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Managing Social, Environmental and Financial Performance Simultaneously
Marc J. Epstein, Adriana Rejc Buhovac, Kristi Yuthas, Long Range Planning, 48 (2015) 35-45
The significant challenge of trying to simultaneously manage social, environmental and financial performance is one of the most critical challenges in the field of corporate sustainability. This paper explores how large, complex, for-profit organizations are actually integrating this challenge into decision-making and implementing sustainability. Based on field research with interviews at Nike, Procter & Gamble, The Home Depot and Nissan North America, the study specifically investigates how managers at various levels are making the trade-offs and simultaneously managing social, environmental and financial performance. We find that, while the companies’ informal systems strongly promote sustainability, their formal systems seemingly have a very traditional focus on financial performance. But, the managers operating under these paradoxical systems do not believe these systems to be in conflict, and they do not perceive a high level of tension.
They recognize the financial value of stakeholder reactions to social and environmental performance, and this minimizes the magnitude of the loss in a “win-lose” scenario, or, when the value of these impacts exceeds the cost of an initiative, turns it into a “win-win”
scenario.
Why Nike Kicks Butt in Sustainability
Marc J. Epstein, Adriana Rejc Buhovac, Kristi Yuthas
Nike Inc. has a unique combination of capabilities and competencies that position the company as a leader in sustainability. Nike is among the world’s most prominent
sustainable corporations, and is regularly recognized by organizations that rank sustainable performance. It possesses a unique combination of strengths and capabilities that enable the company to make rapid advancements in sustainability that are ahead of other firms in its industry, and that increasingly contribute to the financial
performance of the company. Nike believes that we are at the beginning of a shift from a service- or knowledge-based economy to a sustainability-based economy, as environmental constraints increasingly influence business choices. Nike is making choices today that are intended to position the firm for effective competition in a sustainability-based economic environment.
Several features of the firm, which have been fundamental to the company’s financial strength, are also instrumental in the company’s sustainability performance.
Among the factors most important in its sustainability positioning are leadership, organizational design, market strength, market positioning and organizational culture.
A New Day for Sustainability - Is Your Company Ready to Take on Increased Responsibility for Its Activities throughout the Globe?
Marc J. Epstein and Adriana Rejc Buhovac
The world of sustainability is changing dramatically, and management
accountants need to be prepared.
Even though the companies rated highest in sustainability performance generally evaluate labor standards and examine environmental performance, few look at the safety standards of the buildings their suppliers lease. Yet sustainability issues have become more complex. Consumers want to know why facilities such as the Rana Plaza building are used to produce their garments. Multinational corporations that are using such suppliers but are failing to supervise and manage their
safety appropriately can experience disruption, consumer displeasure, and harm to their brand, as well as additional out-of-pocket costs related to facilities they don’t own or lease, such as mandatory repairs and renovations. The Rana Plaza catastrophe has forced companies to rethink their social and financial liabilities.