(35) Sustainability
Sustainability: Developing a personal ethic
Why Sustainability Is Now the Key Driver of Innovation
Sustainability by Organizational Function
Senior Management:
How to Lead the Sustainability Effort
Devise an implementation strategy and enlist support
After developing a business case for pursuing sustainability and identifying terms and frameworks, the next step is to develop an implementation strategy. Where are you going to start your efforts? Who needs to be involved? What do the executives need to do to demonstrate their support? The importance of this step cannot be overemphasized. In our experience, many of the mistakes organizations make regarding sustainability are not technical mistakes but mistakes in change to management:
• A catalogue retailer trained all employees on sustainability before having any systems in place to harness the ideas and energy that the training generated. They ended up with hundreds of employee suggestions languishing for over a year until they hired someone to head up the sustainability effort.
• A timber company also trained employees and then expected improvements to happen spontaneously. They soon discovered they needed a set of teams to provide structure and focus and a process to evaluate the ideas that were generated.
• A consultant associated with The Natural Step framework became so enamoured with the back casting process that he was adamant about approaching all clients with this approach. He discovered the number of organizations willing to jump into sustainability ‘whole hog’ was quite limited.
• One company tried to apply the same exhaustive environmental management system that was used in their manufacturing group in their retail outlet, getting hopelessly bogged down in terminology and technique.
• A governmental agency decided to use a voluntary green team to spearhead their sustainability efforts. The team didn’t have enough clout or the right members to be effective.
These are just a few of the organizational change mistakes we have witnessed, all examples of making the implementation of sustainability unnecessarily difficult. The following advice should help you avoid these and other problems.
Pick the best entry point
In many situations, organizations are better off starting their sustainability effort quietly, tucking it into something already in existence. This lets you gain some experience and avoid the eye-rolling usually associated with new organizational ‘programmes’ or ‘initiatives’. The analysis of your threats and opportunities should imply likely places to begin. Find a place where those intersect with existing efforts you have planned:
• Are you planning any capital improvements (new/remodeled buildings or product lines)? The catalogue retailer, Norm Thompson, began their sustainability effort when they were constructing a new office building. Since buildings last for decades, the impacts of design decisions go on for years. After achieving their goals of making it as green as possible, they moved on to the next phase of their sustainability plan.
• Are you designing a new product, service or programme? Philips Microelectronics chooses a ‘flagship’ product within a product group and applies design for environment principles. Since most of the impacts of products are determined in design, this is a high-leverage opportunity.
• Where are your largest expenses and environmental impacts? Herman Miller ships their furniture in their own trucks. They discovered that by adding an aerodynamic scoop on to their truck cabs, the fuel savings paid for the upgrades in several months, reducing their climate impacts.
• Where is the ‘low-hanging fruit’, something you can pick off easily to show progress and save money? Many organizations find that energy/lighting upgrades and packaging changes can yield significant benefits with little effort.
• Do you have an existing process that could be tweaked to make it relate to sustainability (eg environmentally preferable purchasing policies or an environmental management system)? The Oregon Department of Administrative services used their purchasing power to reward those with more sustainable products and services.
• Do you have a waste stream that has potential to go somewhere other than the landfill? At the Klamath Falls, Oregon plant of wood products manufacturer Collins Companies, an employee wondered if the sawdust couldn’t be put back into the product instead of burned for energy or hauled off. This single idea saved the company over a million dollars and actually improved the quality of their product.
• Is there a nuisance (to employees, customers or the community) that you could solve and thus generate future support for your work? A number of different property management firms have found that by changing to green cleaning products, they eliminated janitor complaints about skin irritation and allergic reactions.
Set up the best structure
Given your chosen entry point, you may need one or more of several common structures:
Sustainability coordinators or directors. Many organizations find it helpful to assign someone the responsibility for leading the sustainability effort. Ideally this person should report to top management. It can be impressive how much one person can make happen. Two women at Multnomah County, in Portland, Oregon have jump-started everything from eco-roofs to a global warming action plan to a food policy council. It is often wise, however, to make these positions long term but temporary, sending the message to managers that soon they will need to take over these functions.
