haugh and Talwar, 2010; Willard, 2009). Yet despite the prevalence of sustainability, there is tremendous variation in how companies have responded. Part of this variation can be explained by enormous ambiguity around what sustainability actually means, leaving the term open to various managerial interpretations that translate into diverse actions at the firm level.
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