After spotting the trends that corporate sustainability practitioners see in their daily work (Read: Four Trends in Corporate Sustainability), I looked deeper to figure out which strategies were getting leaders ahead. My conversations with some 20 leaders in Fortune 500 companies revealed three key strategies:
- Changing how the business views sustainability benefits – from cost reduction to revenue growth
- Moving sustainability out of departmental silos into shared business goals
- Reporting and sharing the things that matter with the people who care
In this follow-on post, I’ll highlight some of the common obstacles to implementing sustainability within companies, how leaders are overcoming them to achieve true sustainability leadership, and what laggards can start doing now to catch up.
Changing Minds About Sustainability: Moving sustainability from cost reduction to revenue growth
There are many perceptions within companies of what sustainability is or is not. Most corporate sustainability programs start organically as employee-led recycling programs and other eco-efficiency activities. These programs often evolve little beyond this point because business leaders have been slow to understand the value of implementing sustainability across the board.
Outside of the corporate responsibility department, sustainability within many companies is viewed as a “check the box” activity, or at best, as a cost-reduction activity. Leading companies are asking: How do we move sustainability from eco-efficiency and operational cost savings initiatives to top-line revenue growth?
Long-time practitioners understand sustainability will take its place at the executive table only when they can present a revenue case for sustainability initiatives that captures leadership attention. In most companies, delivering return on investment to the business is the only way to move sustainability into the mainstream corporate planning and strategy processes. While demonstrating this ROI can be painstaking and won’t happen overnight, it is a requirement for all but the lucky few companies whose leadership naturally and enthusiastically embraces sustainability as a way of doing business.
Moving Sustainability From CSR to the Business, AKA, Sharing the Load
For any company that aspires to leadership, sustainability strategy and goal achievement cannot be left to a single department. Sharing the strategy and goals among all business units and providing incentives to accept accountability and reward achievement helps move sustainability out of one job description or department and into the entire business.
What’s key here is pairing that responsibility with the means to achieve sustainability goals. Allocating a percentage of sustainability budgets to other business units and dividing the amount among the value chain (including IT, logistics and manufacturing) will empower groups to execute on their goals and reap rewards.
Distributing goals across the organization is the required pre-work to answer the question on the minds of many corporate leaders today: How do we continue to demonstrate sustainability leadership to our stakeholders? They understand leadership and innovation result from embedding sustainability ownership throughout the business and not relegating it to a corporate social responsibility (CSR) function.
Companies looking to broaden innovation potential beyond even their own business units are engaging leading non-governmental organizations (NGOs) for help in setting targets and goals. Companies often need help in setting greenhouse gas and other environmental goals, as they do not have the internal capacity or experience. Not only do NGOs offer experience in setting goals and targets, they also have gained insights working with leading companies that can lead to new opportunities for your business.
Reporting and Sharing What Matters with People Who Care
Although voluntary, most leading companies publish annual or biennial CSR reports, which represent a direct cost in both money and resources. These reports require a lot of work. Many companies complete them to satisfy stakeholder expectation, but struggle to define the clear business value of reporting beyond brand reputation. One leader asked me: Is this what the shareholders want?
Typical companies are still unsure how much value customers place on their green practices, but leading firms see being green as a tiebreaker for their customers or consumers when all else is equal. With this in mind, they know they need to determine the target audience and frequency of their sustainability reports. Some are trying to evolve from a static “summary” reporting to a more engaging monthly or quarterly web-based storytelling method.
Often sustainability reporting is imposed from the outside. For example, larger companies may feel peer or competitive pressure to respond to prominent sustainability-related reporting schemes, such as the Carbon Disclosure Project and Climate Counts.
Companies also receive sustainability questionnaires from customers, investment funds, stakeholders, NGOs and other interested parties. These are usually not standardized and require time and resources to complete. Some practitioners I’ve interviewed wonder whether their completed questionnaires are ever even reviewed by the originating company. One leader said he has never received a follow-up or clarifying question from his company’s replies. The suspicion is these questionnaires are just another example of some other company’s sustainability “box checking” exercise – “Yes, we have inquired about our vendors’ sustainability programs.”
Even so, these reports need not be a waste of time. For companies that participate in global reporting programs, solicit sustainability information from their suppliers or respond to customer questionnaires, the exercises can be a source for growth and competitive advantage. But not if they just gather information without acting on it. They lose an opportunity to learn where they can leverage or improve their sustainability investments to maximize return.
Exploratory dialogue with like-minded suppliers and customers can unlock great opportunities. It also requires effort beyond just collecting completed surveys. This activity is what often separates leading companies from the laggards.
How to Catch a Leader
Leaders like Timberland, Nike and Patagonia press forward to see sustainability as a revenue growth opportunity, distribute goals throughout their whole business and share their results widely and regularly with their stakeholders. What more can your business do?
- If you’re on an internal green team trying to get larger buy-in, start making that business case to grab the attention of corporate.
- If your CSR/green department is strong but siloed, find other departments to collaborate with and share the challenges and rewards.
- If you’re not doing any reporting yet, commit to robust sustainability data capture. Share metrics internally with leaders, business planning and strategic planning teams. Before starting a corporate sustainability report, understand the commitment and resources required to produce a high quality report, including accurate data and metrics. Look at what your competition is up to, or ask your customers directly which sustainability metrics are important to them.
Taking one meaningful step forward in any of these categories would be a great way for lagging businesses to begin to catch up.