Steering committees. Often the management team isn’t yet ready to manage the sustainability effort. In these situations, a steering committee can provide supervision, coordination and leadership. The Oregon Museum of Science and Industry (OMSI) successfully used a steering committee for a year to increase front-line participation in and commitment to the effort.
Task forces. Steering committees, managers and/or sustainability coordinators often spawn task forces to work on specific projects: researching the best certification schemes, setting up environmentally preferable purchasing policies, redesigning the production process, etc. At OMSI the steering committee set up a zero waste team and a climate team to attack two of their largest environmental impacts.
Standing teams. In some situations, having standing teams that focus on certain elements
of the organization can be useful. Collins Companies, for example, created an input–output diagram of their operation and then assigned teams to each of the inputs and outputs: an energy team, a raw materials team, a waste team, etc. When you set up any type of team, think long and hard about what you expect of it. We use a ‘pre-launch’ process of working through the why, who, what, when, where and how questions and, to really work, the process takes several hours. But taking the time up front saves many hours of team time and associated frustration. If you are clear enough about the boundaries, you should be able to give the team authority to make decisions.
Demonstrate support
Executives often think that all they need to do is tell people they support a new initiative and their work is done. In fact not only must they communicate the message regularly and repeatedly, they must align their actions. At the Oregon Museum of Science and Industry, the task force wanted to encourage employees to use alternative transportation for commuting. So when we talked to the executive director, we asked her to ride her bike to work and then parade around the office in her bike helmet until she was sure at least a dozen people had seen her.
You must ‘walk the talk’.
What you say is only effective to the degree that your actions support your words. So here are some effective ways to demonstrate support:
• Take symbolic action. Do something no one thinks you would do to demonstrate your commitment. This may be as simple as redesignating your hallowed parking spot for car-poolers or as big as dropping an environmentally or socially questionable product line.
• Do at least as much as you expect others to do. This may involve cycling to work, using teleconferences to avoid business travel, taking the most fuel-efficient fleet car, volunteering in the community, etc.
• Ask people about sustainability and what they have done to work towards it. Follow up on task forces. Ask for regular face-to-face reports from sustainability coordinators, steering committees and task forces.
• Promote people (perhaps the sustainability coordinator) in part because of their efforts on sustainability-related projects.
• Make it easy for employees to be more sustainable at work and at home. The Washington Park Zoo, in Portland, Oregon, for example, lets employees add difficult-to-recycle items like batteries to the organizations recycle bins. Quantec, a small consulting firm in Portland, Oregon, gives its 35 employees an incentive to buy Toyota Priuses; they have found this a powerful employee retention strategy since the bonus is paid out over several years. Portland State University lets employees and professors use the car-share programme for free during working hours to encourage alternative transportation.
• Bring in people from outside to show off what your employees have done. Give the teams visibility at important business functions.
• Put your money and your time where your mouth is. Join and attend appropriate professional associations. Send people to sustainability conferences and training. Expect people to work on sustainability tasks during working hours.
• Change your business systems to incorporate sustainability.
Resources:
James, Jennifer (1997) Thinking in the Future Tense. New York: Simon & Schuster. This book includes wonderful questions to guide your assessment of your own culture.
Align business systems
Business systems are a powerful indicator of organizational priorities but they often hold back the organizational change effort, sending mixed signals.
Below are some suggestions for how to incorporate sustainability into common business systems:
Strategic planning. Make sustainability one of the key trends you consider.
Operational planning. Expect every department to set at least one sustainability goal.
Budgeting. When sustainability-related projects can prove a return, let the department keep a portion of the return in their budget to use as they see fit.
Performance appraisals and compensation. Make sustainability a key part of executive and other employee reviews.
Orientation and training. Embed sustainability into employee orientation and management training.
Environmental management systems. If you have an EMS, incorporate sustainability into policy statements and the criteria for setting priorities.
