16
August

3 Steps to Improving your Sustainability Data Collection, Analysis

A recent report published in the MIT Sloan Management Review indicated just how far sustainability has come over the last few years. In the report, seven out of ten surveyed executives noted that sustainability has become a permanent goal on the corporate agenda. Additionally, two-thirds believed that corporate sustainability was necessary to being competitive in today’s landscape.

Being competitive requires companies to benchmark goals for sustainability that set the business to positively impact the Triple Bottom Line (people, planet and profit). However, David Schatsky of Green Research, writes that all sustainability goals aren’t created equal:

“Aggressive goals are more powerful than modest goals. Public goals have greater impact than internal goals. Quantitative goals are more credible than non-quantitative goals. And goals for the future send a signal that goals described in retrospect do not.”

Leaders should do the following to ensure that sustainability programs are aggressive and actionable:

(1) Automate data collection to improve accuracy, reduce labor hours
Taking data from enterprise software systems (e.g., ERP software, SCM software, CRM software) allows businesses to have a more accurate, real-time data stream of its activities. By doing so, they can also eliminate human error and reduce the amount of labor required to manually log the activities of individual warehouses, manufacturing facilities, sales offices, etc.

(2) Improve analysis with business intelligence applications
Businesses should also look to invest in Business Intelligence (BI) tools to improve the speed, accuracy, and breadth of analysis around sustainability projects. Analysts can use these applications to find “sustainability leaks”, or areas where efficiency is not being obtained for unforeseen reasons. In addition, these applications can package information in a visual manner that executives can digest quickly and easily.

(3) Build sustainability teams around data-minded leaders
Finally, for sustainability teams–and businesses–to become more accountable, they will have to build leadership around employees that are data-minded and can get the most “bang for the buck,” as many of these programs are underfunded (and underappreciated).
For more on this topic, you can check out the SoftwareAdvice.com (website) blog post: Data Collection + Business Intelligence = Successful Sustainability Initiatives.

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8
August

Three Reality Checks for Brands Making Headway on Sustainability

 

Supermarket shelves, the high street and online retail are burgeoning with brands making a lot of noise about one or other aspect of sustainability. Be it water conservation, reduced packaging, organic, Fairtrade or Rainforest Alliance ingredients, Better Cotton, recycled polyester or the latest in electric vehicle R&D – it’s hard to go shopping today and not come across at least one of the above.

Seeing so many brands considering and leveraging the complexities of sustainability has been a positive force for good in the marketing space. Recently we heard the CEO of the Marketing Society remark on the rapid spread of sustainability thinking in branding. He mentioned a manifesto they had written for marketing in 2005, which didn’t mention the word sustainable or sustainability, yet now it’s an escalating hot topic amongst their members and high up their agenda (the event we were at was all about making sustainability ‘sexy’).

During our biannual seminar on sustainability and brands last month, we spent a couple of hours with a group of brand managers, marketers and sustainability professionals, looking at 25 brands and how they are using sustainability challenges to create positive impact. With sustainability targets snapping at business’s heels (reducing CO2 emissions, for example, by 50% by 2025 in the UK and globally by 80-90% by 2050), we found an array of diverse responses across a range of brands.

We’ll be looking at the three brand initiatives that sparked the most discussion and enabled us to think through a few reality checks for what works well and less well in today’s marketing world, where brands compete on sustainability, with the winners reaping the benefits of consumer loyalty and an enhanced reputation.

First up is Whole Foods. They made an announcement in April that from Earth Day they would no longer be selling unsustainable fish. Great news. However, it begged an important question – what fish were they selling before? It turned out that those in the room had all assumed that Whole Foods would source the vast majority of its produce sustainably anyway, and we felt a bit let down that this was not the case. A very positive message had become negative due to consumers’ built-in expectations of the brand and what we believed it stood for.

Reality check #1: Understanding what your consumers assume your brand already does on sustainability is critical when thinking through the message you want to get across. Telling them something they think you already do is unlikely to have much impact.

Next up is Method’s range of cleaning products. From the start their mission was to combine unique, excellent design and functionality with ecologically sound formulations. The seminar group who looked into their story further found they had been up-cycling the plastic waste from the ‘islands of trash’ in the ocean, to create a range of packaging. Some may say that’s clever PR, which of course it is, but it’s also very cleverly using a sustainability challenge/hazard (i.e. reams and reams of plastic waste in our oceans) to drive packaging innovation – and yes, the innovation also has a lovely story to tell that’s far more interesting than ‘rPET’.

Reality check #2: If you start with sustainability as your stimulus for innovation, your brand can tell a strong, genuine story of positive impact once it’s on the shelf.

Our last example is BMWi’s two-page advert found in April’s edition of Wallpapermagazine. The text reads:

“BMWi provides intelligent applications and services that improve the way you get around town – inside and outside the car. Looking for the talk-of-the-town dining experience or the nearest wifi hotspot? No problem. Need a parking space for half a day? We can help. And if you’re a keen pedestrian but crave the occasional drive, we have the right car and we’ll share it with you. More innovative services are coming soon in a growing number of cities. Because we’ve only just begun. More: bmw-i.com/mobility.”

