9. Making It Happen in Your Organization
As shown in the previous chapters, the challenges involved in understanding and effectively managing the risks and opportunities inherent in pursuing corporate sustainability are numerous, complex, and interrelated. Many actors, both within and beyond the organization, play roles in and have different levels of influence on the firm, the nature and prominence of its major ES&G issues, and its ability to chart and maintain an optimal course toward long-term sustainability. Moreover, the types of issues that are becoming increasingly prominent in the minds of more organizational (and societal) stakeholders may be difficult to manage using conventional approaches, organizational structures, and behaviors. This chapter synthesizes some of the key ideas presented in this book. It outlines a thought process and approach that recognizes and addresses the important obstacles that limit progress toward a more sustainable business model in many companies. This chapter also provides key touch points for business executives and managers to refer to as they consider how best to address the crucial ES&G issues facing their own organizations. I then summarize some of the key skills and behavioral attributes that I believe will be important for those who work on sustainability issues within companies or who may seek to do so in the future. This discussion is predicated upon my belief that effective management of ES&G issues in the future will require a far more interdisciplinary and strategic approach than has generally been applied up to this point. The chapter, and this book, concludes with a few final thoughts.
Creating Sustainable Value for the Enterprise
With the growing interest and involvement of financial sector actors in the management of corporate ES&G issues, it is imperative that any company-wide initiative or program to pursue sustainability have a fundamental orientation toward creating value. It is legitimate and admirable for companies to participate in philanthropic endeavors, adopt a policy of corporate social responsibility, and undertake efforts to limit any adverse impacts of their activities on public goods and limited natural resources. But unless and until there is a fundamental redrawing of the role of the corporation in American society, it is important that business executives and managers approach sustainability issues with a consistent focus. They must concentrate on the determinants of financial value—revenue growth, earnings growth, and risk control/reduction. They must find ways to limit adverse environmental, health and safety, or social impacts and offer products and services that are more environmentally and socially benign than existing alternatives. And they must do so while also increasing efficiency and reducing costs, risks, and liabilities. This strategy is the most promising path toward long-term growth in revenues and shareholder wealth, greater stability, and organizational sustainability.
This chapter offers a generalized approach by which this can be done in virtually any company. Many of the specific activities listed here were described in Chapter 5. They are summarized here to show you how more fully considering market forces and actors and the financial implications of ES&G issues (as explored in Chapters 6, 7, and 8) suggests an alternative approach to organizational sustainability—one that is materially different from that employed in many companies to this point.
Create (or Improve) a Financial Value Orientation
As stated in several places in this book, it is logical, effective, and efficient to start with a value-creation orientation when defining a sustainability program or initiative. This makes much more sense than applying financial considerations as a final screen or hurdle to be cleared when evaluating specific ES&G-oriented projects or programs. The place to begin is with the firm’s organizational mission, vision, major objectives, and strategy. Presumably, these are established and well understood by the executives and managers leading any such effort. 1 If they are not present, or are but do not appear to provide an adequate basis for establishing a sustainability program, the early work on the latter provides an excellent opportunity to reexamine and, as appropriate, retool the firm’s defined mission, plans, and strategy, and/or clarify or refine its organizational values. In conjunction with reviewing these fundamental aspects of what the firm is about and what it seeks to accomplish, those leading any sustainability effort should consider the major financial goals that have been established by senior management. They should begin thinking, in general terms, about how various aspects of the sustainability program or initiative can support or advance attainment of these goals.
