Strategic implementation of organizational eco-sustainability policy and strategy - a McKinsey seven S's approach

This thesis is a study of organizational eco-sustainability policy and strategy adoption and implementation, how can it be measured and what influences it. The McKinsey Seven S’s (7S’s) Framework is used as a foundation for the development of an evaluation metric, the Organizational Eco-Sustainability Index (OESI). The OESI is then used in this research to numerically assess and then compare the extent of eco-sustainability practices adoption by Australian companies publicly listed on the Australian Securities Exchange (ASX) Top 200. <br><br>In Phase 1 of the research, data was collected through document and content analysis of sustainability and/or annual reports of 200 public listed companies on the ASX. 84 companies from significant carbon emitter industry groups: materials, real estate and transportation and from the banking group were then sampled for detailed analysis. A set of metrics (OESI) with 139 criteria derived from the existing research and business literatures, was developed based on an existing risk assessment model and then applied to 15 of the 84 companies.<br><br>An analysis of the application of the OESI showed that the metric could consistently differentiate the extent of adoption of eco-sustainability policy between companies in one industry, between all companies collectively, between industries and between companies over a 5-year period. The OESI shows that the extent of the adoption of eco-sustainability policy and strategy is different across the four sampled industry groups. And, the banking industry has generally been more active in eco-sustainability practice, compared to other industries in this study.<br><br>In Phase 2, interviews with senior executives, responsible for their organization’s sustainability confirmed the validity of the dimensions used and the efficacy of the OESI. The OESI provides a snapshot of the company’s current eco-sustainability position and enables them to compare their position relative to their peers in the same and/or across industries. The conclusion from their evaluation of the OESI was that the metric provides the companies with an opportunity to reflect and reassess what dimensions are important for their organization, so that they understand where effort is needed, what resources are required and ultimately, where the degree of difficulty in managing eco-sustainability policy and reporting is to get the desired results and create significant positive impacts, environmentally and economically.<br><br>The results of a regression analysis in Phase 3 showed that the relationship between the 7 dimensions of the OESI and the dependent variables measuring eco-sustainability were significant, suggesting that the OESI had some predictive value for companies. However, there were no measurable or significant relations between the OESI and business performance, measured by market capitalization, average share return and earnings per share over two consecutive fiscal years (2010-11 and 2011-12).<br><br>Finally the research revisited the dimensions of the OESI to re-consider and re-assess the extent of criteria needed to make the metric easier. The analysis showed that a revised model was consistent and able to demonstrate equally, if not better, the extent of eco-sustainability action. The OESI shows promise in predicting eco-sustainability and in the longer term, business performance.<br>