The spring 2017 WorldView conference presented a terrific opportunity to discuss the strategic sustainability issues facing the food and beverage industry. Businesses are attempting to manage new and increased risks around climate change, resource availability, economic and social inequality, radial transparency, and changing consumer expectations, not to mention technological disruption. At the same time, we’re seeing a significant change in the investor climate—environmental, social and governance (ESG) investing now comprises more than one out of every five dollars under professional management in the United States—$8.72 trillion or more, according to the US SIF Foundation’s 2016 Report on Sustainable and Responsible Investing Trends in the United States.
Companies can no longer afford to sideline sustainability. According to a McKinsey report, the value at stake from sustainability issues can be as high as 25-70% of Earnings before Interest, Taxes, Depreciation, Amortization (EBITDA.) We’re also seeing an increased commodification of brands, and many brands have collapsed into each other as consumers price shop. One study from Havas Group indicated that most people wouldn’t care if 73% of brands disappeared. On the flip side, 20% of brands were felt to notably improve quality of life, so there is opportunity for companies to differentiate themselves by actively engaging with the issues customers care about.
But how? The NYU Stern School of Business believes the answer lies in embedding sustainability strategy within core business strategy to drive risk reduction, competitive advantage, innovation, operational efficiency, employee engagement, all of which prove your company’s value to society. Sustainable companies outperform their peers significantly over time, including better stock and operational performance, according to a study by the Harvard Business School.
Teaching the Value of Sustainability in Business
In order to tackle these ambitious goals, organizations need employees who excel in systems and design thinking, stakeholder management, interactive and transparent communications, understanding ESG risk and opportunity, and who can make the business case for sustainability.
We launched the Center for Sustainable Business at NYU Stern in January 2016 to help current and future business leaders learn how to embed sustainability core to business strategy-- through education, research and outreach.
And while Stern offers sustainable business concentrations and executive courses, our students want these ideas embedded in their core courses, as well as incorporated into research projects, case studies, and pilot projects. The future lies in fully integrating sustainability concepts into traditional business concepts, and giving them the same level of attention.
Recruiting and Retaining the Best and Brightest
As these bright young graduates enter the market, businesses need to understand exactly what it will take to attract talent and, just as importantly, keep it. These graduates are part of a growing group of “aspirationals,” that shop their values and hold brands to high standards, including brands they would consider working for. Recruiting efforts therefore need to be aligned with your company’s sustainability messaging; they need to be encouraging passion and purpose in your employees and prospects. By helping employees understand they are part of something bigger and working with an organization that lives up to the highest ideals, you can increase engagement, motivation, and help keep people for the long-term.
One question that came up at WorldView was how to attract the best and the brightest to “unsexy,” established industries like food and beverage—my answer is that sustainability is the key here as well. Food and beverages have become integral to social status amongst millennials, who proactively share their dining experiences and habits on social media platforms; many millennials also relate well to “authentic” brands who have a social purpose. Organizations need to be sure to present the full picture of who they are, and not be afraid to go deeper with case studies and examples. Make it clear that the entire company is committed to sustainability, it’s not just sustainability department that is playing an important part in keeping Earth livable for generations to come, but also the accountants, brand managers, and marketers!
As the expectations of students (and, in turn, employees) continue to shift, there is real opportunity for forward-thinking organizations to differentiate themselves and attract top-of-the-class talent, which can further strengthen their position into the sustainability-focused future.
Read more about the WorldView event here, and see my full presentation slides. Learn more about NYU Stern’s Center for Sustainable Business.
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About the Author
Director, Center for Sustainable Business
NYU Stern School of Business
Tensie Whelan joined New York University Stern School of Business in November 2015 as Clinical Professor of Business and Society. She leads the school’s efforts around issues of business and sustainability, driving research and coursework on natural resource-based challenges including climate change, water scarcity, biodiversity loss, poverty and unsustainable development.