Once the key organizational objectives, plans, and financial goals have been assembled, three substantial fact-finding and analysis steps should be carried out. The first is to conduct a business position assessment that considers current economic conditions and the stage of the overall business cycle; the nature, risk profile, and prospects of the company’s industry;2 and the firm’s recent performance and visible opportunities and threats. The second step is to map the firm’s major business activities (both current and planned) to all relevant major ES&G endpoints. Conceptually, this process can work much like the environmental aspects analysis described in Chapter 5. The exception is that it considers both the organization’s ongoing activities, products, and services and prospective new ones. In the current context, however, it is especially important that in evaluating the significance of each ES&G aspect, stakeholder and financial criteria should be explicitly included, even if only indirectly or partially. This assessment should focus on the metrics that really count (such as those directly related to company strategic goals, sources of competitive advantage, or investor concerns), rather than standard financial statement items or commonly used ratios. The final major step is to assemble the firm’s relevant ES&G, operating, and financial data. This information should be organized by key financial endpoints—revenue growth, profitability, and risk management, and/or the intangible assets that are most important within the firm’s industry. To the extent possible, the team should attempt to quantify and tabulate data on resources (including, man-hours and funds) invested in existing EHS or sustainability programs. The team also should outline both existing and potential linkages between these programs and core business management processes.
With the foregoing information developed and assembled in this way, the involved executives and managers can then evaluate and compare the quantified benefits of their existing activities to their associated costs. They also can better understand how these activities contribute to building the firm’s intangible assets and the capabilities and attributes needed to execute its value-creation strategy, thus providing a portion of the foundation that will generate future revenues. In addition, the data will enable the team to identify and rank high-payoff ES&G-focused activities and distinguish them from others that are costly and/or that provide limited or no appreciable financial benefits. The resulting information can then be used to identify and address gaps in current metrics and/or measurement practices and make appropriate adjustments in priorities, approaches, staffing, and funding.
The final activity is to develop capture plans for and compile a portfolio of the most promising opportunities. 3 This involves defining value-creation objectives and, for each, a range of target values to be attained over time. For each opportunity, the team should develop a management program that defines methods, processes, responsibilities, required resources (money and staff), time frames, and performance measures. The management program also should address the risks and required analysis/documentation, if any, that would accompany a process change associated with pursuing the opportunity. The resulting set of capture plans can then be assembled into a portfolio of high-priority opportunities that would be presented to the relevant company senior management for consideration.
This approach to pursuing organizational sustainability offers several advantages over the more commonly used tactical, issue-driven alternative. First, it allows the team and the company to identify, manage, improve, measure, and report what really matters. They don’t have to expend valuable resources on issues to which the firm can contribute relatively little and/or that offer no opportunity to create new financial value. Another advantage is that this approach allows the firm to develop and articulate a compelling value proposition to all stakeholders, including investors and other financial community entities that, as discussed in previous chapters, are increasingly engaged with ES&G issues. By taking this approach, companies also can surface, articulate, and discuss any policy/legal risks and stakeholder concerns in advance, rather than reacting to (perhaps unanticipated) developments after they occur. On a related note, by using this approach, the firm attains and maintains greater control over its messaging, image, and brand strength while offering greater transparency and credibility. 4 By proactively addressing important (and only important) ES&G issues and stakeholder concerns, improving clarity and transparency, and focusing explicitly and skillfully on creating stable but continually growing financial value, companies can achieve durable competitive advantage.
Secure and Maintain Senior Management Commitment and Ongoing Involvement
The issues involved in actively pursuing sustainability are important, will affect many different people housed within different functions, and are likely to change any number of existing beliefs and work practices. Therefore, it is vital for any substantive initiative or program devoted to sustainability to include tangible senior management commitment and visible involvement. As discussed in previous chapters, there are simply too many human foibles and entrenched behavior patterns to overcome, and too much opportunity for the effort to be sidetracked, marginalized, or “captured” by one internal group, to the detriment of the firm as a whole, for any other senior management posture to be either effective or sensible.
