In the last few years, sustainability has leapt from being a topic discussed primarily by environmentalists and other activist groups to being high on the agenda of large organizations around the world. It embraces a wide range of issues, from renewable-resource questions, such as whether to build new manufacturing plants in areas of potential future water shortage, to social topics, such as how to ensure that the workforce of the future has the skills the organization needs. Understandably, many firms find addressing such a wide-ranging set of issues challenging. How do you reconcile long-term global changes in population, climate and the availability of basic resources with the short-term pressures of delivering financial performance?

The first step is to recognize that those apparently contradictory pressures are already converging. It may take some time for the effects of these long-term trends to have an immediate impact on business operations, but consumers' perceptions of the threat and companies' responses to it are already shaping buying behaviors. This is true both for end consumers and increasingly in business-to-business transactions, and it means that environmental sustainability is having a real impact on business performance today.

This is why organizations that consider risk management's broader implications are re-evaluating their approach in addressing intangible and long-term risks. Leading corporations such as IBM, Cisco, BMW, Pfizer, Wal-Mart, Nike, McDonald's and others that have implemented environmental sustainability programs are embracing the importance of sustainability as a part of their business strategies and are working to develop new risk-management techniques to address emerging risks associated with sustainability concepts.

SUSTAINABILITY AND THE ‘TRIPLE BOTTOM LINE'

While sustainability is a relatively new concern to corporate executives, the fundamental concepts go back further. Twenty years ago, the United Nations Brundtland Commission published the report Our Common Future, which focused on sustainable development in emerging nations and the various ways in which necessary changes could be achieved. The report included an often-cited definition of sustainability: "Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs."

Ten years later, in 1997, British economist John Elkington introduced the concept of the "triple bottom line," asserting that sustainability has to be measured in terms of the economic, environmental, and social performance and impact of an organization. This deceptively simple formula lies at the heart of most approaches to corporate sustainability today.

The three dimensions of the triple bottom line extend sustainability beyond an environmental focus to include having a strong brand and reputation, being an employer of choice, engendering the trust of financial markets, increasing shareholder value, and developing innovative new products and services to create new markets. Only by working toward balance and success in the three realms of economic, environmental and social performance can firms effectively respond to emerging risks and capture new opportunities.

WHY CARE ABOUT SUSTAINABILITY? TANGIBLE AND INTANGIBLE ASSETS

For some people, this is a question that has already been answered. They contend that because the world's population has doubled from 3 billion to 6 billion in the last 40 years, and will increase by another 3 billion in the next 40 years, we must make significant changes if we are to sustain human life on this planet, dwarfing all other business and personal concerns.

But there are also sound business reasons (including financial results and shareholder value) why sustainability should play a significant role in corporate strategy. There is increasing evidence that focusing on sustainability can significantly improve corporate performance, with the growth in market capitalization of sustainable corporations outperforming the MCSI world index by 80 percent over a six-year period.