Some in the room mistook this advert for ‘another EV coming to a salesroom near you,’ but digging a little deeper, this advert is a teaser for something that would radically alter BMW’s traditional business model, and if done well, could be a shining example of a sustainable business model. Now that they are considering mobility, rather than the historic model of manufacturing and sales, and targeting pedestrians as well as drivers, indicates a far more radical and systemic approach to finding solutions and ways of doing business in the not-so-distant future. It highlights the sort of brand-led innovation we need to transform to sustainable behaviours and lifestyles. And of course mobility, the BMW way, is likely to be far more aspirational than a local government-led initiative promoting sustainable mobility, for example.

Reality check  #3: Generating ideas today for brand-led, sustainable business models of the (not-so-distant) future could help your brand secure a long-term competitive edge and be resilient to changing markets.

We ended the seminar on a bit of a high, uplifted by the breadth and depth of brand engagement on sustainability today, but with the realisation that it’s really tough out there. Consumers expect more and more from brands. Havas’s meaningful brands index talks about the pioneering brands being those that are ‘making commitments not promises’ and EuroRSCG’s Prosumers report reminds us that most 18-25 year olds believe “the things I consume have more power to change things than the people I vote for.”

We’re making it our business to help brands think through what they can be doing – from incremental, quick-wins to new product innovation and the exciting world of more radical, business model innovation – if you let your brand values and sustainability lead you, the win-win innovations will follow.

Article as written for Sustainable Life Media, July 9, 2012, by Fiona Bennie, Consultant at Dragon Rouge.

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17
April

Optimism: Abundance is our future

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5
April

10 Lessons from 11 Business Sustainability Journeys

There are many valuable lessons to be learned by reviewing the ways companies relate to sustainability. An increasing number of companies around the world are engaging major sustainability initiatives ahead of government regulation and in the absence of strong public demand.

Corporate sustainability is now part of strategic business decisions that are determining everything from manufacturing processes to marketing communications. As explained in a Sustainable Brands article, “Companies increasingly recognize that a proactive stance on sustainability is becoming a competitive necessity in attracting investors, employment talent and supply chain partners, as well as customers.”

Each company has had to deal with a unique set of circumstances and each company’s experience reveals a different insight. Here is a selection of ten companies and some of lessons that we can take from their sustainability journeys.

1. Eastman Kodak Corporation: Adapt or Die

Companies that proactively engage sustainability are rewarded while companies that ignore sustainability are punished. This holds true for Eastman Kodak, which is forced to reinvent itself by the changing marketplace. The company must radically change its product offerings and its culture of complacency or it will die.

As reviewed in a Triple Pundit article, Kodak is already teetering on the brink. To raise capital, they are close to selling off some of their lucrative patents, and they have one year to submit a reorganization plan to bankruptcy court.

To survive, the 120-year-old film company is morphing itself into a digital imaging company. Through its partnership with Natcore Technologies, Kodak is also investing in inexpensive patented thin-film solar technology, specifically flexible solar cells, through a New Jersey-based startup. The solar cells cost as little as half as much as traditional thin-film solar cells to manufacture. This is a bold move for Kodak, but it will need to make similar bold moves if it is to regain its foothold.

2. Toshiba International Corporation: Bold Strategic Move

Adapt or die is a motto that applies equally to thriving businesses as well. Toshiba, once a leader in incandescent lighting, is now betting on LED technology as the future of lighting. As revealed in a recent press release, Toshiba completely abandoned production of incandescent lights in March 2010 and is now diving fully invested in LED lighting. Toshiba is the first major lighting manufacturer to proactively discontinue the production of incandescent lamps.

Toshiba is one of the largest lighting companies and LED light manufacturers in the world, they produced their first light bulb in 1890. On July 13, 2011, Toshiba announced that twenty of its energy-efficient LED lights have received the US Environmental Protection Agency (EPA) Energy Star® label. An Energy Star qualified LED lamp uses up to 75% less energy, lasts at least 15 times longer than incandescent lighting and has a light quality, which remains consistent over time.

Being awarded the Energy Star certification is an important payoff for Toshiba’s bold strategy.

3. LG Electronics, Inc.: Lead through Public Private Collaboration

LG Electronics USA is based in Englewood Cliffs, N.J., and it is the North American subsidiary of LG Electronics, Inc., a $49 billion global force and technology leader. LG Electronics Inc. is reducing emissions by collaborating with government.

As reviewed in an April 3, 2012 PR Newswire release, LG Electronics USA plans to cut its carbon footprint in half by 2020. To help achieve this ambitious objective, the company is working in cooperation with the EPA’s Green Power Partnership, which is a voluntary clean energy program.

As part of the Partnership, LG USA will power its Englewood headquarters by purchasing more than 1.5 million kilowatt-hours (kWh) of green power over the next 18 months. This translates to carbon emissions reductions equivalent to more than 200 passenger vehicles per year, or more than 100 average American homes annually.

Blaine Collison, director of the EPA Green Power Partnership, said LGs effort “provides an excellent example for other organizations.”

In addition to their partnership with the U.S. EPA, LG is also part of South Korea’s Green Technology Center (GTC), a research institute that will focus on developing environmentally friendly technologies.

4. Samsung: Get There First and Keep Innovating to Stay on Top

As reviewed in an Ecoleader article, Samsung has a green vision that will only get greener in the future. Like LG, Samsung is also part of South Korea’s Green Technology Center (GTC) research center and the company is already a leader in energy-efficient products.

In 2007, Samsung was first with internet connected appliances to increase energy savings and reduce costs, and in 2008, Samsung launched an eco-phone made with corn-based bioplastics. In 2011, the company launched more Green IT products and services and in the summer of 2011, Samsung joined the Climate Savers Computing Initiative (CSCI).

