Hitting the sustainability sweet spot: having it all

Corporations and their leaders are coming under increasing pressure to achieve “sustainability.” Sustainable enterprises minimize harmful environmental impacts, are socially responsible, and create shareholder value.

Using secondary data, we compared the financial performance of recognized sustainability leaders to that of a carefully selected matched set of competitors.

The authors find that, on average, sustainability leaders outperform their competitors. However, this is true and only two out of three cases.

While the authors utilized a relatively small sample with data that covers only a three‐year period, the use of secondary data from two different databases reduces concerns about common method bias. The clear implication of this analysis is that a commitment to sustainability does not harm financial performance and may, in fact, enhance performance.

The authors conclude with a set of recommendations for how top management teams can hit the sustainability sweet spot.

The concept of the sustainable enterprise is relatively new and little rigorous research has been conducted on its performance implications. The authors believe that the literature review, the research undertaken, and the practical implications will be of value to both scholars and to executive teams.