MIT Sloan: Sustainable Benefits

Rick Locke, professor of entrepreneurship and political science at MIT Sloan, tells CEO that senior executives should think about sustainability in a more positive light.

When executives talk about sustainability they think about it as an additional cost or constraint on the business. At the MIT Sloan School of Management in the US, however, business academics and other faculties are changing the discourse around sustainability, as they encourage business students and executives to think about sustainability in a more positive light.

The starting point in the discussion, says Rick Locke, professor of entrepreneurship and political science at MIT Sloan, is to shift corporate perceptions of sustainability as something that is limited to issues such as climate change. ‘We define sustainability in a broad way. It is not just about the environment and climate change, or energy, but includes issues such as labour and social sustainability,’ says Locke. ‘The problem is that the discussion around sustainability often becomes very siloed. We want to show how all these pieces link together.’

Broaden the mind

At present, says Locke, business tends to view sustainability as a constraint. So if you are going to be environmentally friendly or if you have to reduce your carbon footprint, then it will involve additional costs, or constrain what you want to, or are able to do. However, by broadening the definition and understanding the full impact of the business in terms of sustainability, it soon becomes apparent that addressing issues of sustainability can be very beneficial.

‘It can create all sorts of opportunities for the business,’ says Locke. ‘Just look at the organisation’s operations in terms of the use of energy and water, materials that are eventually wasted and even the people who work with you. We already know that there are all sorts of new ways of using those resources that will increase efficiency, reduce waste, make you a greener, more sustainable company, at the same time as improving the bottom line.’

Sustainability in action

This is not just theory either. Locke has conducted extensive research with Nike, had access to all of the company’s supplier data, and visited and studied supplier factories right across the world. ‘In my research with Nike, for example, it was clear that the company realised it had an abundance of materials when it has making the samples for its products which were being manufactured in a variety of suppliers’ factories,’ says Locke. ‘And that even in the production of the goods there was a tremendous amount of valuable material that was being wasted.’

After its own analyses, Nike revisited its product development and design processes and the cutting of prototypes, redesigned the function, and radically reduced the material that it used in developing prototype samples, and in production. The result was reduced costs, and a more sustainable approach to product development.

Right now the sustainability research is being introduced as part of customised executive education programmes, but the business school and the sustainability team are speaking to clients about offering dedicated programmes focusing solely on sustainability. And the business school already runs an MBA sustainability lab programme.

Locke is also doing a lot of work with engineers and scientists at MIT, because he believes that understanding sustainability and how best to tackle it requires a combination of technical expertise as well as managerial knowledge about how organisations and markets work. By putting these things together, says Locke, the MIT Sloan faculty team can give the students and companies they work with an edge.

Central sustainability

Ultimately, however, the aim is to show programme participants that, while there are these big problems out there associated with sustainability, there are also tremendous opportunities for businesses to improve profitability and at the same time be more responsive to the environment. ‘Sustainability is not a nice additional thing to do on top of your core business, but absolutely central to what a business does,’ says Locke.

‘And it is not just about corporate social responsibility or sustainability reports. You really have to go back into the core business, operations, supply chain, product development and design, and rethink it in a way that is going to be not only good for the planet, but good for the business too.’