Sustainability means opportunities for those firms acting globally to help meet their clients’ demands

Marc Epstein likes to talk about the Toyota Prius. Not the car itself, but more Toyota’s strategy behind the development and the delivery of the first mainstream electric/gas hybrid car. In an incredibly forward-thinking moment, Toyota’s leadership brought together a team to develop what it was calling “the car of the 21st century” way back in 1993, long before it was fashionable to think of an automobile’s impact on the future. Even more innovative, perhaps, was the team Toyota assembled to work on the car. The traditional hierarchal model was replaced by what Epstein calls “an equal-access system of communication,” which included leadership, designers, engineers, marketers and production plant crew chiefs.

“The Prius was a huge risk, but it has been an absolute bonanza for Toyota,” says Epstein, author of Making Sustainability Work: Best Practices in Managing and Measuring Corporate Social, Environmental and Economic Impacts. “And it got first-mover advantage in the marketplace and with consumers, which led to Toyota controlling over 50 percent of the hybrid market even though there are more than 25 hybrids out there right now.”

And since the Prius debuted in the U.S. in 2001, Toyota has sold more than 1 million hybrid cars, twice as many as its nearest competitor. Toyota is now the No. 2 seller of automobiles worldwide, and its brand value has increased 47 percent since the Prius was launched, according to Interbrand.

What's Your Carbon Footprint? Firms take on travel to reduce impact

Shannon Schuyler spends a lot of her time thinking of ways to reduce the carbon footprint at PricewaterhouseCoopers. “We look at everything from travel to paper usage to the impact of our employees commuting,” says Schuyler, who is a managing director with PwC. “More and more we’re finding that clients are demanding to see what we’re doing internally before they decide to have us work with them on a sustainability project.” Although the new initiative is only a few months old, Schuyler has already found ways for PwC to reduce its overall impact. “As a company, we’re one of the largest purchasers of rental cars. So, we’ve gone out to the car-rental firms and have encouraged them to add more hybrids to their fleet,” she says. “And then we’ll want to work more with the ones that do.”

“Making a difference: PwC is looking to rent more hybrid cars while A.T. Kearney is developing a new delivery model that relies less on air travel.”

Another area that drives up a carbon footprint in a hurry is air travel. “Obviously, we travel a lot, and that has a very big impact,” she says. “But we’re also looking into ways to reduce our air travel.” Daniel Mahler, a partner at A.T. Kearney and the firm’s global coordinator for sustainability, is also trying to reduce air travel. When Mahler began to calculate A.T. Kearney’s carbon footprint, he discovered that about 79 percent of it was due to air travel. And of that 79 percent, three-quarters of it was client related. “Travel is not a sacred cow,” Mahler says. “We understand that we need to provide great service to our clients, but do we need to have five consultants on site full time five days a week? Can we deliver the same quality of work without traveling like we have traditionally done?” These are the questions Mahler is asking as he and A.T. Kearney embark on an aggressive campaign to become carbon neutral by 2010. As part of the pledge, the firm is working on “non-traditional delivery models” of its consulting services that include client service models not so heavily dependent on air travel. In addition, A.T. Kearney has appointed sustainability “czars” in each of its profit centers and will begin semi-annual progress measurements this year. —JK

There’s a lesson in there for consulting firms, Epstein says. “Big risks lead to big rewards,” he says. “There are huge opportunities out there for consulting firms willing to take a risk.”

Several have, particularly in the midst of skyrocketing client demand for sustainability work.

Iván Martén, global leader of the Energy Practice at The Boston Consulting Group, says the time to act is now. “Sustainability has become a critical global issue and is indeed a real business imperative,” he says. “Maintaining society’s established, or aspiring, lifestyle while reducing carbon emissions could be the biggest challenge business executives face in this century. Companies need to move beyond the rhetoric and implement plans that are sustainable and profitable.”

One firm that’s jumped in to the sustainability movement with both feet is A.T. Kearney. As a partner and the global coordinator for sustainability, Daniel Mahler knows what’s at stake. He says, simply: “We think it’s going to be huge.”

