TAG ARCHIVES: CORPORATE SOCIAL RESPONSIBILITY

Sustainability and theWalking DeadPosted on February 18, 2015

Talk of embedding sustainability into business strategy is all well and good, but executing on thatis an altogether harder proposition. The corporates that lead the way adopt a longer-termapproach to doing business, discussing issues such as human rights, the environment, labourand anti-corruption when making decisions. As a result, sustainable thinking is ingrained in theplans, policies and procedures of the organisation.

The United Nations (UN) Global Compact, the world’s largest voluntary sustainability initiative forcorporates, has made a difference. Part of the success is because it’s based on concepts thatbusinesses are familiar with, such as due diligence and risk management, but they’re applied inthe context of human rights. Despite its achievements, a large number of companies still have along way to go.

At the last UN Global Compact Leaders Summit, the majority of the executives attendingrecognised that sustainability was important for the future of their businesses. However, accordingto Chip Pitts, Criticaleye Thought Leader, Lecturer in Law at Stanford Law School and ProfessorialLecturer at Oxford University, they need to take their initiatives to the next level.

He says: “Some companies, mistakenly in my opinion, think they’re doing everything they can, buta lot of the time they haven’t really. What they’re doing is often not completely in accord with thecurrent human rights norms, or environmental sustainability norms. The key to gettingsustainability right is really getting the commitment from the top and at all levels of the company,

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then focusing on the tough work of truly integrating and embedding it at every level.”

A common problem is a failure to align different parts of a business. For instance, the CSRdepartment won’t have contact with procurement, and different incentive structures canencourage conflicting behaviour. For Chip, it’s all about execution and unless the thinking aroundsustainability is joined-up, the impact a company can make will always be limited.

“There’s a difference between the formal policy, the stated commitment and the ability toimplement effectively on the ground where it counts, where it affects people’s lives and theenvironment,” he says. “Often, there’s a real failure in the implementation, but the companies thatare doing it well are starting to align these concepts.”

Peter Lacy, Managing Director of Strategy Practice & Sustainability Services for Asia Pac atAccenture, says: “Sustainability should be managed not as a standalone, isolated corporateresponsibility, but as an integral part of business strategy. It is a chance to manage reputation andgrow revenue, while understanding risk more effectively.”

It’s a case of companies beginning to integrate sustainability into their products and service mix, interms of R&D, marketing and branding. “Businesses such as Vodafone and Unilever are alsoputting pressure on their supply chains to drive significant environmental gains and efficiencies intheir operations,” he says.

Lean and green

The idea of a business being able to do more with less has gained real traction in theboardroom. Sandy Stash, Group VP for Safety, Sustainability and External Affairs at Tullow Oil,says: “At the heart of sustainability is efficiency. An efficient business is a sustainable business.”

When it comes to best practice, Sandy says that companies from different industries canbenchmark ideas: “We’ve learned a lot from the airline industry. You’d think there’d be nosimilarities between running oil platforms and onshore oil facilities and airplanes, and yet in thepsychology and practice of running a safe and sustainable operation, there’s a lot our industry cantake on board.”

The main barriers to sustainable thinking within corporates often come from basic misconceptionsand short-termism at board level. Kevin Craven, Chief Executive Officer of UK CentralGovernment at Serco Group, an international outsourcing company, says: “Sustainability is notabout tree hugging but rather good business sense where everyone can benefit. Both clients andemployees are really looking hard at businesses which genuinely integrate sustainable practicesinto their working ways – you cannot fake this by greenwashing your polices…

“Your planning horizons cannot be about the one-year or even the three-year cycle – they need tobe longer so that the impact of your business on a community or the environment can beconsidered. Planning, rather than reacting, is always more economical.”

Gareth Llewellyn, Executive Director of Safety and Sustainable Development at Network Rail,

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says: “Being part of a sustainable business is about making money. From a commercialperspective you have to be profitable, otherwise you’ll go out of business and that can have quitea big economic and social impact on those who work for you.

“You also need to make sure that whatever product you use or manufacture doesn’t have a majoror persistent environmental impact, because if it does you’ll be regulated out of existence whetheryou like or not. The other piece to this is the social impact: if society believes that you’re deliveringyour business in an unethical manner, Enron perhaps being a good example here, you will beforced out of business.”

Ultimately, for sustainability to be taken seriously, senior executives have to demonstrate how itwill help deliver overall business targets. Andrew McCallum, former Director of Corporate Affairsand Business Support for Dana Petroleum, comments: “From a risk perspective, companies needto identify the social, environmental and economic considerations that might impact thesuccessful delivery of the business strategy.

“There’s definitely a role for businesses to be involved in the communities where they operate.Helping to tackle relevant social and environmental issues should benefit the company and thecommunity.”

If a sustainable approach is going to be more than an adjunct of the organisation, it needs to bedriven from the top. After all, there is little point in discussing long-term intentions for society andthe environment when the culture of a business is very much about hitting short-term targets.“Businesses need to execute on integrated leadership,” says Chip. “That means sustainability isembedded horizontally and vertically throughout the extended enterprise.

“Everyone needs to understand that it’s the ways things are done… The companies that don’t getthis are truly the walking dead, they just don’t realise it yet.”

You have been warned…

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Posted in Business, CEO, Social responsibility, Sustainability | Tagged business, BusinessStrategy, Corporate Social Responsibility, CSR, sustainability | Leave a reply

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