Samsung will continue to innovate by increasing energy efficiency, reducing CO2 emissions and being less harmful to the environment when its products are recycled or disposed.

5. PPR Home: Innovative Metrics Shed Light on Supply Chains

As reported in GreenBiz, the parent company of some of the world’s biggest luxury and sporting brands, including Gucci, Yves Saint Laurent, and PUMA, are embarking on one of the world’s most ambitious green accounting programs. PPR Home has announced that it will adopt a group environmental profit and loss statement (EP&L) by 2015.

This new approach to accounting will help to monitor and manage greenhouse gas emissions, water use, pollution, and land use change. According to PUMA executive chairman, Jochen Zeitz, EP&Ls are superior to conventional sustainability reports.

”As the manager of a business, all you need to look at now is one page and you know what you need to do because it tells you exactly where you need to attack in order to get rid of your footprint,” Zeitz said. “But once you visualise and measure, you can actually manage the impact. Whereas before the visualisation was so hypothetical that it didn’t lead to concrete day-to-day decisions.”

The EP&L provide a more transparent view of the supply chain. PUMA’s E P&L revealed that 94 percent of its environmental impact was created in the supply chain, which has encouraged the company to find alternative materials to reduce that impact. Zeitz said that the company was looking into requiring firms to measure and report their environmental impact when PUMA is selecting suppliers in future.

6. HP and Dell: Manufacturing or Recycling

According to an article by Carol Baroudi, HP and Dell are each taking different approaches to sustainability. HP is emphasizing removing toxic compounds from manufacturing while Dell is focused on recycling through take back programs.

HP has been far better than Dell at removing toxic compounds from their designs. They have reduced PVC and BFRs, and they have completely phased out beryllium and other compounds.

Dell is better than HP at recycling their products at the end of their life cycle. Dell is working with the EPA on the National Strategy for Electronics Stewardship. Dell and the EPA are promoting recycling for electronic waste. The goal of the Strategy is to “encourage electronics manufacturers to expand their product take-back programs, and use certified recyclers as a minimum standard in those programs.”

7. Unilever: Go Big or Go Home

Greenbiz has lauded Unilever’s efforts if for no other reason than the sheer scale of its sustainability ambitions. By 2020, the company, with annual revenues exceeding $63 billion, plans to cut its massive environmental footprint in half through its Sustainable Living Plan.

Big efforts get noticed as is evidenced by the fact that Unilever won top honors at the 2011 International Green Awards in London. Unilever was named the Grand Prix award winner because it has “the greatest capacity to change the way society and business is perceived, supported by factual evidence of systemic change.”

Unilever’s Sustainable Living Plan articulates the view that business must prepare itself for a future in which resources are rare and more expensive.

“We are preparing ourselves for that future. We’re also trying to develop products and services which will allow our consumers to adapt to a very different world,” Gavin Neath, Unilever’s senior vice president of sustainability, said in an interview. “People talk a lot about things like climate change adaptation. In a real sense, part of what we’re doing in the Sustainable Living Plan is about climate change adaptation.”

8. ARAMARK: Training a Workforce

You do not need to be a multi-billion dollar company to develop innovative approaches to address sustainability challenges. One such concern involves securing qualified employees. ARAMARK has launched an Environmental Internship Program designed to meet the growing need for employees who have a practical understanding of environmental initiatives plus fundamental business knowledge.

The program provides young professionals with corporate experience and creates an awareness of the role environmental stewardship can play in all jobs. ARAMARK is a world leader in professional services, providing award-winning food services, facilities management, and uniform and career apparel to health care institutions, universities and school districts, stadiums and arenas, and businesses around the world.

“Environmental practices can be incorporated into virtually any job, and through the ARAMARK Environmental Internship Program, we can help develop employees who make the connection between the work that they do, and its impact on the environment and on our business,” said Rick Martella, ARAMARK Vice President, Business Affairs. “Embedding these internships in key roles across the company will provide environmental knowledge and skills that are not confined to a single position or type of job, and can be easily shared.”

9. Berg Engineering Consultants Ltd.: Be Proactive

Green is also growing in the building sector. As reported in the Daily Herald Business Ledger, the green market was 2 percent of non-residential construction starts in 2005; 12 percent in 2008; and grew to 28-35 percent in 2010. By 2015, an estimated 40-48 percent of new non-residential construction will be green. Experts say green building will support 7.9 million U.S. jobs and pump $554 million into the U.S. economy over the next four years.

By 2015, the green share of the largest non-residential retrofit and renovation activity will more than triple, growing to 25-33 percent of the activity by value — a $14-18 billion opportunity in major construction projects alone, industry experts say.

When Brian Berg Sr. established Berg Engineering Consultants Ltd. (BEC), there was no green market and there was no LEED certification. However, when he set up shop in the midst of the 70s energy crisis, he paid heed to prevailing conditions and positioned himself to be ahead of the curve in energy-efficient designs.

Now his firm has won numerous energy awards using energy efficient design in a huge and growing market.

“Dad had to invent energy efficient design,” explains Brian Berg Jr. “Today it’s not so much a process, but education — staying on top of innovations, showing clients how spending a little more for a more energy efficient building envelope is a smart investment.”

10. Bluehorse Associates: Doing It for the Money

Bottom line benefits are driving the adoption of sustainability. As Sara Pax, President of Bluehorse Associates, noted, it is ‘not about tree-hugging’: Sustainability is simply good for business. According to Pax, companies should be concerned about their environmental sustainability – but it has more to do with ensuring profitability than it does with saving the planet.

