Implementing Sustainability: The Role of Leadership and Organizational Culture

By Epstein, Marc J.; Buhovac, Adriana Rejc et al. | Strategic Finance, April 2010 | Go to article overview

Implementing Sustainability: The Role of Leadership and Organizational Culture


Epstein, Marc J., Buhovac, Adriana Rejc, Yuthas, Kristi, Strategic Finance


This article is based on a study supported by IMA's Foundation for Applied Research (FAR).

Executives recognize the importance of social and environmental responsibility--corporate sustainability--but they seldom implement it successfully. The challenge lies in how to actually integrate sustainability into operational and capital investment decision making and implement it successfully in large, complex, for-profit organizations. The financial executive plays a vital role.

Top management typically cascades these management decisions down because sustainability impacts are often local, so usually only a small number of these decisions are made at corporate headquarters. As individual managers at the business units, geographical units, and facilities make these decisions, they also must make the appropriate tradeoffs regarding social and environmental impacts vs. financial ones. Typically, the vice president of sustainability, who reports to the CEO, requests improved sustainability performance, while the CEO and CFO demand improved financial performance. At the same time, a company provides little guidance and support to senior- and middle-level operations managers to aid in the decision making and tradeoffs. How can they manage this challenge successfully?

Field Study Brings New Findings

In the January 2008 issue of Strategic Finance,Marc J. Epstein presented the Corporate Sustainability Model, a comprehensive approach for examining, measuring, and managing the drivers of corporate sustainability. The model can help managers incorporate a sustainability strategy into daily operations and link that strategy to specific actions that improve both sustainability and financial performance.

Epstein argues that, to improve the sustainability strategy implementation process, managers should carefully identify and measure key performance drivers included among the various inputs and processes. The drivers of the model include:

* External context (regulatory and geographical),

* Internal context (mission, corporate strategy, corporate organizational structure, organizational culture, and systems),

* Business context (industry sector, customers, and products), and

* Human and financial resources.

The inputs guide leaders in making decisions so they can develop an appropriate sustainability strategy; set up aligned structures, systems, and programs; and take action. The managerial actions lead to positive or negative sustainability performance and stakeholder reactions, ultimately affecting long-term corporate financial performance. This model should help managers better analyze and manage these drivers as well as pursue social and environmental impacts more effectively. Figure 1 illustrates the Corporate Sustainability Model.

[FIGURE 1 OMITTED]

Recently, the Foundation for Applied Research (FAR) of the Institute of Management Accountants (IMA[R]) sponsored a research study to examine how leading corporations integrate economic, social, and environmental impacts into day-to-day management decision making.

The research focused on four companies:

* Nike, the world's leading designer, marketer, and distributor of athletic products and clothing;

* Procter & Gamble (P&G), one of the world's leading branded consumer products companies;

* The Home Depot, the world's largest home-improvement specialty retailer; and

* Nissan North America, a unit of Nissan Motor Co., a leading global auto manufacturer.

These companies have reputations for leading practices in managing sustainability and have high ratings on various indexes on sustainability performance. We conducted open-ended, semi-structured interviews with senior managers, business unit and facility managers, geographical unit managers, functional managers, and sustainability managers. The study investigated how managers currently make tradeoffs and simultaneously manage social, environmental, and financial performance. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Implementing Sustainability: The Role of Leadership and Organizational Culture
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.