It’s hard to put a finger on just what sustainability encompasses. Is it Dell pledging to plant a tree for every PC it sells? Is it Goldman Sachs investing $1 billion in clean energy technologies? Is it the city of San Francisco banning the use of plastic bags in supermarkets? All of the above, Mahler says. “It’s adopting business strategies that meet the needs of the company and its stakeholders today, while protecting, sustaining and enhancing the human and natural resources that we’ll need in the future.” In other words, it’s not just corporate social responsibility. Rather, it’s a completely new and innovative way to think about all aspects of your business, Mahler says.

going to market
A.T. Kearney launched its 90-person Sustainability Practice last June and is investing some $6 million in research and intellectual capital around the topic. “It is in A.T. Kearney’s DNA to think about topics that go beyond the classic consulting mission,” Mahler says. “It’s not about the short-term gains for clients; it’s about the essential rightness of the advice that we give to clients every day.”

Mahler says the sustainability movement at A.T. Kearney was energized by the leadership of Paul Laudicina, who took over as the firm’s chairman in September 2006. At the time, Laudicina was head of A.T. Kearney’s Global Business Policy Council and had a long-standing interest in environmental issues.

“From day one, sustainability was a top priority for Paul, both in terms of our clients and for us as a firm,” Mahler says. “The initiative has been clearly spearheaded by Paul, so it has the top-down support, but it wouldn’t be possible without the right firm DNA and a very ripe consultant body that was ready to move on it.”

That consultant body is made up of a constant pipeline of recruits who come to A.T. Kearney specifically because of the Sustainability Practice, Mahler says. “This has helped our recruiting tremendously. The younger generation is helping fuel the growth,” Mahler says. “In addition, we’ve also retained people who otherwise would’ve left A.T. Kearney.”

Like A.T. Kearney, other firms have launched standalone sustainability practices with dedicated practitioners.

Accenture launched a centralized sustainability practice with about 50 consultants last summer. The practice, made up of existing consultants and new sustainability hires, consists of sustainability experts who stay closely tethered to the firm’s other practice areas, says Sander van’t Noordende, group chief executive, resources, at Accenture. “Keeping connected [to other practice areas] is vital. Sustainability is not something we do on the side; it’s part of the way we do business,” he says. “We’ve made a significant investment, and I expect this will be one of the fastest-growing—if not the fastest-growing—practice area within Accenture over the next several years.”

PricewaterhouseCoopers, meanwhile, has had a small sustainability practice since the mid-1990s. The practice has significantly ramped up over the last three years, and the firm now has about 400 consultants worldwide dedicated to what PwC calls its Global Sustainability Practice.

Other firms view sustainability as a natural enhancement of their consulting offerings. IBM, for instance, handles sustainability as an extension of its core capabilities. “We advise clients all the time that sustainability works most effectively when it works as the core of the business,” says George Pohle, vice president and global leader of the Business Strategy Consulting Practice at IBM. “Therefore, that’s the way we’re dealing with it internally.”

Bain & Company, meanwhile, goes to market in a similar way. “Rather than viewing sustainability as a standalone practice area, we’re viewing it as important part of everyday business,” says Darrell Rigby, head of Bain’s Global Retail Practice. “Every industry practice is paying greater attention [to it] and the role it should play in strategy. As we go forward, we may find that we need to handle sustainability more centrally, but as of right now, that’s not the plan. We started this aggressively about two years ago. Our people internally and our clients were very interested in sustainability, so we started learning more about it and funded a project with the World Economic Forum on sustainability.”

Rigby gave a presentation at the WEF about consumer goods companies looking at sustainability as a platform for innovation and growth, not just as a matter of cost control and risk management. He talked about Timberland, which is now producing biodegradable boots and shoes, and General Mills, which now sells a byproduct of Cheerios breakfast cereal as fuel.

And Rigby’s WEF presentation is right in line with what an IBM survey of business executives revealed about their views of sustainability. Pohle says two-thirds of them view it as a growth opportunity as opposed to it being about regulatory compliance or philanthropy. Welcome news, for sure. But no matter how much consultants push clients to get ahead of the curve, the reality remains that much of the low-hanging fruit right now remains around the compliance and regulatory work, demand that will only increase with the pending onslaught of U.S. environmental regulations in the pipeline.