Bluehorse Associates is the maker of a tool for measuring environmental sustainability for the food industry called Carbonostics, which Pax claims can give food and beverage companies tangible information about which measures make most sense for business, as well as for the environment.

Consumer engagement should not be a top priority for companies, Pax said, as only a very small percentage of consumers change their purchasing decisions based on any environmental work that a company has undertaken.

Conclusion

Businesses are drawn to sustainability by the returns they see in the real world experience of other businesses. Research bears out the hypothesis that businesses that adopt a sustainable culture “significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance.” This was the finding in a November 2011 study conducted by researchers at Harvard Business School and London Business School.

Business is doing more for the environment than governments or grass roots populism. We can learn a great deal from the sustainability journeys of the brave pioneers who have dared to lead.

Article written for Global Warmingis Real,  as published in Sustainable Life Media by Richard Matthews,  a consultant, eco-entrepreneur, green investor and author of numerous articles on sustainable positioning, eco-economics and enviro-politics.

Source: Global Warming is Real (http://s.tt/18OZN)

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15
March

Is Your Brand’s Sustainability Really Worth Talking About?

Once upon a time (until recently, actually), the sustainability story of an iconic cosmetics brand focused on contributing to reforestation – doing its bit for climate change, biodiversity and cleaner water.  This brand said little about what it was doing to reduce toxins in its products or source and manufacture those products more sustainably.  (Not that much, it turned out.)  This despite the fact that the overwhelming majority of most product companies’ environmental footprint is, of course, in the products themselves.  To savvier consumers, investors and employees, the reforestation story was the equivalent of a deflecting nervous laugh trying to divert attention from the brand’s core sustainability reality.

Over time, every company’s sustainability ROI boils down to just two things:  reality and perception.  From atop the growing mountain of evidence, we’ve already seen that sustainability reality, done right, reduces costs and risks while driving innovation and product appeal.  Meanwhile, each year sustainability perceptions have a larger impact on brand equity and its attendant revenue, pricing power, and customer and stakeholder loyalty.  Regardless of how you tell your sustainability story in an increasingly transparent world, whether brand impact will be positive or negative is utterly dependent on your sustainability reality.  So as communicators, every day we have to ask if our sustainability performance – not just professed values or stated corporate commitments  – is actually worth talking about.

Whose job is it, anyway?

It’s critical to get very clear on what part of achieving your brand’s desired sustainability perceptions is up to Marketing/Corporate Communications and what part is up to product development.   Is your sustainability reality weaker than the story you’re telling, or is it actually stronger?

If perceptions lag reality as they do for many brands (Dow, L’Oreal, Merck, Nokia, Shell among them), there is uncaptured ROI in unrealized brand equity.  That’s up to communicators to fix, staying current on the brand’s legitimate sustainability proof points and weaving them into an appropriate and powerful tapestry.  But when reality is weaker than the story (the more common scenario; you know who you are), reality is your ceiling for how compelling your sustainability communication can be without significant greenwashing exposure.  In product companies, it’s up to product development, supply chain, and product lifecycle managers to raise that ceiling.

In that context, the big problem is that CMO’s/corporate brand stewards seldom have a seat at the table when product design and development decisions are being made.  How can CMO’s be accountable for brand health when sustainability perceptions will be largely determined by product content, sourcing, manufacture, packaging, distribution, use, and disposal/re-use?

Yet that doesn’t mean just accepting the hand we’re dealt.  It means we must persistently and urgently ask the executives responsible for product development decisions  “What more can we do to ensure that sustainability criteria are systematically encountered when product ideas/improvements are being evaluated for development?”

This requires ensuring that product sustainability is not a segregated assessment, but that preliminary assessments are integrated with other non-sustainability criteria impacting customer appeal – and always occur early enough in the development decision cycle to prevent investments that diminish or even cripple your sustainability reality.

What’s a brand steward to do?

1.  Know where you stand.  In the absence of sustainability-focused primary research designed to assess where you are today on sustainability reality vs. perception, reports like those linked above (from Interbrand and BrandLogic) are useful inputs.  If your brand is not included in such reports, you may need to undertake primary research or at least piece together other secondary research with whatever you already have.

2.  Define communication objectives calibrated to what degree your sustainability reality is truly worth talking about.  If your reality is stronger than your perception, portray that reality aggressively and compellingly to meet those objectives.  If it’s weaker, urge your senior executive leadership team to keep up the pressure on reality with systematic, integrated sustainability assessments in your product development pipeline – before product development projects are approved.

3.  Ensure that your perception monitoring mechanisms do all they can to gauge whether your story is going far enough so that you don’t leave unrealized brand equity on the table, but not so far that it greenwashes.  Savvier customers are already punishing brands that selectively tout the good part of their story while burying the bad.  The transparency imperative will keep increasing the pressure on your reality.

Just to be clear, I think contributions to reforestation are great.  But when products companies give short shrift to the harder part, they can punish their brands (and brand communicators) as much as the environment.


Steven Cristol is founder of Strategic Harmony® Partners and has advised some of the world’s most innovative companies on brand strategy and product strategy. Article was written for Sustainable Life Media.