Forge Constructive Relationships with Important External Stakeholders
It should be clear by now that company stakeholders are growing more numerous, more interested and engaged, and more assertive regarding ES&G issues. It also should be apparent that many, if not most, of the concerns being raised by the more important corporate stakeholders are legitimate and worthy of consideration. Executives contemplating beginning or building on existing sustainability program efforts should ensure the following:
• An explicit effort to identify the firm’s important stakeholders is conducted (or updated)
• A process exists for determining which stakeholders (or types) are considered significant and appropriate for engagement
• Stakeholder relationships are established (or improved upon), with a clear understanding of the roles and expectations of all parties
• These relationships receive the attention and resources they need to produce the desired outcomes
Forewarned is forearmed!
Define an ES&G Mission, Vision, and Explicit Linkages to the Overall Corporate Strategy
Regardless of whether a particular organization and its leadership choose to undertake the activities just described (adopting a value-creation orientation), it is important to explicitly define a few points. You must spell out what is to be accomplished through any sustainability program or initiative, what the desired end state would represent, and how ES&G performance-improvement activities are related to the major elements of the overall company strategy to maintain and grow its business. Absent such linkages, it may be difficult or impossible to attract or maintain support within senior management and across the organization. It also will become more likely that priorities and decisions will be made on the basis of personal preference, past practice, or other factors not directly related to creating new financial value.
Formulate ES&G/Sustainability Objectives
Any rational program or initiative has one or more objectives that represent a desired outcome. Outcomes may be defined only in general terms, be difficult to attain, and require a number of years to reach. Nonetheless, such longer-term objectives must be defined and receive at least the endorsement of company senior management. Otherwise, it may be difficult for the sustainability program or initiative to achieve more than incremental improvements over the status quo, demonstrate to internal and external stakeholders that it has a purpose and is worthy of support, and attract the participation and enthusiasm of people across the organization needed for it to succeed.
Strengthen Organization-Wide Policies, Goals, and Performance Metrics
To attain program objectives, the firm needs to establish (or enhance existing) policies regarding environmental protection, worker health and safety, human and labor rights, other social issues, and governance. Alternatively, it could consolidate its position and aspirations regarding these topics into either a smaller number of combinations or a single sustainability policy. As discussed earlier in this book, coherent policies that apply to all parts of the firm provide an essential point of reference both for any sustainability team and for all other members of the organization. Specific goals are required to render long-term objectives workable, tangible, and immediate. A ten-year objective without accompanying shorter-term goals (such as for this year) invites delay and may signal (correctly or incorrectly) the absence of a serious commitment on the part of senior management. Finally, the bookend to defining program objectives (and more specific goals) is a set of performance metrics that are populated and reported up the management chain at regular intervals. Metrics provide a feedback mechanism that is essential to ensuring that the effort is on course or, alternatively, that corrective measures are required.
Deploy Necessary Infrastructure
Actively pursuing sustainability goals, which generally requires at least some organizational change, does not happen by itself or solely with the hard work and good intentions of their proponents. The firm must have management and information systems, work practices, incentives, training, and other infrastructure elements with which to help define and impel sustainability-oriented behaviors and achieve ES&G performance improvement. Many companies, particularly larger ones, may have an existing array of EMSs, EHS management tools, procedures and processes, training materials, and other assets that can be drawn upon to establish the required sustainability program infrastructure. These existing assets may require expansion, updating, or even extensive retooling. But they offer the advantage of being familiar (and likely credible) to company staff, and they probably can be modified more quickly and at lower cost than starting anew. In other cases, it may be necessary to develop the required elements from scratch. In such cases, sustainability team members might want to perform some research on tools and resources developed by their industry/trade associations, consult relevant international standards and guidelines (discussed in Chapters 3 and 5), and examine resources available from public sector entities (including the EPA, OSHA, and state government agencies), NGOs, and educational institutions.
