The Challenge of Managing Your Sustainability Reputation
I often hear managers saying, â€śWe donâ€™t talk publicly about our sustainability and CSR initiatives. We do it because itâ€™s the right thing to do. For us, it’s action, not words.â€ť A high minded posture, and not without strategic benefit. Some companies have found that sticking their heads up over the parapet and proclaiming their corporate virtue sets them up as a target for activist groups ready to pounce on any misstep. But as a recent CSR audit for a large national restaurant chain undertaken by the Thunderbird School of Global Business highlighted, this is a growing challenge for corporate sustainability executives.
Silence around one companyâ€™s responsibilities can become an untenable reputation vacuum filled by bloggers, critiques, analysts and competitors, just to name a few. The restaurant chain’s sustainability reputation was already being constructed in traditional and social media – even before their formal CSR strategy was finalized. As a colleague of mine says, â€śStakeholders are not waiting for you to take the lead in the dialogue on social and environmental responsibility; they are already out there defining what your organization is all about.â€ť
We can thank the internet for that. Stakeholders – that is anyone with an interest or â€śstakeâ€ť in your companyâ€™s actions – have been empowered by the glass-house transparency of ubiquitous information. Business intelligence is no longer confined to the pages of business magazines or boardroom rumors. Itâ€™s available through Web sites of government agencies, employee social networks and blogs, activist reports, online community discussion boards, supplierâ€™s financial reports, and so on. And the social media explosion can create a reverberation effect as stakeholders share what they discover and build upon each otherâ€™s beliefs. A very real possibility is that one disgruntled stakeholderâ€™s opinions can become amplified into generally accepted truth.
Perceptions can become reality before you know it.
The Social Sustainability Perception
So companies should manage their social and environmental responsibilities – and their sustainability reputation – actively, right? A one word answer is â€śyesâ€ť, but itâ€™s not that simple. Many companies have turned to their PR and marketing departments to manage their sustainability reputations. But managing a â€śbrandâ€ť and managing a â€śreputationâ€ť for being a sustainable and responsible company are quite different tasks, as the case of oil giant BP illustrates.
In an effort to break free from the general negative public perception of oil companies, BP launched an ambitious re-branding effort in 2000 called â€śBeyond Petroleum.â€ť As the name says, BP was casting itself as a different kind of oil company, looking ahead to a cleaner future after oil. The company spent upwards of half-a-billion dollars changing its logo to a sunflower and putting solar panels on its service stations. It also invested in renewable energy companies. But critics cried â€śgreenwashing,â€ť pointing out that over 90 percent of the companyâ€™s revenues continued to come from its oil business. Fortune magazine noted, â€śHereâ€™s a novel advertising strategy – pitch your least important product and ignore your most important one.â€ť
Most established companies are in a similar situation to BP. They have products and services they canâ€™t change overnight, developed in a time before climate change and human rights were major concerns. Any step forward to a more sustainable strategy can always be contrasted with the unsustainable legacy segments of the business. The reason products are scrutinized holistically in this manner lies in the nature of sustainability itself. In the words of environmental movement founder Barry Commoner, â€śEverything connects to everything else.â€ť Sustainability is a holistic systems condition, something that activists wonâ€™t let you forget. Anything less than a sustainability â€śfull-Montyâ€ť may leave you open to questions, criticism and charges of â€śgreenwashing.â€ť
How do companies get around this? The first step is demonstrating to your stakeholders that you understand the environmental and social implications of your companyâ€™s actions. Itâ€™s important to express your understanding of where your responsibilities lie, and to illustrate the companyâ€™s dedication to improving its positive impact on the global environment. This canâ€™t be done unilaterally â€“ it requires clarifying that your perceptions of corporate responsibility are aligned with your stakeholderâ€™s expectations. Quite simply, itâ€™s a negotiation. Once you are clear on where your responsibilities lie, you then have to make – and fulfill – commitments to improve your companyâ€™s social and environmental performance. Only then can you begin to engender trust in your corporate efforts. And over time, that trust leads to a reputation for sustainable corporate action.
Expectations management is also a key puzzle piece. True sustainability wonâ€™t happen overnight, but you understand the ultimate gain â€“ and the investment. Youâ€™ve got to be in it for the long haul.
Gregory Unruh, Ph.D., is a professor of global business and director of the Lincoln Center for Ethics in Global Management at Thunderbird School of Global Management. Unruh is a leading expert on sustainable business strategy and an outspoken advocate of ethics and corporate social responsibility. In his forthcoming book Earth, Inc. (April 2010), he provides a framework for how managers can adopt the biosphereâ€™s sustainability principles and transform their companies into both environmentally sustainable and financially profitable enterprises. Follow him on Twitter @gregoryunruh.
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