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September 11, 2008

The Greening of Business Culture: Comparing the Best-in-Class

Jhana Senxian
Sustainability & CSR Specialist
Aberdeen Group

Recent Aberdeen research on sustainability initiatives has revealed that top performers place the transformation of enterprise culture at the center of their sustainability and corporate responsibility platforms. Findings demonstrate that sustainability best practices are as much about change in organizational culture as they are about process transformation.

Among the Best-in-Class, vision, leadership, education, and communication are as important as changes in operational processes and technology. In fact, this focus on people and processes results in a variety of qualitative improvements across the enterprise. Best-in-Class organizations state that their Corporate Responsibility (CR) and sustainability platforms have positively impacted employee/management relations and company communication (56%).

This column will compare Best-in-Class outcomes from Building a Green Supply Chain, March 2008 and Getting from Green to Gold, July 2008 — both of which indicate that culture is the lynchpin to sustainability success.

Citing Culture: Five Key Elements

Best-in-Class organizations are differentiated from their Average and Laggard peers by a greater commitment to a holistic and coordinated vision, driven by an executive champion, and supported by a culture of robust education, communication, and data sharing. Figure 1, below compares the performance of the Best-in-Class from the two reports and illustrates a greater emphasis on the socializing aspects of sustainability training, tracking, and communication among the top retail performers.

While the Best-in-Class significantly outperformed their Average and Laggard peers in both studies, the retail Best-in-Class significantly distinguish themselves from the supply chain Best-in-Class in the following ways:

• 56% of the retail Best-in-Class have had their initiatives in place for 6+ years — 31% of which have had their initiatives in place for more than 10 years
• 13% of the supply chain Best-in-Class have had their initiatives for 6+ years — of which only 9%  have had an initiative for more than 10 years
• 72% of the supply chain Best-in-Class communicate performance to internal stakeholders, quarterly — 88% of the retail Best-in-Class communicate to their internal stakeholders, monthly
• 72% of the supply chain Best-in-Class communicate their sustainability progress  to their external stakeholders, yearly — 84% of the retail Best-in-Class communicate progress to their external stakeholders, quarterly

The retail Best-in-Class are more closely engaged with their stakeholders and are more aggressively communicating their vision, progress, and challenges around their sustainability and CR goals and outcomes. Best-in-Class retailers are 19% as likely to engage in educating their internal stakeholders as are the best performing supply chain respondents. These major organizational differences — based upon shared visions and goals and operationalized by people — deeply impact the culture and success of CR initiatives.

Culture- Supporting Technology

Study results further showed a major difference between Best-in-Class adoption levels of key technological enablers. As demonstrated above in Figure 1, while 19% of supply chain top performers utilize role-based, green dashboards calibrated to sustainability and CR goals and performance, a full 44% of top performing retailers have adopted this method of data and performance tracking and sharing.

Effective CR performance depends upon an array of complex, quantitative, and qualitative data delivered to and acted upon by an individual or team, in the appropriate job role. On a foundation of coordinated education and communication, role-based green dashboards facilitate the structured sharing and understanding of enterprise performance, at multiple levels. The Best-in-Class leverage a committed approach to data integration and analysis to drive visibility and optimize decision making all along the value chain.

Case in Point

Context: The Carrefour Group is the number one retailer in Europe and the second largest retailer in the world, by revenue. With over 490,000 employees, tens of thousands of suppliers, and 15,000 stores and franchises operating in 30 countries, the company processes over 3 Billion checkouts per year for annual revenues totaling more than 102 Billion Euros. The company operates in diverse retail formats with 59% Hypermarket, 23.5% Supermarket, 9.7% hard discount, and 7.7% cash and carry. Though actively engaged around issues related to sustainability since the early nineties, Carrefour officially implemented a holistic, global, corporate responsibility platform in 2000 framed around the Triple Bottom Line goals of ensuring: environmental progress, social progress, and economic progress. Enterprise oversight of the agenda is handled by a five person team which collaborates with the managers of the programs in each country where the company has a presence. The corporate level team assures that the company’s policies, standards, and KPIs are shared throughout the global organization while the country managers ensure that the specifics of the sustainability program are thoroughly localized to reflect country-specific compliance, social, political, and environmental issues. Alignment is ensured via quarterly video conferences to augment communication around the scope and challenges of the program between the corporate team and the country managers.