Leverage Capability Through Cross-Functional Teams
As suggested previously, ES&G issues are multifaceted and often complex. Successfully understanding them and optimizing the firm’s activities to alleviate concerns and take advantage of opportunities requires the involvement of people having diverse knowledge, insight, capabilities, credibility, and authority. The only practical way in which the necessary diversity can be brought to bear throughout the preparation, launch, and ongoing operation of a sustainability program or initiative is to form a team collectively offering the perspectives and attributes required. The likely outcome is that the whole becomes greater than the sum of its parts, in terms of business-relevant insights, internal credibility, effectiveness in transforming ideas into action, and generating results efficiently and quickly. The likely outcomes if this is not done include some combination of internal resistance, hardening of organizational silos, thinking and improvement initiatives that are tactical rather than strategic, promotion of ideas that may not be operationally feasible, and unrecognized (and foregone) opportunities for improvement.
Measure and Report Performance
Just as it is important to establish long-term objectives and shorter-term goals toward their attainment, the firm must measure and document progress (or the lack thereof) at regular intervals. Only in this way is it possible to determine whether plans are taking shape as intended, tasks are being completed, and activities are achieving their desired ends. As suggested here and in Chapter 8, the team should carefully consider defining a set of metrics that address ES&G posture and performance concerns of external stakeholders and activity levels, investments, and operational and financial results generated by sustainability initiatives. Unfortunately, most corporate sustainability programs appear to currently focus almost exclusively on the former, that is, the conventional measures of ES&G performance described in Chapter 8. For companies to address sustainability in all of its dimensions, as suggested here, the focus needs to become broader and, in some ways, deeper, to address the value creation potential and results of sustainability activities. Another important decision to be made is how widely to report performance, and in what format(s). Clearly, regular reporting to senior management is essential. A variety of indications show that public reporting of at least key ES&G performance results will increasingly be required of public companies, whether through new mandates or in response to stakeholder demands. It would seem prudent for senior executives in many companies to consider their options and preferences now, while maximum flexibility regarding this important issue remains available to them.
Seek, Obtain, and Evaluate Feedback
Few people enjoy receiving criticism, whether from supervisors or others. But it is important to recognize that constructive criticism from one’s management or from important stakeholders can provide important information and insights and can be the starting point for future improvements. Those involved in creating or improving a corporate sustainability program should ensure that it includes robust mechanisms to collect feedback from key internal and external stakeholders, whether or not such feedback is volunteered. They also should ensure that their program has a means by which reactions to the program and its results are factored into its deliberations and decision-making moving forward. In most companies, senior management and its views and preferences will receive adequate attention. But it also is important to “close the loop” with external parties by providing a response to their feedback. Even if the company’s response is to not accept the requests(s) or recommendation(s) offered, it is important to keep the communication channel open as a means of ensuring that the relationship remains productive and respectful.
Continually Improve
As you probably know by now, sustainability should be viewed as a journey rather than a destination. The conditions confronting any company are continually changing, and ES&G issues are multidimensional and complex. Therefore, the leaders of any corporate sustainability team can be assured that the results of their efforts, no matter how insightful and effective, will position their company for success for only a limited time. In other words, as soon as (or before) the company reaps the rewards of its adept management of ES&G issues, the conditions that the team so skillfully addressed will have changed. And the firm will need to modify its positions, activities, and priorities in response. A realistic and reasonable expectation is that the firm, and its intellectual capital, brand value, relationships, and other intangible assets, will improve over time as it successfully addresses its substantial ES&G aspects. These improvements in the company’s intangible assets will enable it to maintain and grow its revenue, increase earnings, and reduce and control its risks and liabilities. Accordingly, continual performance improvement along all relevant ES&G dimensions should be the stated goal and expectation of any coherent sustainability program or initiative.
By implementing this set of activities, companies and their leaders and managers can understand and optimize their collective responses to the important ES&G trends and challenges described in this book. Many of the recommended actions represent a distinct departure from the conditions and work practices that exist in many organizations today. Therefore, it should be unsurprising that those who are or would be involved in sustainability-oriented activities in corporations will need to exhibit some skills, behaviors, and attributes that may not be in common use today. This topic and its implications are explored in the next section.
