A BCG exec says the same CEOs who used to resist sustainability are changing their tune after seeing the numbers

A BCG exec says the same CEOs who used to resist sustainability are changing their tune after seeing the numbers

wendy woods


Boston Consulting Group senior partner Wendy Woods is the firm's global head of social impact practice.

  • Boston Consulting Group senior partner Wendy Woods leads the company's social impact sector.
  • Last October, the firm published a report on what it calls "total societal impact," and why it believes it is a lens that should replace that of maximizing total shareholder return at an expense.
  • The report contains data broken down by industry, linking growth to the implementation of initiatives fitting BCG's TSI model, and it's changed conversations with clients.
  • This article is part of Business Insider's ongoing series on Better Capitalism.

Wendy Woods has been with Boston Consulting Group for more than 23 years, and she's seen a major shift over that time in the way companies think about doing good.

As the global head of BCG's social impact practice, Woods oversaw a report on what she and her team dubbed "total societal impact," a replacement for the lens of maximizing total shareholder return at the expense of other stakeholders, like employees, customers, and society at large. The report's data showed that companies that have implemented plans that would boost "TSI" are actually growing more than those that aren't. It's changing the way major corporations and investors BCG works with understand their role in society, and how occasionally supporting a charity or releasing a warm and fuzzy ad campaign isn't going to cut it anymore.

Complimentary Tech Event
Transform talent with learning that works
Capability development is critical for businesses who want to push the envelope of innovation.Discover how business leaders are strategizing around building talent capabilities and empowering employee transformation.Know More

"And I think total societal impact allows us to get to a different place where, we are saying, this is not just about business being a checkbook, this is about business finding ways to do 'better capitalism' and to do their job of creating shareholder value," Woods told Business Insider, referencing our series exploring the creation of long-term value.

In the past, Woods explained, CEOs could be pitched something like a way to make ingredient-sourcing more sustainable through better relationships with farmers and understand that it had a societal benefit, but not see any reason to undergo a campaign that would likely not reach its full potential until their term as chief executive was up. But now those same types of executives have the material that convinces them otherwise.


For example, the TSI research found, "In consumer packaged goods, gross margins were 4.8 percentage points higher, all else being equal, for companies that were the top performers in socially responsible sourcing than for the median performers," and, "In biopharmaceuticals, EBITDA margins were 8.2 percentage points higher, all else being equal, for the top performers in expanding access to drugs than for the median performers."

Woods noted that companies like Mondel─ôz and Mars Inc. have taken this advice and developed plans around sustainability, and that even banks can do things like offer lower-priced mortgages to customers who implement "green" standards in their homes.

And not all of the socially conscious initiatives have to be those that would stretch beyond a typical CEO's tenure, Woods said. For example, BCG recently studied the issue of food waste - how $1.2 trillion worth of food, or one third of all produced globally, is wasted each year. Woods said that when presented with that data, an executive of a food company could see that not only will a food-waste reduction program actually have a social benefit, it could both lower expenses for and boost the public image of the business. And it's something that doesn't need 10 years for implementation. It's something a CEO could feel happy about and easily explain to investors.

As for investors, Woods said, they are also recognizing the benefits of so-called TSI-boosting initiatives. BCG's report states that in 2016, $23 trillion of assets under management around the world - a full quarter - were in funds focused on environmental, social, and governance (ESG) criteria. Woods moderated a panel of socially-conscious investors at the World Economic Forum's annual meeting in Davos, Switzerland in January, and an audience member asked if focusing on ESG (or TSI) would be a dismissal of fiduciary duty. Woods said that, "all four people on the panel said if you aren't doing this, you're ignoring your fiduciary duty because you're putting too much risk into the business."