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The Challenge of Managing Your Sustainability Reputation

unruh, gregory, thunderbird schoolI often hear managers saying, “We don’t talk publicly about our sustainability and CSR initiatives. We do it because it’s the right thing to do. For us, it’s action, not words.” 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 company’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, “Stakeholders 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.”

We can thank the internet for that. Stakeholders – that is anyone with an interest or “stake” in your company’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. It’s available through Web sites of government agencies, employee social networks and blogs, activist reports, online community discussion boards, supplier’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 other’s beliefs. A very real possibility is that one disgruntled stakeholder’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 “yes”, but it’s not that simple. Many companies have turned to their PR and marketing departments to manage their sustainability reputations. But managing a “brand” and managing a “reputation” 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 “Beyond Petroleum.” 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 “greenwashing,” pointing out that over 90 percent of the company’s revenues continued to come from its oil business. Fortune magazine noted, “Here’s a novel advertising strategy – pitch your least important product and ignore your most important one.”

Most established companies are in a similar situation to BP. They have products and services they can’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, “Everything connects to everything else.” Sustainability is a holistic systems condition, something that activists won’t let you forget. Anything less than a sustainability “full-Monty” may leave you open to questions, criticism and charges of “greenwashing.”

How do companies get around this? The first step is demonstrating to your stakeholders that you understand the environmental and social implications of your company’s actions. It’s important to express your understanding of where your responsibilities lie, and to illustrate the company’s dedication to improving its positive impact on the global environment. This can’t be done unilaterally – it requires clarifying that your perceptions of corporate responsibility are aligned with your stakeholder’s expectations. Quite simply, it’s a negotiation. Once you are clear on where your responsibilities lie, you then have to make – and fulfill – commitments to improve your company’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 won’t happen overnight, but you understand the ultimate gain – and the investment. You’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 biosphere’s sustainability principles and transform their companies into both environmentally sustainable and financially profitable enterprises. Follow him on Twitter @gregoryunruh.

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8 thoughts on “The Challenge of Managing Your Sustainability Reputation

  1. The real problem is getting the US to think in long haul terms. The 24/7 media environment we now live in aggravates an already notable national tendency to think that “long-term” or “long haul” means the next two year election cycle. Companies fall into the same trap, never knowing exactly if the next administration or the next congress will enact new regulations and laws, enforce or ignore existing regulations and laws, and what that means in terms of planning. An uncertainty cycle lends itself to inertia because it’s harder to be proactive in an environment that is mired in short view horizons. Still, the longest journey and all that, so thanks for keeping the CSR flag flying.

  2. You make a good point. As your article indicates for cited case study, if a company does not articulate their sustainability strategy in such a manner that it appears to be consistent with mid to long term plans and actions, the company’s interests may be better served saying nothing at all. Analysts and media always check to see if plans and words align with Corporate actions. If Company A is doing the right things at the right time and in the right manner the market outcome will be sustainable by definition.

  3. It is important to keep stakeholders informed about your good deeds and to be transparent.

    It is like making a deposit in the reputation bank. Make regular deposits.

    Many a company wants to let stakeholders know about their good deeds once things have gone awry, then it is too late.

  4. very nicely put…its very much about transparency; walking the talk and talking the walk need to be balanced.

  5. Increasingly customers and other stakeholders are makign decisions based on whether they can trust the marketing messages of a company. Therefore before talking about sustainability a company is well advised to ensure that their reputation is trusted in the market place. With real trust can come approval of sustainability initiatives without the challenge of the greenwash charge.

  6. Gregory, this is an excellent article on the importance, as well as the challenges, of finding a balance between a commitment to CSR and the natural tendency to highlight only a company’s most sustainable practices, which often leads to charges of “greenwashing”. I think your first step is right on target. Understanding and acknowledging a business’s responsibilities to its stakeholders is critical. It shows all concerned parties that the organization is aware of how its actions affect their lives and it begins to create a road map for the company to follow as it addresses its social and environmental duties. Engaging stakeholders directly provides for the “negotiation” you mentioned and facilitates the emergence of common ground between all parties.

  7. A good article. Suzy Howell’s comment is very true. There’s a general election in the UK next month and the environment and sustainability has fallen off the top of every party’s agenda: business is concerned that setting long term targets is almost pointless because short term government policies may overturn the long term. There’s a 2050 target set in the UK of 80% reduction in carbon emissions but the steps for getting there are unclear. Companies need to negotiate not only with stakeholders (who are they exactly? Customers? Shareholders? Employees? Wider public?) but with environmental scientists to set the right targets, give the right message and deliver measurable results that are tangibly making a difference. Or we will end up with finger-in-the-air targets and then leave it to marketing depts to put a spin on it.

  8. Hi Gregory,

    An excellent article. I am presenting an information session on sustainable reporting on behalf of the Noosa Biosphere Social Board and while googling for a range of views and perspectives, came across this article and website. Ethics in Business is one thing but social accountability of govt in decision making is another. We are a coastal community threatened with govt mandated population growth ie ‘there’s a piece of land – build a suburb’. Most of us feel the social and environmental costs will be unbearable. Can you or any other respondents direct me to papers or articles on govt’s anywhere doing sound social accounting?

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