While this trend has been emerging for quite awhile, a recent IBM Institute for Business Value study, Leading a Sustainable Enterprise, conducted with business leaders from around the world showed that most are unprepared to measure and improve their own sustainability or that of their suppliers.

For example, while many companies have ambitious goals to reduce CO2 emissions, in our study only 19 per cent were measuring it often enough to make substantive changes to their operations to lower emissions. In fact, only 30 per cent are collecting data frequently enough to make strategic decisions that address inefficiencies, environmental impact and risk across eight major categories - CO2, water, waste, energy, sustainable procurement, labour standards, product composition and product lifecycle. Twenty-nine per cent aren't collecting any sustainability data at all from their supply chain partners. Eight in 10 aren't collecting supplier data for CO2 and water, and six in 10 aren't checking supplier data for labour standards.

How will companies achieve the levels of transparency, efficiency and social responsibility as prescribed by efforts such as a sustainability index? As Pulitzer Prize winner Thomas Friedman said in his latest book Hot, Flat and Crowded, you can't make anything greener unless you make it smarter - smarter materials, smarter designs, smarter software.

For example, in order for a company to reduce its carbon footprint, it needs to know where and how energy is consumed and CO2 is emitted throughout all phases of its operations - everything from data centres, to office space, to manufacturing, to delivery - as well as through every phase of its supply chain. Then it needs to determine where it can make reductions balanced against other environmental considerations and areas vital to overall performance, such as cost, quality and service.

Interesting conclusions

Taking such a comprehensive view can lead to some interesting - sometimes counter-intuitive - conclusions. For example, excess packaging has been a major focus when examining a product's environmental impact. Yet analysis of a shelf-stable, single-serving beef chili and beans product from food processor Truitt Brothers demonstrated that a little extra packaging actually helps reduce environmental impact.

It keeps food losses below 4 per cent, compared to typical food losses in the home of more than 15 per cent. And it eliminates refrigeration in transportation, retail merchandising and home storage, reducing energy use and greenhouse gas emissions.

Leading companies today are setting standards and measurements for themselves and their suppliers - and even collaborating with competitors to set uniform industry specifications. They're deploying sensors and meters to collect and measure this data everywhere, and their suppliers are doing the same. They're implementing networks, analytics and dashboards that present that data in a way that lets them make better decisions to improve efficiency and lower emissions, and change business processes to put it all into action.

For many companies, this means rethinking every aspect of how they operate and who they do business with. But the long-term implications are clear - businesses that do this effectively and proactively will thrive. Those that don't, will not.

The author is Senior Vice-President and Managing Partner of IBM Global Business Services. In Singapore for the APEC CEO Summit 2009, he will share IBM's point of view on sustainable development in a panel discussion on 'Meeting the challenge of sustainable development: Are there trade-offs with economic growth? What role does technology have to play?'