Implications for Sustainability Professionals
From the foregoing, it should be clear that business as usual will be insufficient to meet the challenges and capture the opportunities presented by ES&G issues or to implement the steps needed to make corporations more sustainable. If you’re involved in sustainability-related activities within a company, or you may become involved in the future, the trends and indicated actions discussed throughout this book suggest a number of implications.
The World, and Sustainability Challenges, Are Dynamic
The field of corporate sustainability, and all the business functions and external influences that affect it, are highly dynamic. This suggests that those involved in managing sustainability programs or initiatives, particularly those at executive levels (such as newly minted Chief Sustainability Officers), must be vigilant and inquisitive. They need to be able to perceive and understand changes in the business landscape as they occur. The dynamic nature of ES&G issues also implies that it is important to establish (or sharpen) a mechanism whereby corporate sustainability leaders can continually scan the horizon and identify emerging issues before they become acute concerns.
Another finding that emerges from examining ES&G issues and the trends that have unfolded over recent years is that the conventional wisdom is often incorrect. Any number of commonly, and often tightly, held assumptions about corporate sustainability have been upended or called into question. These include the nature and importance of EHS issues and their impact on the firm’s financial success, the relationship of the firm to its employees and society, and the appropriate factors to consider when investing in corporate securities. Given recent trends, it is not unreasonable to expect further disruption of the consensus in relevant domains during the next several years.
As in so many other areas of business, ES&G issues and concerns are becoming more global. Notably, the trend runs in both directions. U.S. companies increasingly are being held responsible for their contributions to transboundary environmental problems, labor conditions used by offshore suppliers/manufacturers, and other issues. And major customers, national governments, and host societies are raising their level of expectations regarding acceptable corporate practices abroad. U.S. corporations having any substantial international involvement (virtually all large and mid-cap U.S. firms) and those who lead or seek to lead their sustainability efforts therefore must understand the reach of their companies (both the supply chain and customer markets). They also must remain abreast of the major ES&G concerns and trends in play in all relevant geographies.
In response to the nature and magnitude of several ES&G issues and growing public concern about them, there is significant potential for additional public sector activity across a number of domains relevant to the sustainability posture and programs of U.S. companies. Some of these activities may have important and unexpected impacts, and others are likely to have effects that are predictable but seem to be underappreciated at present. Examples (discussed in earlier chapters) include but by no means are limited to the following:
• The possibility of mandatory disclosure of corporate ES&G information imposed by the SEC
• A modified interpretation of ERISA by the U.S. Department of Labor
• Material/product restrictions under the REACH regulation of the EU
• More-restrictive product/process requirements issued by the EPA and/or GSA applied to goods and services sold to the U.S. federal government
Vigilance, on both a personal and systematic level, will be required to remain abreast of such developments. In addition, depending on the nature of the firm’s lines of business and the prominence of particular issues or public sector entities in its operations, establishing and maintaining cooperative, respectful lines of bilateral communication with the relevant public sector organizations may be warranted.
One consequence of the dynamism created by the increasing prominence of ES&G issues and stakeholder expectations is that threats to and opportunities for the business may emerge from unexpected, even unfamiliar, places. This can occur in any number of ways. For example, a new EHS regulation (or natural resources use restriction) may impose short-term costs on either one’s own firm or one or more major competitors. This might create a severe impact on production, pricing, or margins or, alternatively, an opportunity to price aggressively yet profitably to capture market share and build customer relationships. Lack of effective EHS management systems and controls can lead to accidents, incidents, and even disasters. These can create financial liabilities, damage public image and brand value, weaken the firm’s competitive position, and, perversely, bring public pressure for new regulatory controls that affect all industry participants—even those with effective programs. Such wide-ranging effects also can create opportunities for firms with a track record of high-level performance and for those who bring to market new products and services that help alleviate the source(s) of concern.
