Innovating for Sustainability - Professor Robert Eccles & Professor George Serafeim

Every major company is grappling with the meaning and application of sustainability in relation to its geographic location, industry and business model. Similarly, more and more institutional investors are incorporating sustainability into their resource allocation decision making process. As a result, we are seeing the emergence of a new view of the role of the corporation in society, one that simultaneously meets shareholders' and other stakeholders' objectives. This new model is only beginning to emerge, but some of its outlines are already clear such as a longer-term time horizon, more holistic performance measurement and reporting, more active corporate governance, and greater engagement with shareholders and other stakeholders.

Achieving sustainability - for corporations, investors, analysts, information intermediaries, and other forms of organisations - often requires innovations in processes, products, and business models in order to optimise both financial and nonfinancial (e.g., environmental, social, and governance [ESG]) outcomes. Innovation is a critical element, because in the absence of it managers often need to make trade-offs between financial and ESG goals. Therefore, innovation is the mechanism that allows companies to extend the performance frontier.