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June 07, 2006
Book Review--Managing the Business Case for Sustainability: The Integration of Social, Environmental, and Economic Performance
    by Bill Baue

The book presents a wide breadth of academic and practitioner perspectives on corporate social and environmental sustainability.

Reading Managing the Business Case for Sustainability: The Integration of Social, Environmental, and Economic Performance (Greenleaf Publishing 2006) is no small feat--quite literally, the book must weigh a few pounds and runs over 600 pages! Laden with the vernacular of corporate social responsibility (CSR), the text is clearly not geared toward a lay audience but toward heavyweights--academics conducting empirical research on CSR and business practitioners trying to make corporate social and environmental sustainability a reality. For this audience, the book will prove an indispensable resource. The very act of collecting such a wide variety of perspectives on CSR helps put to rest the question of whether there is a business case for sustainability, and rightly focuses attention on actual options and solutions.

"There is no doubt: non-market issues such as environmental and social issues can have a substantial impact on the competitiveness and economic performance of a company," state editors Stefan Schaltegger of the University of Luneburg and Marcus Wagner of the Technical University of Munich. Both are also associated with the Centre for Sustainability Management, which Prof. Schaltegger directs.

Profs. Schaltegger and Wagner clarify, however, that instituting corporate sustainability initiatives does not automatically lead to cash pouring into the coffers.

"On a conceptual and empirical basis, the research results and experiences of corporate practice show [that there] is no automatic link--neither a positive nor a negative one--between environmental or social performance and economic performance . . . it is more important how sustainability is managed than what environmental or social performance level has been achieved," they state.

The editors organize the book into three separate sections, the first considering corporate sustainability from a theoretical perspective, the second examining empirical research on it, and the third advancing case studies of hands-on experience with sustainability initiatives. The theoretical section looks at the link between environmental performance and economic success, then social performance and economic success, and then integrated approaches.

"So far, companies have been able to manage the link between environmental performance and economic success better than the link between social performance and economic success," the editors report. "A reason for this may be that environmental management has a longer history than explicit social or societal management."

"In addition, environmental issues can be measured better or more easily than social aspects," they add.

One theme that arises linking the second and third sections is automobiles. Niki Rosinski of Generation Investment Management in London uses the example of how climate change impacts the auto industry to examine how the Dow Jones Sustainability Index (DJSI) offers investors a systematic methodology for assessing the materiality of sustainability issues. Mr. Rosinski, who used to work for Sustainable Asset Management (SAM--which administers DJSI), demonstrates how the DJSI methodology can be used on a disaggregated basis as a way to benchmark financial competitiveness based on sustainability performance. In other words, to identify likely winners and losers in the auto sector based on how well they manage climate risk.

The third section includes case studies on actual car companies. Mats Willander, a professor at Chalmers University of Technology and business strategy manager at Volvo, examines why auto companies such as Ford (ticker: F) and Volvo (VOLVY) do not sell their most environmentally friendly cars in sufficient volumes.

"He concludes that the industry's perceived reluctance towards becoming more environmentally friendly may not be rooted in a lack of willingness, ethics, or belief in the strategic relevance of environmental issues," the editors write in their overview of the book. "Instead, it may be caused by institutionalized perceptions and engineering practices that create a bias in the understanding of consumer expectations."

"The author indicates that what is perceived as high cost by consumers may be very low and that more innovative solutions addressing not only the monetary issue but also the symbolic, behavioral, and organizational attributes of the product may open a major potential for car manufacturers," they add.

Peter and Sarah Stanwick of Auburn University appraise how Honda (HMC) and Toyota (TM) are taking a leadership role on advancing environmental sustainability.

"To paraphrase Charles Dickens, it is definitely a tale of two strategies," state Profs. Stanwick. "We classify Honda as having an inward environmental strategy and Toyota as having an outward environmental strategy."

"An inward environmental strategy looks at incremental avenues to expand a company's relationship with sustainability issues," they continue. "An outward environmental strategy is based on expanding product lines in order to address sustainability issues."

Instead of validating one approach over the other, the researchers identify the strengths of each strategy. Likewise, the book seeks not to endorse one particular perspective on the corporate sustainability, but rather viewpoints across the spectrum. Indeed, what is impressive about the book is its incredible breadth and depth--which might explain its heft!


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