Sustainability Must Be Viewed as a Core Requirement
As documented in numerous places throughout this book, the notion of sustainability as I have defined it (in Chapter 2) provides an accurate reflection of and appropriate response to external conditions. These conditions affect business enterprises of all types and sizes that are significant, growing, and more than likely to remain so during the next several decades. The question facing any business and its leadership, therefore, is not whether they need to accept and address the need for a coherent approach to sustainability, but when and how this work will be done. I have made the case that a disciplined, financially driven approach will be needed for such efforts to succeed and reach their full potential. And I have provided substantial evidence of how and why such an approach is justified and worthy of senior management support and involvement.
What It Takes
Assuming general agreement with these assertions, the key question then becomes, who should lead and be involved with sustainability program development, deployment, and operation (or, alternatively, refinement)? A growing number of companies are beginning to answer this question by appointing Chief Sustainability Officers (CSOs). Interestingly, however, there does not appear to be a common formula for how to fill this position, in terms of prior experience and qualifications. Some firms choose an EHS professional from their own ranks or from another company. Others select a member of the public relations staff. Still others broaden the responsibilities of an existing senior executive by adding the CSO title.
Every company is different, and there may be compelling reasons to place certain key employees in a multifaceted, challenging position such as the CSO. But I believe that the emerging realities described here suggest that what might be considered a general job description for a CSO is expanding. This means that certain attributes are important to success in this position and are likely to remain so for the foreseeable future. Among them are the attributes described in the following sections.
Strategic Thinking
Viewed through the appropriate lens, leading a coherent sustainability program or initiative in a company of substantial size is a major challenge that involves many moving parts. The relevant aspects of existing EHS compliance, employee development, philanthropy, and other corporate activities and functions must be brought together. And an effective way to manage multiple endpoints, people, and programs must be found. These tasks require the ability to think strategically. Moreover, existing programs must be woven together and expanded in scope to include active consideration of business-relevant opportunities. This implies the ability to look across functions, disciplines, programs, and issues, distill common themes, and develop effective strategies for satisfying multiple needs without substantially increasing the total effort and cost devoted to meeting these expectations.
Technical Expertise and Cross-Functional Understanding
CSOs and people in similar positions must be conversant in, at least on a conceptual level, the essence of EHS regulation and policy, energy management, pollution prevention, supply chain management, financial analysis, and operations management. This knowledge is essential to being able to “connect the dots” in the appropriate ways, make sound decisions about relative priorities, and plan, assign, and oversee work performed by company staff. A thorough grounding in at least one of these disciplines and some meaningful exposure to the others is now and always will be needed to effectively execute the duties of a CSO, at least as defined here.
A corollary to this point is that among the many EHS professionals currently doing sustainability work in corporations, a large percentage will need to gain a greater appreciation of and facility with financial concepts and financial market dynamics. These additional talents will be needed for them to make the right decisions and reach their full value-creation potential, whether or not they are chosen to fulfill the role of CSO. The following sidebar contains further perspective on these issues from some respected voices in the field.
Critical Thinking and Analysis Skills
As noted previously, emerging ES&G issues are raising many questions about widely held beliefs, attitudes, and practices. Therefore, it is important that CSOs and other senior professionals working on sustainability issues be able to parse and carefully evaluate competing claims and reach rational, fact-based conclusions and decisions. Executives and managers working on corporate sustainability issues therefore should cultivate the ability to think critically, ask probing questions, challenge assumptions and analytical methods, and generally bring a skeptical eye to claims based on or dependent on “what everyone knows.”
Team Building and Leadership
Remaining abreast of the many ES&G issues and trends that are taking shape across multiple business functions and geographies necessarily involves forming and coordinating activities across a multidis-ciplinary team. Serving as team leader and, more generally, the focal point for internal sustainability efforts, the CSO needs to cultivate and maintain relationships with knowledgeable and reliable contacts in key roles across the company. The simple fact is that no one person has all the relevant knowledge, skills, and wherewithal to develop and implement an optimal sustainability strategy and program in a company of significant size. Nor can one person continually carry out the reconnaissance activities needed to remain informed about all relevant issues. Relationships across the organization are key to making things happen. The CSO needs to demonstrate (or quickly develop) the ability to get people of different backgrounds and with different immediate priorities to work together and pull in the same direction.