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6
March

Communicating a Change of Heart

Everything changes during the moment when you wake up, realize that things need to be better, and understand that you have a role to play in the story.  Companies that are implementing a sustainability strategy are doing so because somewhere in the organization, someone had what Ray Anderson called his “spear in the chest” moment, and realized life would never be the same.  Yes, there are some who only see this opportunistically and recognize sustainability’s power to reduce risk and costs while increasing efficiencies.  Yet as the revolution of real change unfolds, what happens is a change of heart for  entire organizations.

The communications implications for this are significant.  How the brand’s purpose is understood and expressed must now reflect a deeper purpose.  First, alignment around and commitment to   that purpose must be created.  The challenge is for businesses – who are facing a growing activist consumer – to clearly and credibly express a new dimension of their business. A dimension that is not held hostage to short term profitability but rather integrates service to greater good alongside financial well-being.

We as sustainability communicators understand the power of the narrative to help organizations’ achieve their goals.  After more than 25 years, I see the role that communications plays in five distinct co-creation areas and believe that this is the core of what we – the storytellers of commerce — are working toward:

1.  Establishing credibility. From branding initiatives to corporate reputation campaigns, brands are creating a new series of communications (CSR reports, ads, web sites, forums) that provide the detailed transparency for telling a complex sustainability story. Truth-telling and hero’s journey are the themes here.

2.  Removing barriers. There is a range of stakeholders whose buy-in is essential in successful sustainability implementation.  Employees, supply chain, distribution partners, governments and NGOs, local communities must all become part of the team and be persuaded to set aside self-serving agendas and biases.  A call to community is at the heart of this effort.

3.  Accelerating acceptance. Clarity can speed goal attainment when players in the system understand how their contribution and connection contributes to success.  Participation in a greater goal that is a both-and proposition is the key theme.

4.  Building consensus.  In today’s always-on world, successful communications must not only break through the cacophony but be designed to create cohesion among disparate groups.  This is really about helping orchestrate a theme amongst varied voices.

5.  Empowering advocates. Businesses now rely on a host of advocates who share the narrative – they tweet, post, like, share and rate.    Everywhere you can read about how business as we know it has changed – that social media and the new connected customer require a new way of doing business.  This means creating narratives that are distinct, sharable messages designed so that others can say-it-forward.

Co-created communications with stakeholders can only come from a strategic approach and the realization that it must be carefully constructed for every transaction.  Sustainability communication is there to give people on all sides of the revolution a voice.  And that beautifully expresses a change of heart.

Article written for Sustainable Life Media by Sandy Skees, CEO, Communications4Good.


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25
January

Five Principles of a Sustainable Business Model

Do most shareholders believe they make enough money? Probably not. With Exxon’s 2010 profits at $41B, shareholders are still clamoring for more. And, the easiest way to grow profits is to grow the business.

Yet, the natural environmental cannot accommodate more industrial growth. Our natural resources are being extracted and disposed of faster than they can be renewed. Nowhere is this more evident than with fossil fuels. The more fossil fuels we extract, the more that ends up in our air, water and landfills as either carbon emissions or as byproducts and waste.

The fact that the natural environment is not on the minds of most managers is not entirely surprising. Many business professors still teach the 1970’s doctrine of Milton Friedman: “The social responsibility of business is to increase its profits”. Growth, therefore, is at the heart of the business model. But the foundation of this model was developed at a time when we didn’t comprehend the natural limits to growth.

Business sustainability tackles these issues head on. Many business advocates translate business sustainability into the triple bottom line: firms are expected to manage the social, environmental and financial implications of their actions. The triple bottom line encourages firms to seek win-wins, where they search for profitable activities that benefit society and the environment.

But, most managers recognize that such win-wins are elusive, especially in the short-term. And as shareholder scrutiny intensifies, managers are under even greater pressure to show consistently high and growing profits each quarter. What’s more, the triple bottom line advises firms what to measure, but not how to manage. It does not tell managers how to organize their business and how to make important tradeoffs. The triple bottom line is still grounded in the short term and in the existing business model.

I believe part of the answer is in recasting business sustainability as resilience. Resilience not only recognizes the importance of profits, but also values longevity and bouncing back from shocks. It shifts the paradigm from business-centric to recognizing that businesses are part of a wider system – a resilient business requires resilient relationships.

Based in systems theory, approaching sustainability as resilience reveals some important insights into organizational forms, some of which I describe below.

  1. Diversity.

    The firm needs a diverse set of resources, people and investments to be resilient. While diverse investments are seen to draw on resources and absorb managerial attention, a single line of business, single sources of revenues, or people with similar mindsets can expose the firm to greater risks. Firms can no longer simply ‘stick to the knitting’.

  2. Modularity.

    Matrixed organizations are often seen as facilitating knowledge flows. However, such organizations are not only resource intensive, they expose the whole organization to shocks as they reverberate through the organization. Organizations need to be less interdependent, and focus on modularity, so they can be insulated from shocks.

  3. Openness.

    Resilient firms must know what’s going on outside their boundaries. These firms can sense issues on the horizon. They are constantly monitoring the external environment, and drawing scenarios of possible futures. They expect not only to react to those potential futures, but also help to shape them. The link between the organization and the external business and natural environment is vital, permeable, and malleable.

  4. Slack resources.

    In an era of just-in-time production, slack resources are often seen as costly and wasteful. However, innovation and adaptation requires both financial and creative investments, and the space to change direction. Firms that can ride storms must allow for a little more time to accommodate new ideas, scenarios, and shifts in thinking.

