The right business strategy for corporate social responsibility

Something happens when the word "sustainability" comes up. People become fixated on the environmental aspects of corporate social responsibility and forget about the economics.

The following is an excerpt from the book Strategy for Sustainability: A Business Manifesto, by Adam Werbach.

In some aspects, running a company is not all that different than sustaining a busy, three-child family. The parents are struggling to pay the mortgage while striving to put away money for a college education, all the while dealing with tantrums and illnesses and unforeseen events. Companies need to take care of their three constituencies, too -- customers, employees, and suppliers -- constantly innovating on the core product or service, investing in sales and marketing, and finding new ways to save costs in the supply chain. For most families, the North Star is clear -- provide the kids more opportunities than what they had. For companies, finding a North Star can be trickier.

Skiers report snow blindness when the sun reflects off the snow and obscures their vision. Is there also "green blindness" that affects companies trying to take a leadership stance? Something happens when the word sustainability comes up. People forget the business. They become fixated on the environmental aspects of sustainability and forget about the economics. Hoards of midlevel managers flock to corporate social responsibility [CSR] conferences to empathize with each other about how difficult it is to get staff, resources, and management attention. The most common question I hear in these meetings is, "How did you get management to listen?"

If the goal were to build an information technology system, senior people across the organization would certainly come together to get management attention, time, and resources. Similarly, small, rebel factions across the organization would never have to work across department lines to "build the business case." Quite the opposite; without the business case, there would be no discussion. Why, then, do people struggle with implementing sustainability efforts?

They get stuck trying to be good corporate citizens and currying favor with outsiders, never actually figuring out how to connect sustainability to their core business. Some people almost feel guilty talking about sustainability as a business driver. But that's exactly the approach that would allow them to make the biggest change in the world.

Their sustainability initiative must be core to the business -- bold, not bolted on, not "feel good once a year" for employees. Economist editor Daniel Franklin explains this point: "Many companies pretend that their sustainability strategy runs deeper than it really does. It has become almost obligatory for executives to claim that CSR is 'connected to the core' of corporate strategy, or that it has become 'part of the DNA.' In truth, even ardent advocates of sustainability struggle to identify more than a handful of examples. More often the activities that go under the sustainability banner are a hotchpotch of pet projects at best tenuously related to the core business." To be successful, you need to peel off the green blinders and start thinking of sustainability as a new tool set, like information technology or globalization, that can help you reinvigorate a business.

At this point, you should have a clearer view of the situation facing a business, relative to changes in society, technology, and resources, based on your STaR map for the organization. Now a company needs to develop North Star goals to guide the whole organization toward executing a strategy for sustainability. Remember, a North Star goal is an overarching business goal that has these characteristics:

  • It is optimistic and aspirational.

  • Your organization can achieve it in five to fifteen years.

  • It applies across the enterprise.

  • Every employee can personally act on it.

  • It connects to the core of your business.

  • It drives excitement and passion in your organization.

  • It serves a higher purpose than business profitability.

  • It solves a great human challenge.

  • It leverages your organization's strengths.

Smaller companies founded more recently, like Stonyfield Farm and method, were founded with their North Star goals in mind. Their North Star goal connected solving a great human challenge with their organizational strengths. The founders knew the global human challenges that the companies hoped to solve. They built the core of their business around a higher purpose that inevitably drives excitement and passion in the organization. Many older companies, like Johnson & Johnson, have organizational beliefs that point them toward their North Star. Johnson & Johnson's credo begins, "We believe that our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services." JCPenney was founded on the Golden Rule as its operating belief. These strong, credo-based companies can move quite quickly into a strategy for sustainability, since tying the business functions even more closely to solving global human challenges is something the companies already desire. For other companies not built with sustainability in mind, there are a few types of North Star goals that they adopt:

  • Internal organizing or operating goals
  • Game-changing goals
  • Product- or service-changing goals
  • [People] get stuck trying to be good corporate citizens and currying favor with outsiders, never actually figuring out how to connect sustainability to their core business.

    Internal organizing North Star goals help provide a level of specificity and clarity to the organization. In 2008, for example, Hilton created four initiatives for its hotels around the world: (1) reduce the energy consumption of direct operations by 20 percent, (2) reduce CO2 emissions by 20 percent, (3) reduce waste output by 20 percent, and (4) reduce water consumption by 10 percent. These goals represent millions of dollars of cost savings for Hilton and require everyone, from the housekeepers to the operating engineers, to lend a hand. In 2007, Procter & Gamble set a five-year goal to "sell $20 billion worth of 'sustainable innovation products'; reduce carbon dioxide emissions, energy use, water use and waste by 10 percent and deliver 2 billion liters of clean water to children around the world." For P&G, leveraging its global reach to push $20 billion of new "sustainable innovation products" is a way to engage every person in the P&G organization. Sales is what they do.

    If you set an internal transformation goal (like Hilton's), then first look at the major resources used in your business and then project the efficiencies you could achieve through different scales of effort. Most companies can exceed even their most ambitious efficiency and waste-reduction goals, because they have much waste in their systems. Without a major conservation effort, from 1975 to 2006, the United States made a dollar of real gross domestic product with 48 percent less total energy, 54 percent less oil, 64 percent less directly used natural gas, 17 percent less electricity, and two-thirds less water. Goals for reducing the absolute amount of CO2 are harder to hit, particularly if yours is a growing business. Do not let that dissuade you. Once you have measured your carbon footprint, your first step should be to increase efficiency, which will result in increasing the profit per unit of carbon consumed. Walter Stahel, who defined the cradle-to-cradle concept, recommends using the metric of dollars of profit per unit of material consumed. Either way, goals to reduce absolute resource consumption are critical across the economy.

    Read more about Strategies for Sustainability. Reprinted by permission of Harvard Business Press. Excerpted from Strategy for Sustainability: A Business Manifesto (July 2009). Copyright © 2009 Adam Werbach; All Rights Reserved.

This was first published in July 2009
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