Communication Skills
People who are assigned to develop, deploy, and explain a sustainability program or initiative to internal and external audiences must be able to communicate complex concepts in terms that can be readily understood by people with widely varying levels of education and sophistication. Being able to speak clearly and authoritatively, make oneself understood, and effectively respond to questions and even hostility under a variety of circumstances is and will become more important in the future as ES&G issues become more prominent for more companies. In addition, as in so many other aspects of the business world, the ability to write clearly and effectively is imperative. Increasing demands for corporate transparency inexorably lead to more disclosure, and the issues are complex and multifaceted.
For those companies, and the executives and aspiring sustainability leaders within them, it may be appropriate to seek opportunities to build or improve on existing skills in these areas. Partnerships or contractual arrangements with external stakeholders and product/service providers can accelerate progress. Many sources of guidance, training, tools, and other assistance are available. As discussed in Chapters 2 and 5, the availability of proven approaches, methods, data, and both formal and informal training is extensive. Hundreds of qualified consulting firms, NGOs, public sector programs, and educational institutions offer products and services ranging from EHS compliance training to facilitated team-building exercises. Finally, interested individuals might want to supplement their previous formal education by pursuing graduate-level study or working toward a certification.
As discussed in a number of places in this book (particularly in Chapters 3, 4, and 5), sustainability programs will be most effective if those leading them exhibit certain characteristics. I don’t want to sound pejorative, but my experience suggests that by the time people enter the workforce, they either have these attributes or they don’t. These qualities are not a function of formal education or on-the-job experience but instead are personality aspects that are shaped by an individual’s life experiences and personal values. I suggest that having and using the personal attributes discussed next will distinguish those who are highly successful in the CSO role and the sustainability field more generally from those who are not.
Intellectual Curiosity
In my view, pursuing organizational sustainability is not concerned simply with demonstrating responsibility, satisfying external expectations, or controlling risk. Instead, it is fundamentally about continually asking yourself (and your colleagues) how the status quo can be improved upon. Viewed appropriately, ES&G issues are evaluated in terms of not only risk and liability exposure but also new opportunities for the business to grow and thrive. Finding and pursuing these opportunities requires a type of intellectual curiosity and impatience that are often absent (or suppressed) in many business organizations and functions. In my experience, these qualities are more common in corporate research and development departments. But they also can be found within the more creative NGOs, certain pockets of public sector organizations, and academia. Discovery is often an enlightening and empowering phenomenon. Those who would lead sustainability programs should be expected to either bring the intellectual firepower needed to drive discovery in their organizations or deploy and support others who can. The following sidebar offers some corporate perspectives on the importance of this attribute.
Personal Integrity
Working effectively with both colleagues and external stakeholders will be far easier and more productive if you display honesty, integrity, and fair dealing with others. People will willingly follow a leader who upholds their personal values (or aspirations), even if the work ahead is difficult and the outcomes are uncertain. People also will, under certain conditions, follow a leader who is unscrupulous, dishonest, or overly self-serving, particularly if they believe their employment or personal well-being are at risk if they do not. In the context of organizational sustainability, however, such people are poorly suited for leadership roles. Effectively managing the many ES&G issues that affect even moderately large companies requires the involvement of too many people and has too many moving parts for such an arrangement to be effective. And, importantly, putting someone who lacks personal integrity in charge of (or in a prominent role in) the firm’s sustainability program(s) or initiatives puts at risk the company’s social license to operate. Anyone who might become the face of the firm, even in a limited way, simply must embody its highest virtues and core values.