  5. Matching cycles.

    Firms often think about optimizing performance and getting more from less. But, this thinking puts firms on a treadmill, doing the same thing faster every day—and, it has them bumping up against resource constraints. Resilient businesses think, not about constant growth, but rather about cyclical processes: cycles of growth and contraction, cycles of production, and cycles of consumer purchase patterns. Understanding the rhythms of business and the environment will allow the firm to synchronize with them meaningfully, and not overreact to what is likely just a cycle.

These ideas need to developed and tested. But, they offer a starting place for dialogue for a 21st century business model based on sustainability.

This article was written by Tima Bansal for the Network for Business Sustainability, December 2011.

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17
January

A Vision of Real Corporate Leadership on Sustainability

The basics of sustainability excellence are fairly well known by now:  reduce your footprint, create products and services that help customers do the same, drive employee engagement, think value chain, track data and enable transparency, and on and on.   But real leaders will go further and address the scale of the sustainability challenges we face by fundamentally remaking their companies.  Here’s what  is envisioned in a few key areas:

Science-Based Goals

Footprint reduction targets are important, but if the goals are not based on what scientists tell us – i.e., we need an 80% reduction in absolute greenhouse gas emissions – they’re not good enough.  Sony and a few others have targeted zero impact by 2050.  This level of commitment needs to become the norm, and then a few brave souls can go beyond reducing harm (even to zero) and set goals to build restorative enterprises.

Policy

While uncommon today, the basic level of performance on policy should be to make lobbying efforts consistent with core business strategy and public messaging (for example, are you proudly launching products that use less energy, yet lobbying hard against higher efficiency standards?).  Real leaders go much further and lobby for stricter standards and aggressive action on climate.  CEOs can demonstrate their external leadership by promoting this agenda with corporate peers and government leaders.  Some companies are on track, committing to the recent “2 Degree Challenge Communiqué” or joining groups like BICEP (led by Ceres, Nike, and others) which demand strong climate policy action.

Product and Service Innovation

Reducing the customer’s footprint will need to be the core aim of all innovation efforts and all product lines (not just a sliver of the portfolio as it is today).  Sustainability innovators will open up their creativity process, inviting customers and partners to offer innovative solutions (GE’s Ecomagination Challenge is a good example).  Innovators will embrace disruption and heresy (which I’ve written about before) by helping customers use less of their products. For a glimpse of the future, see Unilever’s campaigns to get customers to reduce water use and Patagonia’s Common Threads, which offers a grand bargain: “We make useful gear that lasts a long time…You don’t buy what you don’t need.”

Valuation and Investments: Financial and Operational Metrics

Leaders such as P&G and GE have set aggressive revenue targets for their greener products.  A few companies put a price on carbon for internal capital allocation decisions or, like DuPont and Owens Corning, set aside a percentage of capex for eco-efficiency investments.  These actions help correct the inherent flaws of ROI decision-making by valuing sustainability more explicitly.  The next step is fully incorporating intangible value – employee engagement, customer loyalty, brand value, and the like – as well as measuring and including all externalized costs in investment decisions.  Two trendsetters, Puma and Dow, have begun this important journey.

Investor Relations

I believe that the relentless pursuit of short-term, quarterly profit goals to please Wall Street analysts is bad for companies – great enterprises very rarely seek profit alone – and certainly isn’t good for the planet.  Like Unilever’s CEO Paul Polman, the real leaders will stop providing quarterly guidance and ask managers to focus on the real measures of success: making great products, serving customer needs, creating good jobs, and driving both cash flow and long-term profitability.  The most sustainable companies will become “benefit companies” or “B Corps”, with a broader charter than just pursuing shareholder value.  Seek greatness and sustainability, and the money will follow.

Resources Dedicated

Most companies give their sustainability execs woefully inadequate resources to do their stated jobs, let alone transform their companies.  A truly committed organization will allocate resources equal to the challenge and will give the sustainability function real power.   I suggest creating a “skunk works” team run by sustainability, along with perhaps corporate strategy and R&D, to question everything and challenge the core business model (e.g., What if the product were a service? What if we used no fossil fuels?).  This is how companies can systematize heretical innovation.

Employee Engagement

Educating all employees on sustainability principles and creating green teams are good first steps.  Tying all executive compensation directly, and substantially, to sustainability goals is even better.  But real leaders should work to convince those hostile to change throughout the organization…or eliminate them.  In the words of Jim Collins in Good to Great, “get the right people on (and off) the bus.”  Leaders will also help employees pursue sustainability in their own lives and communities and provide an outlet for organizing campaigns, such as the awareness-raising “climate ride” conducted by apparel company Eileen Fisher.  If the workplace is appropriate for United Way drives, why not for climate action?

In short, I’m imagining a very different kind of company. The overwhelming challenges we face demand profound shifts.  Of course, much more than I’ve mentioned will need to change – on the social side of the equation for sure – so please let me know what you would add to my vision of true leadership.


Andrew Winston, founder of Winston Eco-Strategies, is the author of Green Recovery, a strategic plan for using environmental thinking to survive hard economic times. He is also the co-author of Green to Gold, the best-selling guide to what works – and what doesn’t – when companies go green. Andrew is a globally recognized expert on green business, appearing regularly in major media such as The Wall Street Journal, Time, BusinessWeek, New York Times, and CNBC. Andrew is dedicated to helping companies both large and small use environmental strategy to grow, create enduring value, and build stronger relationships with employees, and customers.

