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Behind the Mission of Sustainability

What is the fundamental purpose of the sustainability program at your company? Executives offer an astonishingly diverse set of responses to this question. Which is just as it should be.

We recently completed over thirty interviews with senior sustainability executives and asked about the central rationale for sustainability at their companies. Some executives cite existential threats such as dwindling supplies of key natural resources as the driver of their company’s commitment to sustainability. Others point to demands from their customers. Some invoke the expectations of their employees; they believe that a reputation for doing business sustainably will aid in employee recruitment, retention and engagement. Some say sustainability is the path to differentiation in a commoditized market. Other motivations we heard from sustainability executives include:

  • Doing the right thing
  • Managing our brand reputation
  • Mitigating regulatory, supply chain or NGO action risks
  • Seizing new opportunities
  • Making us a better company

How companies articulate the fundamental purpose of their sustainability initiatives is as varied as the industries they operate in, the customers they serve, their heritage, and the vision and commitment of their most senior leadership.

All companies are in business to make money. Beyond that, corporate purpose begins to diverge significantly. Stakeholders have different concerns. Company faces different conditions, including dependence on raw materials or natural resources, risk of NGO action, regulatory backlash, carbon risk or energy risk. Companies have diverse environmental impacts: for some, water use is an Achilles heel; for others, it’s waste. Employees have different interests: ideas that may excite, attract and retain staff at a food service company may not inspire employees of a venerable financial services firm.

A number of companies have developed comprehensive sustainability strategies driven entirely by self interest, without a whiff of altruism. One firm we spoke with made a point of declaring that their program was “not about responsibility.” They don’t believe in corporate social responsibility. But they do believe climate change is a grave threat to their interests. So they are investing substantial sums in combating it in word and deed.

Tools for Formulating Purpose

Formulating the purpose of a company’s sustainability program requires a process that unfolds at some companies over many months or even years. It requires gathering and analyzing information from outside the company, as well as introspection and assessment inside the company. Companies consider many points of reference in formulating their purpose, including:

Customer attitudes and behaviors. What are customers’ views about environmental issues and their expectations of your company?

Employee attitudes and behaviors. How does a company’s environmental stance affect employees’ choice of where to work? What do they expect from your company? Are they seeking ways of being engaged at work in sustainability initiatives?

Competitors and industry leaders. How are my competitors tackling sustainability? What are leaders in other industries saying and doing?

Greatest environmental impacts. Sustainability initiatives, to be meaningful, need to focus on areas where their environmental impacts are greatest. Where are your company’s greatest environmental impacts?

Principal environmental threats. Companies heavily dependent on a predictable supply of key raw materials, such as cacao, water, or fossil fuels, are wise to make protecting or conserving those materials or developing alternatives, a pillar of their sustainability programs.

Promising environmental opportunities. Most companies find they can reduce waste, environmental impacts and expenses in the early stages of sustainability programs. Some look farther at how programs can boost their top line. BASF, for example, claims that “climate protection” products account for 10 percent of its sales. Bloomberg expanded its information business offerings introducing environmental, social and governance data alongside traditional investment metrics in its widely used workstation. It also purchased the company New Energy Finance, to provide additional information services to investors in alternative energy and carbon mitigation projects.

What you control. Walmart is recognized for the unusual power it holds over its suppliers. Because it has this power, Walmart has been able to begin demanding that its suppliers improve their own environmental performance as a condition of future business. Other companies with lower leverage over suppliers may start by focusing in improving internal operations, such as water use—areas they can control.

The link to strategy and corporate mission. Sustainability programs gain strength when they are linked to the company’s broader strategy. Outdoor gear maker and retailer REI has company mission to “inspire, educate and outfit for a lifetime of outdoor adventure and stewardship” so it’s easy to see how improving the sustainability of its operations and products are naturally aligned with its mission. Unilver’s strategy depends on tapping burgeoning markets in the developing world to eventually double its business. Framing its sustainability goals in terms of that broader goal—decoupling growth from environmental impact—gives a powerful impetus to its sustainability program.

The table below summarizes the major dimensions of purpose we found in our interviews with sustainability executives.