Many executives yearn for the days when all they had to do was make a profit and not break any laws. But those days are gone. Stakeholders (including investors, customers, suppliers, special interest groups and community members) are increasingly making their voices heard. Even Wal-Mart, which used to focus only on keeping prices cheap, is realizing the need to incorporate social responsibility and sustainability into its culture. They have realized that activists have been targeting retailers, not offshore manufacturers. ‘We thought we could sit in Bentonville [Arkansas],’ said Lee Scott, their CEO, ‘take care of customers, take care of associates – and the world would leave us alone. It doesn’t work that way anymore.’ Recently Wal-Mart announced sweeping and specific environmental goals to reduce energy consumption in its outlets and trucks, and reduce packaging. They also plan to push these initiatives upstream to their suppliers. Wal-Mart now recognizes the need to take responsibility for the social and environmental impacts of their entire supply chain. CEO Lee Scott again:
There will be a day of reckoning for retailers. If somebody wakes up and finds out that children that are down the river from that factory where you save three cents a foot in the cost of garden hose are developing cancers at a significant rate so that the American public can save three cents a foot, those things won’t be tolerated, and they shouldn’t be tolerated.
One specific action they are taking is to begin buying organic cotton to remove many tons of pesticides from use. As already mentioned, shareholder resolutions are increasing and the scope of their concerns continues to increase. The Carbon Disclosure Project, representing institutional investors’ worth over $31 trillion, is forcing companies to report risks associated with climate change. In the last couple of years, shareholder resolutions related to toxic chemicals, according to the Investor Environmental Health Network, were responsible for over $34 billion in assets.
Environmental and social justice lawsuits are increasing as well and are not just a problem in the litigious US. Environmentalists in Australia sued to challenge a proposed mine and courts in the European Union are sharpening their pencils on climate issues. Environmental groups and other special interest groups can make their voices heard in uncomfortable ways if you don’t involve them and listen to their concerns. Fortunately, many of these groups, even the most fringe ones, are now open to collaborating to find solutions In the aftermath of Enron, Worldcom, Tyco, Parmalat and other bad actors, there is an obvious need for transparency, accuracy and ethics. Just the hint of ethical breaches has already brought a number of companies down. In the US, the Sarbanes–Oxley Bill has at least made it clear ‘where the buck stops’. It increases the responsibility of corporations to be transparent. But you will need to do much more. Stakeholder involvement has progressed further in the UK and Europe than in the US.
Resources
ISO 26000 is a new standard for corporate social responsibility and stakeholder involvement. This effort is linked to the Global Reporting Initiative, which is creating standards for sustainability reporting. AA1000 is a standard for ethics and stakeholder engagement, www.accountability.org.uk.
For checklists on stakeholder audits, see Wheeler, David and Maria Sillanpaa (1997) The
Stakeholder Corporation: The Body Shop Blueprint for Maximizing Stakeholder Value. London: Pitman Publishing.
Hemmati, Minu (2002) Multi-Stakeholder Processes for Governance and Sustainability.
London: Earthscan.
Paine, Lynn S. (2003) Value Shift: Why Companies Must Merge Social and Financial Imperatives to Achieve Superior Performance. New York: McGraw Hill.
Innovest is an environmental rating company, www.innovestgroup.com, rating large, publicly held companies based on their environmental performance and then selling this research to money managers, banks, insurance companies, industry and consultants. Many of the ratings apply to products and services that people use (eg petroleum, foods, retailers and banks). They have also published retail reports, which can be found at www.socialfunds.com under the section ‘Corporate Social Responsibility’. The Interfaith Center on Corporate Responsibility, www.iccr.org, provides a focus for corporate responsibility issues and campaigns.
Sustainability reports
With regard to transparency, one obvious option is to publish a sustainability report. This should cover all your major impacts and expose your warts as well as your successes. The Global Reporting Initiative is an international standard for sustainability reporting and in 2006 more than one-third of the Standard and Poors 100 used them. Go to the CorporateRegister.com to find sustainability and corporate social responsibility reports.
Partner with NGOs
Many organizations are finding it enormously helpful to use environmental or other nongovernmental organizations as partners to help them improve their own performance.