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11
January

Defining and Developing Personal and Brand Leadership

We begin 2012 with an inquiry into how personal and brand leadership is evolving to serve both thriving businesses and a flourishing world. The question of what leadership really looks like is vital; it’s getting clearer that tomorrow’s winners will require the skills for both creating profits and nourishing human and natural systems.

A December 14, 2011 opinion piece in the Wall Street Journal by Al Gore and David Blood notes that “businesses cannot be asked to do the job of governments, but companies and investors will ultimately mobilize most of the capital needed to overcome the unprecedented challenges we now face.”

A long line of thought leaders from Peter Drucker to Michael Porter tell us business is moving in this direction; and a growing number of corporations are leading the way, from IBM and GE in the U.S. to Unilever, Puma, Munich RE and Santander abroad.

So what is changing in the task of leadership? We believe that businesses in every sector are on the cusp of a new paradigm of sustainable value creation (which we have explored elsewhere), one that calls for a different type of leadership. In this opening piece, we attempt to quickly outline some of our ideas on the topic, as a framing exercise for the month ahead.

The broad thrust of the leadership change is toward more integration and broader thinking, serving not only shareholders but all stakeholders in ways that are value creating.  We’re moving beyond the basic business case for sustainability – creating value in a range of ways from cutting costs and mitigating risk to driving revenues and brand value – to include a personal and organizational commitment to leaving the world a better place. While the move toward systems thinking in management has been around at least since Peter Senge’s The Fifth Discipline, we see a qualitative change in the making, one that is best described as a shift to holistic thinking.

One pivotal change is the gradual merging of the outer dimension of leadership – focused on the external market forces that condition a company’s opportunities for profit and growth – with the inner dimension of leadership based on meaning, purpose, values and spirit. Another pivotal change is the gradual merging of personal leadership with organizational leadership, in other words, the individual leader’s beliefs and behaviors are becoming more integrated with the organization’s identity, strategy, and culture. As a result the proverbial need to “check in your values at the door” on the way to work is lessening as people work for companies that are committed to doing well and doing good (the point being, these two are not at odds).

We visually map this evolution to greater integration in Figure 1 (hey, as consultants we need a good 2 x 2 matrix to tell our story).  We’ll each post a piece on what external (Andrew) and internal (Chris) leadership looks like, but we want to lay out the core components here. The point is not that leadership tomorrow is about choosing one level or dimension over another. Instead, it is about playing in all four quadrants. Good leaders and strong brands embed sustainability for business advantage in terms that respond to external pressures and consider the full value chain of their impacts, risks, and opportunities and convey to external partners and customers a clear vision.  These leaders also develop internal capabilities, such as culture, mission, and values at both the personal and organizational levels. The holy grail of consistency across all these levels we call holistic leadership.

Figure 1

To understand how fragmented have been past leadership approaches, consider where the work of the following authors maps onto Figure 1. Jim Collins’ Level 5 Leadership, described in his best seller Good to Great, is primarily at the external-facing personal level (lower left). Michael Porter’s Shared Value idea is primarily at the organizational level and external dimension (upper left) with its focus on market forces and strategic response. Our own works – Sustainable Value/Embedded Sustainability (Laszlo) and Green to Gold/Green Recovery (Winston) have largely focused on the microeconomic and organizational levels in the top half of Figure 1. Meanwhile, a growing strand of spiritual leadership authors such as L.W. Fry (“Toward a Theory of Spiritual Leadership”, The Leadership Quarterly, 2003) and Otto Scharmer (“Uncovering the Blind Spot of Leadership”, Leader to Leader, Winter 2008) have focused on the personal level and internal dimension (bottom right).

It is our contention that few thinkers and even fewer practitioners effectively operate in all four quadrants. The shift from systemic to holistic thinking may sound like just another conceptual distinction but, we believe a new kind of personal and brand leadership is in the works.  This shift will be at the heart of tomorrow’s sustainable business success.

¹ By mega-forces (in Figure 1), we are referring to increased resource constraints, climate-induced weather pressures, transparency demands, higher expectations of stakeholders along the end-to-end value chain, and tougher environmental and social regulation.


Andrew Winston, founder of Winston Eco-Strategies, is the author of Green Recovery, a strategic plan for using environmental thinking to survive hard economic times. He is also the co-author of Green to Gold, the best-selling guide to what works – and what doesn’t – when companies go green. Andrew is a globally recognized expert on green business, appearing regularly in major media such as The Wall Street Journal, Time, BusinessWeek, New York Times, and CNBC. Andrew is dedicated to helping companies both large and small use environmental strategy to grow, create enduring value, and build stronger relationships with employees, customers, and other stakeholders. His clients have included Bank of America, Bayer, HP, Pepsi, Boeing, and IKEA.


Chris Laszlo, Ph.D., is the author of Sustainable Value: How the World’s Leading Companies Are Doing Well by Doing Good (2008), Greenleaf Publishing and Stanford University Press, and The Sustainable Company (2003, paperback 2005), Island Press. He is an Associate Professor at Case Western Reserve University’s Weatherhead School of Management, where he is the Faculty Research Director at the Fowler Center for Sustainable Value. Chris is also the co-founder and Managing Partner of Sustainable Value Partners, LLC, an advisory services firm specialized in sustainability for business advantage.

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9
January

Five Trends Shaping Sustainable Brands in 2012

A few weeks ago, Raphael Bemporad, Principal of BBMG of NYC had the opportunity to grab lunch with a good friend, and renowned business guru Bob Bloom, to seek his advice as we looked ahead to the New Year.

