- September 17, 2017
- Posted by: fedefiore
- Category: News, Uncategorized
As professionals with a passion for Sustainability, the “true” one, not the one made of glossy reports void of any industrial content, we find a frequent obstacle that makes the first steps with business clients grueling: proving the business case. All right, we are dealing with profit companies, thus it is a legitimate question and we are ready to answer it. What is odd is the utter determination, to the point of challenging Sustainability a-priori, as if there was a will to counter-demonstrate that it will never be an economically viable concept. Why this animosity? The answer that I found is that there is too much lip-service paid to Sustainability and also that there has been a confused transition in the last decade from Philanthropy, through CSR, to Sustainability as if they were the same thing, which is not the case. Hence the huge misunderstanding generating such hostility.
Sustainability is defined as “the ability of an organization to manage transparently its responsibilities for Environmental Stewardship, Social Well Being and Economic Prosperity over the long term, while being held accountable to its Stakeholders” (Pojasek, Farver, 2012).
By definition, then, an organization is rightly defined “sustainable” then it runs its activity while generating economic prosperity, i.e. wealth and means to assure its business continuity, in a responsible way so as to protect the environment and doing its share – only its one, of course – to contribute to social well being.
The pen-fantasists shall excuse me, but “Eco-sustainability” simply does not exist, as well as “Social-sustainability” or “Economic-sustainability” or stools standing on just one leg do not exist either.
With the above definition, used by my former Harvard professors but not at all new, the huge difference between Philanthropy and Sustainability is clarified beyond doubt. Philanthropy is about what you do with some available wealth – as a person or as an organization as well, Sustainability is about how you run the operations of an organization. Tu put it in a nutshell, as we like tu do it at The Embedded Sustainability Initiative, Sustainability is walking the talk of business excellence. It’s not by chance that among the foundations of the best Sustainability management systems are the Performance Frameworks, like the Baldrige in the US and EFQM in Europe (and many others around the world).
More specifically, we use the so called Leading Indicators, i.e. qualitative pointers that allow us to understand what is the capacity of a business to mobilize its inherent potential at best to build its durable success. At ESI we use indicators grouped in five areas: Leadership, Policy and Strategies, People and Knowledge Management, Partnerships and Resources, Processes that are strongly inspired by such kind of approach. Leading Indicators are the bright counterbalance of the obscure face of reporting, i.e. the prevailing activity among organizations boasting their Sustainability.
There are two limiting aspects with a focus on reporting, compared to one on Embedded – Or Integrated – Sustainability: the fist was recently confirmed by the manager of the reporting division of a main international certification company. A lot of businesses think that reporting is about boasting how much they are “good”. In the manager’s words, the majority of their clients at the obvious question “what are your sustainability objectives”, have no answer. However, every year they want to receive a glossy report to display on their websites and presentations. If they are really daring, they put generic assertions about the environment or “Eco-sustainability”, or some of those that we call the “low-hanging fruits” of Sustainability, like: energy savings by substitution of incandescent bulbs with led, replacing old machinery with new more efficient one, progressively switching their vehicle fleet with less gas-guzzling ones. All good things, of course, but little to do with a thorough industrial strategy for the long time success.
The second issue is that reporting is mostly based on what we call “Lagging Indicators”. Even the most common framework used for sustainability reporting, the GRI, is almost completely composed of lagging indicators. Such are indicators of the past that: at best, they can tell us what has already happened, hardly why it happened and for nothing what s going to happen. If we are lucky, we can infer from them what might happen if we change nothing from what we did yesterday. Interesting, but not very useful to develop strategies.