Courage of Convictions
Making sustainable business behavior happen within a company, particularly a large company, is intrinsically difficult. Those who take on the role of leading such efforts will inevitably face skepticism from some colleagues, employees, and external stakeholders. And because people are inherently resistant to change, it is not unlikely that CSOs and other sustainability leaders will encounter both active and passive resistance. To be effective in their roles, these people need to believe earnestly in what they are doing. They also must be willing to take a stand on important issues that may be unpopular, defy long-standing company custom, threaten the personal interests of internally powerful people, or otherwise upset the status quo and push people out of their comfort zones. Doing so involves taking on personal risk. Only those who are willing to face up to the possible consequences of taking an unpopular stand will be able to prevail. The CSO is an unsuitable position for company wallflowers, yes-men (or women), and those seeking tranquility, security, or popularity.
Open-Mindedness and Flexibility
By its nature, a coherent program or initiative focused on sustainable business practices will bring to light new issues and concerns, as well as possible solutions, ideas, and ways of doing things that are outside the firm’s current normal operating practices. As discussed in Chapter 5, sustainability efforts will be greatly helped and, indeed, can only reach full flower, if it is widely understood that new ideas and ways of thinking are encouraged. Accordingly, the CSO must model the desired behavior by demonstrating open-mindedness and promoting experimentation and discovery. This may require the CSO and other senior leaders to set aside existing biases and beliefs, comfortable and widely accepted ways of looking at particular issues, and communication channels that provide only limited access from all employees to senior decision-makers. They also must show open-mindedness regarding the sources and types of ideas that are received and evaluated and make clear that good ideas are welcome and sought from all corners of the company, as well as from stakeholders. Similarly, the evaluation of potential improvements must be performed using criteria that are clear, reasonable, and consistently applied.
Empathy
Finally, managing ES&G issues provides exposure to a wide array of different viewpoints, priorities, biases, and interests. Often it will be impossible to reconcile or harmonize all company and stakeholder positions on some issues. Nevertheless, it is important that any person serving as a CSO understand where others are coming from. Empathy is the ability to see an issue through another’s eyes. Even if you disagree with the person’s position on that issue, you can be reasonably confident that you understand why the other party sees the issue in the way he or she does. Being able to understand ES&G issues in this way is essential to the work of a CSO so that the firm can make decisions that are in its long-term interests. This includes maintaining productive relationships with all important stakeholders. Absent this understanding, the firm may make decisions that do not recognize or address legitimate stakeholder concerns (risking alienation or resistance), do not produce the desired and expected outcomes, or do not take advantage of potential win-win situations.
Closing Thoughts
In this book, I have attempted to show why and how sustainability is rapidly becoming a business imperative. I have provided extensive thoughts on what it will take for both businesses and the executives and managers working for them to respond to the challenges and opportunities presented by emerging environmental, health and safety, social, and governance issues. My greatest hope is that the information and ideas presented here will be of value to those who are dedicated to making their companies and communities as broadly successful, productive, and sustainable as possible. At the very least, I hope I have helped you look at some of these issues in a new light and to consider whether and how some of the concepts presented here can be of value to you in some small way. In either case, I wish you success in your endeavors.
Endnotes
1. As discussed at length in Chapter 5, when you begin a sustainability program in earnest, I strongly recommend the formation of a cross-functional team that includes high-ranking, respected members from across the organization. The following discussion assumes that such a team has been formed and is leading the sustainability program or initiative.
2. In the case of conglomerates, examining the few industries comprising the largest revenue shares and/or presenting the most prominent ES&G issues should suffice.
3. Note that in this context, I define “opportunity” to include elimination of risks and liabilities—that is, removing or diminishing the magnitude or likelihood of one or more negative outcomes.
4. As discussed in Chapters 3 and 4, firms can no longer truly control the information describing their operations and effects or, in a larger sense, their public image. But they can take steps to shape that image in constructive ways. However, doing so requires a degree of transparency that is beyond the current norm for many firms.