Vision Broad

  • Reverse climate change. (Aspen Skiing Company)
  • Restore the planet. (Levi Strauss)
Narrow

  • Eliminate any negative impact the company may have on the environment by 2020. (InterfaceFLOR)
Scope Broad, encompassing environmental and social goals

  • Contribute to the countries we do business in. Helping the real economy. (Standard Chartered)
Narrow, focusing on environmental parameters

  • Address some of society’s most compelling and important environmental and resource challenges. (Anonymous)
Goals Ambitious, Audacious

  • Fossil Fuel Free in manufacturing and distribution by 2023.
  • Achieve zero water intake at our main manufacturing sites by 2018. (Pepsi UK & Ireland)
Modest

  • Reduce waste-to-landfill tonnage by 2% per sales dollar compared to prior year. (Green Mountain Coffee Roasters)
Objectives Strategic

  • Decouple growth from environmental impact. (Unilever)
  • Sustainability is how we fulfill our mission over the next 100 years (REI)
  • Differentiate a commodity product (Enterprise Holdings)
Tactical

  • To be a leading environmentally responsible retailer through focused resource stewardship through our associates, vendors and business partners. (Kohl’s)
  • Save money and match consumer expectations for green (Newell Rubbermaid)
Position Leadership

  • Demonstrate leadership in our industry around environmental sustainability, in particular water stewardship and reduction of greenhouse gas emissions. (PepsiCo International)
Followership

  • Being among the leaders of CSR—in the first quartile. (Acco Brands)
Influence External

  • Reward growers who use more sustainable practices. (Sodexo)
Internal

  • Reduce water use and carbon emissions. (Sodexo)
Respons-ibility To the world and society

  • Showing responsibility to community where employees live and work. (Sprint Nextel)
To ourselves and our stakeholders

  • To continue to operate for a business, more or less the way we operate now for another 100 years. (Mars)
  • It’s not about responsibility; it’s about responding to the needs of their consumers. (Anonymous)

Table 1 Sustainability Visions, Missions and Goals

All of these perspectives are valid, so long as they flow from unique situation of the company; address the company’s major environmental impacts and threats; draw on its competencies; complement its core business; are tied to business opportunities; are in harmony with the corporate personality; speak to the goals and aspiration of major stakeholders; and are in sync with the company’s larger purposes where possible.

How does your sustainability program line up?

David Schatsky, principal of Green Research, is a consultant and adviser to businesses on a range of topics, from clean tech markets to corporate sustainability best practices to business strategy in the Internet and information technology markets. Having spent almost a decade as an analyst and senior executive at JupiterResearch, a leading research and advisory firm focused on Internet business, Schatsky is an expert in business strategy, industry analysis and market research.

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4 thoughts on “Behind the Mission of Sustainability

  1. Good article, David. I particularly like the chart and examples — interesting how many of the “poster children” of sustainability (Interface, Green Mountain Coffee) are not necessarily the most aggressive in their sustainability visions.

    I’ll quibble with one aspect of your article. When you start listing the tools for formulating purpose, you start with the various audiences, and later on mention the material impacts and risks. I would reverse that. While incorporating stakeholder perspectives is important, first and foremost the company needs to honestly face and address their big impacts. Too many companies will be tempted to address the high profile problems and ignore the difficult, but major impacts. But if ignored, they will come back to bite the company.

  2. Thanks, Jim.

    I did not intend to imply any priority in order I listed the tools. I agree that companies need to face their impacts. Whether they need to tackle their biggest ones first is an open question, however. I would advocate getting traction however possible, while keeping an eye on the overall “mission.”

    By the way, if you liked the article, you’ll love the research report it is drawn from. You can find out more about it here: http://bit.ly/eJPBGe

    Thanks again!

  3. Good stuff, David! Sounds like you garnered a lot of insight from the research. The diversity of responses and approaches is consistent with my experience as well. All the best with the report.

  4. Great article!

    David, you wrote “Bloomberg Makes Green Investing Easier” on December 9, 2009 – could you send me the full list of 120 ESG Variables that you mentioned. Also, your bio if you don’t mind. Thanks!

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