Corporate Sustainability: A Strategy?

45 Pages Posted: 8 Jan 2019 Last revised: 9 Jan 2019

See all articles by Ioannis Ioannou

Ioannis Ioannou

London Business School - Department of Strategic & International Management

George Serafeim

Harvard University - Harvard Business School

Date Written: January 1, 2019


We explore the extent of adoption of sustainability practices over time and the implications for firm performance. We find that for almost all industries, sustainability practices converge within an industry over time, implying that they spread as common practices. We also find that the extent of convergence across industries is associated with the adoption of sustainability by the industry’s market leaders and the relative importance of environmental and social issues compared to governance issues. Further, we distinguish between a set of sustainability practices on which companies converge within an industry, which we term “common practices,” and a set on which they do not, which we term “strategic.” We subsequently explore performance implications and find that the adoption of strategic sustainability practices is significantly and positively associated with both return on capital and expectations of future performance as reflected in price to book valuation multiples, whereas the adoption of common sustainability practices is reliably correlated only with expectations of future performance. Overall, we provide evidence about the role of sustainability as a long-term corporate strategy and as a common practice.

Keywords: sustainability, corporate social responsibility, strategy, strategic management, convergence/divergence, best practices, performance, sustainability strategy

Suggested Citation

Ioannou, Ioannis and Serafeim, George, Corporate Sustainability: A Strategy? (January 1, 2019). Harvard Business School Accounting & Management Unit Working Paper No. 19-065, Available at SSRN: or

Ioannis Ioannou

London Business School - Department of Strategic & International Management ( email )

Sussex Place
Regent's Park
London, NW1 4SA
United Kingdom
02070008748 (Phone)


George Serafeim (Contact Author)

Harvard University - Harvard Business School ( email )

381 Morgan Hall
Boston, MA 02163
United States


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