Sustainability as a global movement has for more than 20 years had an aura of ambiguity, meaning different things to different companies – from PR strategies, to building trust and reputation, to marketing strategies, to being a core business strategy, to inspiring a vision that redefines a company. It has operated both like an umbrella, crowding under it many issues — including environmental, social, and economic — as well as a buffet from which companies, communities, and governments could address that which most directly impacted self-interest.
While PR/marketing ploys have often backfired and gotten the label “greenwashing” –Sara Lee’s Ecograin bread is a recent example – there are many illustrations of companies working with former critics. Lipton committed in 2007 to sourcing its tea from “sustainable, ethical sources” by 2015 and works with the Rainforest Alliance which certifies its teas and is duly noted on its labels.
Sustainability is about how products are sourced, made, distributed, and how the people involved with the products are treated and paid. It is also about the bigger picture of cause and effect on the global community. Consider that cities and their surrounding areas — where most businesses reside — take up about three percent of the earth’s surface while those who live and work in them consume more than 75 percent of the world’s natural resources.
In a survey McKinsey did earlier this year more than 50 percent of the nearly 2,000 executives polled considered sustainability very or extremely important in new product development, reputation building and overall corporate strategy. However, only 30 percent say their companies actively seek opportunities to invest in sustainability or embed it in their business practices.
Strengthening brand trust and reputation was one of the strongest motivators for taking action on sustainability in a 2010 survey billed “A New Era of Sustainability” done by The UN Global Compact and Accenture. Nearly 800 CEOs globally responded (among others). While 96 percent of CEOs believe sustainability issues should be fully integrated into the strategy and operation of a company, 49 percent cite the complexity of implementation across functions as the most significant barrier to implementing a company-wide approach to sustainability.
This begs the question how did the companies who have fully committed to sustainability and redefined their businesses managed to overcome obstacles? It has to be about leadership, about a CEO having courage, believing that ultimately shareholders won’t be harmed. It has to be that in expecting there are answers to what a company can do to integrate sustainability into the strategy and operation of the company, you find those answers.
Take for example Ray C. Anderson, the founder and chairman of Interface Inc. Anderson says in his 2009 Confessions of a Radical Industrialist that in 1994 when Interface was a petroleum-intensive modular carpet company he began to get questions from the field about customers asking what Interface was doing for the environment. He said he didn’t have an answer beyond complying with existing laws. So he created a company task force and before the group met, read a book given him by one of the task force invitees called The Ecology of Commerce by Paul Hawken, published in 1993.
Hawken’s book woke him up, Anderson said. Its message resonated about seeing what we take from the earth, the collateral damage we do, and what we waste. Anderson saw that global business and industry had to change their ways to survive. He looked at his company’s pollution stream – without a push from government or critics – and saw that while the company had two decades of substantial profits under its belt, “Interface consumed enough energy each year to light and heat a city,” and that each day just one of his plants sent six tons of carpet trimmings to local landfill.
Interface began a 26-year strategy to achieve its Mission Zero goal in 2020, to be “the number one place to work based on its undisputed leadership in environmental and social sustainability.” The results so far include: the world’s largest manufacturer of modular carpet has reduced the energy used to manufacture carpet by 43 percent, decreased Greenhouse gas emissions 44 percent in absolute terms, and the company has grown by a net sales of 27 percent.
More than the need to rebuild eroded trust with stakeholders, or even avoiding the ethical risks of business as usual, sustainability is about creating a viable, dynamic business model to ensure that a company, its products and services, its customers and the environment in which it operates can continue and grow.
Gael O’Brien, September 20, 2010
You can read another column I wrote on sustainability in Business Ethics Magazine, October 6, 2010