Total Sustainability is a final objective. Achieving that point, with the best social and economic performance, implies engaging the whole intelligence of the organization in rethinking its activity drastically, with objectives that are well defined, easily understandable and regularly measured. We have many exemplary case-histories of true Sustainability today, to illustrate what we are talking about. My favorite is Interface, world leader in modular carpet tiles. Its late CEO and founder Ray Anderson had an epiphany in 1994 that took him to become an inspiring example for hundreds of entrepreneurs and leaders in the world. His Company has achieved extraordinary results, despite operating in an oil intensive sector, pursuing the bold objective of Zero Impact by 2020. As by its 2016 Annual Report, Interface has a renewable energy usage of between 96 percent in the US and 100 percent in Europe, 55 percent of its raw material is either recycled or bio-based, has reduced its CO2 impact by 60 percent. In the meantime, its profits have doubled, sales risen 67 percent and they have fared a couple of global crisis much better then the competition. How? With clear industrial and market objectives, strict adherence to their clear principles and values. They have engaged the brains of all their staff and some research centers worldwide in the study of natural processes to comprehend how to solve problems without causing undesirable side-effects, all the while improving the global Company performance, value for shareholders and the “infamous” bottom line – something that it is commonly said to be the only relevant driver for executives and business people.
Like an example? Ok: to get rid of glue in laying out the tiles they studied how the gecko sticks to our homes’ walls almost magically in any condition. They found that he has nano hairs that cling to the water molecules that adhere to almost every surface on Earth, no matter how dry it is. Outcome? TacTiles®: end of glueing in the laying-out of tiles, a speedier job, less technical skills needed, saving of material and time – thus more profit, more health for customers, less healthcare expenses for the community. Win, win, win. (Great video here)
Before coming to a close with Interface, it is worth remembering that all the Company’s investments in research, innovation, new business models, training, you-name-it relating to Sustainability objectives along these years have been amply repaid by savings, new products and services, new market segments. This is to be remembered because another mistake stemming from the initial misunderstanding about Philanthropy and Sustainability, or the fake “Eco-sustainability”, is the conviction that pursuing Sustainability needs redundant resources, since it is about “being good” and not “doing good business” (see my book “It’s Good Business to di Good with Business” if you want a read).
I had the opportunity to write elsewhere about Corporate Philanthropy, thus I cannot be accused of encouraging inefficient and wasteful Philanthropy, rather the opposite. But, absurdly, we may say that Philanthropy can afford the luxury of being inefficient. It would be a pity, but it can be. No one expects a ROI by Philanthropy. Sustainability is a way to run an organization towards well defined objectives covering the three Pillars: environmental stewardship, economic prosperity, social wellbeing. You cannot run a business if investments don’t produce a ROI. Having said this, we have proof (just one reading here) that doing business ethically and practicing Embedded Sustainability is lucrative. A lot.
At this point, not to leave the reader with the impression of having been abandoned at the “how to” point, here is a short list of steps to walk in order to avoid the “Eco-sustainability” trap and start on the journey that one day will, hopefully, bring his/her business to full Sustainability. Don’t worry, however: it is a progressive journey, where the only moral obligation is to do one’s best, being authentic and using one’s limits and weaknesses as starting points for the most disrupting innovation.
- Forget about the Sustainability Report
- Map your Stakeholders by degree of reciprocal influence
- Assess your impact upon all the Stakeholders, both positive and negative
- Set clear goals, be honest and sensible in setting the timelines
- Integrate Business and Sustainability objectives
- Engage all your collaborators in the Sustainability mission
- Engage your main Stakeholders in the quest for sustainable solutions to your challenges
- Embed Sustainability in every process of your Company
- Nature is 100 percent sustainable: copy from her processes. It’s © free, by the way
- Remember: Embedded Sustainability is the best Risk Management practice (kindly notice that I haven’t put it as “Best Practice of Risk Management”…)
Now we can add to the list the long awaited extra point, the 11th: Sustainability Reporting. You can now remember it and will use it for:
- keep your Stakeholders updated on your journey
- share what you have achieved and what not, both your successes and your failures
- make of transparency and honesty the real value added that will improve your reputation and customer loyalty
- support the morale of your people in hard times, when it will seem that you are not advancing, so that they remember how many extraordinary achievements you have already had
- motivate other organizations to undertake the journey to Sustainability
In conclusion, I am confident that the numbers and considerations above have opened your eyes on the thorough business case of Embedded Sustainability and closed the “court case” against the nonexistent “Eco-sustainability”, so that you don’t need to waste energy over it any more. Now Enjoy your journey towards Embedded Sustainability!