“Looking ahead is useless,” he said in his typically wonderful, challenging way. In the context of market volatility, transformational new technologies and the exponential velocity of change, we have to instead “look around the corner.”

For Bob, success requires letting go of yesterday’s financials, five-point plans and outdated business models to bravely seize opportunities that are fiercely focused on leading innovation to create shared value.

It’s great advice. And, in the spirit of looking around the corner, we wanted to offer five trends that we believe will shape sustainable brands in 2012.

1. The Ubiquity of C2C

In 2012, we will experience a fundamental paradigm shift from a business-to-consumer (B2C) marketplace to a consumer-to-business (C2B) and consumer-to-consumer (C2C) marketplace—where creating, buying, selling and sharing products and services will increasingly be driven by consumers themselves.

This is happening in the context of radical personalization, collaborative consumption and co-creativity, where brand purchases and experiences are dis-intermediated by traditional brands and retailers and unleashed via new technologies and platforms (from Good Guide to Etsy to Getaround) that firmly place more power in the hands of consumers.

Success now means rethinking sales channels toward more direct interaction and inviting consumers in to imagine, create and extend how our brands live in the world.

Figure 1. Etsy’s explosive growth has been fueled by an increasing consumer appetite for radical personalization and co-creativity.

2. The Rise of Generation “Why?”

The rise of the C2C marketplace is driven in part by the influence of values-aspirational, practically minded New Consumers looking for brands that deliver total value: products that work well, cost less, last longer and do some good.

Youthful, educated, wired and mostly female, this New Consumer is asking “why” they should care about brands; and, if they can’t find what they’re looking for, “why not” just create the solutions themselves? New Consumers are more practical and more purposeful, and they’re not willing to wait.

And, with billions of these New Consumers entering the marketplace in developing economies, the key question will be whether brands can reach and delight them—beyond just more consumption—to inspire responsible purchases and deeper participation with health, happiness and sustainability in mind.

Figure 2. A favorite among New Consumers, Warby Parker delivers total value: stylish, practical, reasonably priced eyeglasses that also provide societal benefit.

3. The Race to Relationship

Thanks to Groupon and its countless competitors, 2011’s year of the deal saw virtually every brand category join an unfortunate race to the lowest-price bottom that is destroying brand value, reducing consumers to commodities and undermining our shared, long-term success.

Sure, we dig deals and we always will. Yet by focusing so relentlessly on unsustainable price discounts, we undermine the very potential for our brands to do more and mean more for our customers.

Instead, we believe 2012 will see a race to relationship, where the most successful brands will break free of the lowest-price trap and deliver more value by empowering consumers with better products and experiences and championing their success. ­Patagonia’s disruptive Don’t Buy This Jacket campaign highlights this commitment to creating enduring products and relationships by promising to make “useful gear that lasts a long time” and inviting us to reduce, repair, reuse, recycle and reimagine how and what we consume together.

As one of our favorite clients says, “We don’t want a one-night-stand with our customers. We want long-term love affairs.”

Figure 3. Patagonia’s brave Cyber Monday campaign focused on long-term impact instead of a quick sales bump.

4. The Imperative of Sustainable Brand Innovation

Whether it’s reducing resource risks in supply chains, driving efficiencies into workflows or reaping the rewards of increased transparency and corporate reputation, we believe sustainable brand innovation offers unmatched opportunity for exponential value creation for business, consumers, society and our planet.

In 2012, sustainable brands large and small will increasingly connect consumers, brand teams, suppliers and subject-matter experts in the innovation process to embed sustainability and social purpose into every business strategy, product design and stakeholder relationship.

Creating better brands, products, packaging and platforms, the highest performing companies will integrate practical, environmental and tribal benefits in every new offering—therefore becoming agents of change at a faster speed and larger scale than ever before.

Figure 4. The Neutrogena Naturals brand embraces innovation through partnerships with the Linus Paling Institute, technology scouts and experts in various health and science fields.

5: The Evolution from Occupy to Engage

If the most emblematic word of 2011 was “occupy,” we believe the word of 2012 will be “engage.”

With an existential howl against the status quo, the global Occupy movement represents a deep yearning for a new way of doing business that replaces short-term, transactional, profit-only thinking with a more responsible, transparent and equitable economy that creates more value for more people in more ways.

In 2012, there is good reason to believe that sustainable brands can lead the way.

In states from California to Maryland to New York, B Corporations are engaging policymakers to pass legislation that recognizes (and incentivizes) corporate accountability to all stakeholders: investors, consumers, employees, community members and the environment.

The Harvard Business Review hails the benefits of “The Good Company” that combines financial and social logic into its operations by engaging employees, partners and community institutions in building enduring value and success.

Meanwhile, pioneering brands from Levi’s to Coca Cola to Nike are engaging consumers so they spend less, enjoy more and take action on issues that improve our shared future—from protecting safe drinking water to preserving endangered habitats to creating more opportunities for the producers of their products around the world.

 

Figure 5. Brand as movement: Levi’s Water<Less jeans go beyond a disruptive manufacturing process to a cause partnership with Water.org and tips helping consumers save water.

As we enter a new year and look around the corner, we believe the most successful brands will meet the needs, hopes and aspirations of New Consumers; build more respectful, collaborative and enduring relationships with all stakeholders; and unleash our collective co-creativity to bring better, smarter and more impactful ideas to life in ways that create shared value for all.

An article written by Raphael Bemporad, Principal at BBMG of NYC for Sustainable Life Media

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