Carrefour’s sustainability platform incorporates its Seven Core Values into all activities, worldwide. These include: Freedom- Responsibility-Sharing-Respect-Integrity-Solidarity- and Progress. The company works closely in a highly dynamic, collaborative, and communicative manner with its internal and external stakeholders and customers through regular dialogue and ‘awareness rising’ sessions. One such example of this collaborative approach is the yearly consultation held between the CEO and a group comprised of 30 key external stakeholders (i.e. social or environmental NGOs or trade unions). The dialogue consists of detailing the latest initiatives and to solicit ideas and perspectives on Carrefour’s overall corporate responsibility vision and performance.

Solution: In 2005, Carrefour engaged a French-based software provider of Corporate Social Responsibility and EHS management tools that provides the ability to manage standard and customized non-financial performance all across the enterprise. While integrating easily into its ERP system, the tool offers a user-friendly way to input, access, consolidate, and analyze data in a multi-lingual format for Carrefour’s 200 users, world-wide. The company input all of its previously collected data into the new system which not only allowed its people to manage present sustainability performance but also compare it to the performance of the previous years. The company was able to incorporate educational aspects into the tool to help its users understand how the company as a whole defines and measures various categories and outcomes. Further, the solution lent Carrefour the capacity for multi-leveled, internal benchmarking, enterprise-wide visibility of progress and challenges, role-based views of real-time data, automated report generation according to a range of reporting criteria, streamlined global collaboration and the assigning of action items, the ability to input any number of qualitative measures, weight various metrics according to their own priorities, and more.

The tool allows Carrefour to drive optimal performance that has been translated into a host of benefits for the entire enterprise.

Key Takeaways

Corporate Responsibility agendas revolve around a Triple Bottom Line framework geared to benefit: People, Planet, and Profit. A great deal of business-focused, sustainability research emphasizes a transformation of business processes that support the goals of planet and profit and neglects the centrality of people in making it happen. Before business processes can be transformed, the Best-in-Class have demonstrated that a cultural/people-centered transformation often makes the difference between good results and great results — or even between wild success and dramatic failure.

Based on the research conducted across supply chain and retail executives, specific actions and considerations should include the following:

• Centralize responsibility for all enterprise-wide sustainability and CR initiatives. Taking a coordinated and holistic, end-to-end approach to the socialization of enterprise goals, progress, and challenges will speed benefit achievement and help drive visibility and stakeholder buy-in throughout the organization. Further, an executive champion will also help ensure that such goals are integrated into the fabric of company ethos and operations.
• Implement internal training and education around the company’s sustainability/CR mission.  The meaning of sustainability and responsibility is as contextual as it is contested. Ensuring internal alignment around vision and objectives requires that everyone understands not only their role, but the CSR position and commitment of the entire company.  This will help to eliminate roadblocks and speed time to value.
• Communicate often and clearly to both internal and external stakeholders. Sustainability and Corporate Responsibility are complex processes with many dynamic parts and opportunities for constant improvement. Companies that are as willing to communicate about areas of needed improvement and challenge as they are to champion successes, often find a more collaborative and supportive network of stakeholders and customers.
• Establish clear metrics and track green performance in a variety of areas in a manner that emphasizes data integration, sharing, and role-based specificity.  “You can’t improve what you don’t measure,” so performance management is a key area on which to focus efforts.  If there is a method with which to gather the data, cleanse it, and present it in a simple, easy to understand format, it is then possible to analyze and optimize these parts of the business and use that experience to define and track other relevant measurements.

Top performing organizations leverage the power of collaboration, communication, education, and leadership with both internal and external stakeholders. The depth and dynamism of needed process changes must be supported by deep and dynamic changes in enterprise culture. The shareholders, stakeholders, regulatory boards, community groups, clients, customers, and trade partners, pressuring companies to do business more responsibly, are signs of not just rising energy costs or impersonal compliance mandates — but, also and significantly, of a far-reaching and profound change in the global culture of consumption and production.

Jhana Senxian specializes in sustainability and green-oriented business process transformation for a cross section of practice areas at Aberdeen Group including Supply Chain Management and Retail.

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