Resources:
The Global Reporting Initiative is attempting to develop international standards for sustainability reporting, www.globalreporting.org
If you’re trying to convince your organization to publish an environmental or sustainability report, this article might help you make the case: ‘10 Reasons Why: The Surprising Truths about the Business Value of Sustainability Reporting’, Green at Work Magazine, July/August 2001, p36. Estes, Ralph (1996) Tyranny of the Bottom Line: Why Corp.
These NGOs can act as a proxy for certain stakeholder groups and can also provide technical assistance For example, Norm Thompson, a catalogue retailer in the Pacific northwest, decided one of the best things they could do for the environment would be to shift the entire catalogue industry to using recycled content paper. Shockingly, most catalogues still use 100 per cent virgin paper, based on concerns about appearance. Norm Thompson’s management figured they could switch their entire catalogues to 100 per cent recycled but they’d just represent a tiny blip on the environment’s fluttering electrocardiogram. If they could instead convince the entire industry to shift to only 10 per cent recycled content, they could make a much bigger impact. In order to do this, they had to prove that 10 per cent recycled paper catalogues sold merchandise just as well as ones on virgin paper. Also they had to bring pressure on the paper manufacturers to offer the recycled content paper at the same price. To pull off this feat, they partnered the Alliance for Environmental Innovation, affiliated with Environmental Defense.
Other organizations have worked with the World Wildlife Fund, the National Resources Defense Council, The Nature Conservancy, even Greenpeace, which formerly had earned a reputation for confrontational rather than collaborative approaches. Starbucks worked with Conservation International. Ben Packard, director of environmental affairs, cautions:
It’s critical that your interests and those of the NGO overlap because the organizations can be so different. It’s not enough for them to be a great organization addressing an important issue. The issue [that the two of you are going to work on] must be centrally relevant to both you and the NGO. For example, we worked with Conservation International on shade-grown coffee where they were trying to protect biodiversity and local economies and we could provide a market for their product.
Chiquita Banana now partner with Rainforest Alliance. They spent $20 million in the first
decade of their efforts to clean up their act but saved $100 million in operating costs. Farm productivity is up 27 per cent and the cost per box of bananas is down 12 per cent. They’ve cut use of pesticides, eliminating some insecticides altogether. They manage waste and keep it out of local rivers. Employee morale is up and executives claim that the change in worker attitude alone was worth the effort.
Resources:
Business for Social Responsibility has advice and papers on partnering NGOs. See for example BSR Update, March/April 1999
Stakeholder engagement activities
There are a number of different ways that you can engage stakeholders in discussion and exploration: community meetings, public hearings, private interviews, by-invitation roundtable discussions, etc. We recommend that you find a number of ways to engage them. One gutsy example is US office equipment manufacturer Pitney Bowes’ long-standing practice of holding annual worker stakeholders meetings. ‘Stockholders meetings are usually tame compared with the annual jobholders meetings,’ they report. Held in auditoriums near their main sites, the meetings give every employee a chance to ask management questions or air personal gripes. Senior officers sit on the stage while groups of up to 500 attend. They also hand out prizes – $50 Savings Bonds – for the best questions.
Stakeholder audits
Some organizations, The Body Shop among them, do formal stakeholder audits. In The Stakeholder Corporation: The Body Shop Blueprint for Maximizing Stakeholder Value, the authors identifies different classifications of stakeholders:
• Primary social stakeholders: local communities, suppliers and business partners, customers, investors, employees and managers;
• Secondary social stakeholders: government and civil society, social and third world pressure groups, media and commentators, trade groups and competitors;
• Secondary non-social stakeholders: environmental pressure groups, animal welfare pressure groups, etc.; and
• Primary non-social stakeholders: the natural environment, non-human species, future generations.
Sustainability is an important strategic trend. Your organization may be able to delay significant financial commitments associated with sustainability. There is no need to install uncompetitive equipment, for example. However, you do not want to delay the learning process. Just as with the quality revolution, where it took years to understand what quality meant, how to measure it, what customers expected, etc., so each organization must answer similar questions regarding sustainability. The more you and your employees understand about sustainability, the more sophisticated you will all become in identifying threats and opportunities. You may choose not to be first to market but don’t be last to begin this journey.