Beingful Leadership & Business Performance

Business leaders who are sceptical of the business worth of the principles of Beingful leadership may well ask, Can such a Beingful business also do well in terms of conventional measures of success, such as material profits and market value? If not, the case for such a business is a much harder sell to sceptical business leaders.

The outcome from a Beingful business (which should more correctly be called a beingness) is a company that emphasises ethically, environmentally, and socially sustainable business practices that also lead to financial success. All Beingful businesses are sustainable businesses in terms of outcomes because they actively work to preserve and renew their larger context of nature, humanity, and institutional credibility.

So what is the evidence that sustainable businesses do better than other businesses, even when it comes to conventional measures of performance? In one of the most comprehensive analyses ever conducted, a team of researchers at Harvard Business School (HBS) compared ninety companies that voluntarily adopted environmentally and socially sustainable practices with ninety companies that did not. The two samples were matched in terms of size, industry, and other variables, so that differences in performance would be most likely due to their stance on sustainability.

The HBS researchers found that the sustainable companies were more likely to be long-term oriented, had organised processes and procedures for engaging all their stakeholders, had incentives to compensate top executives on sustainability performance, and had boards that saw themselves as responsible for sustainability. On the whole, sustainable companies ran their business as very differently from others.

The researchers tracked the performance of these two groups of companies over eighteen years, beginning in 1993. They found that sustainable companies outperformed the other companies significantly in market value as well as accounting measures such as return on assets and return on equity. For example, an investment of $1 in early 1993 in a portfolio of sustainable firms would have increased to $22.6 by the end of 2010, using market prices for the companies’ shares. By contrast, a similar investment of $1 in the companies with no focus on sustainability would have grown only to $15. This difference of 47 percent in market returns is large by any measure.

My own qualitative research on thirty Global 500 companies that are using sustainability to drive business innovation, which was published in the Harvard Business Review in 2009, came to similar conclusions. The message here is clear: regardless of how you measure performance, sustainable companies dramatically outperform other companies over the long term.

All this evidence gives me confidence to conclude the following: Beingful companies that deeply value their companies’ connections to their larger context do better than those that don’t, even on conventional measures of success. The challenge is that even when business leaders recognise the importance of the larger context, they often fail to make it central to their everyday decisions.