Continuing the exploration of ways for organizations to do more for biodiversity and environmental sustainability, here are three novel initiatives that may be established by any organization:
Adopt a threatened animal species, plant species and habitat. In addition to the donations allocated to programs dedicated to their protection, such an approach would also raise awareness with both internal and external stakeholders. It would have a motivational factor for staff, knowing that through their work they do something for giving back to the environment. Thus, the company sponsored animal species and company sponsored plant would be symbols of organizational concerns towards the environment and complement their business driven role.
Launch of a product or service with all profits generated through its sales donated to non-profits running programs focused on sustainability issues. A number of such examples already exist, with proceeds dedicated to humanitarian or research causes. Dedicating such an initiative to environmental causes, would complement the emphasis put on Corporate Social Responsibility.
Donate 1% of revenues to environmental causes. Established in 2002, 1% for the Planet is a not-profit organization that has established a network of over 1,400 companies across 44 countries willing to allocate at least 1% of revenues (top line sales) directly to non-profit organizations focused on issues of sustainability. The donations can be allocated to non-profits selected from a list of over 2,600 pre-approved non-profit organizations from around the world. Not surprisingly, most of the companies that have committed to this cause are privately held.
Through such initiatives and similar other ones, organizations can gradually bridge the separation between business and environmental/sustainability issues. Protecting the environment should be seen as part of the business, built in the business model. Success stories such as Interface demonstrate the benefits of such approaches. However corporate environmental initiatives should not be seen as something that is in scope for large companies and market leaders only. Each organization, small or large has a footprint that should be acknowledged and compensated for. A change of mentalities and business models may be necessary for such a transition, enabling smaller, more agile companies to be at the forefront of such a change.
In addition to the organizational level impact, a secondary benefit of such initiatives is at individual level, as awareness in sustainability issues would cascade down from organizational level to employee level, thus being amplified through social networks. Ultimately both individuals and organizations have a footprint on the environment and a shared sense of responsibility should exist at both levels.
In two of my previous blog posts I addressed the link between biodiversity, sustainability and performance, raising questions around the role each organization has in addressing these issues. Companies such as Interface have demonstrated that efforts to reduce carbon footprint and environmental stewardship practices are rewarded by customers and the stockmarket. Such examples are for now exceptions and more can be done to embed sustainability practices in organizations. Besides theory and rhetoric, there are a number of practical ideas that are worth exploring:
At a business philosophy level, environmental concerns need to be at the core of the business model and not be seen simply as a marketing / public relations stunt. Sustainability is today a key value driver of organizational performance.
Environmental / sustainability statements elements should be used across organizational performance management systems and not in isolation. While specific organizational wide environmental plans and reports are useful, elements of environmental rhetoric should appear in mission and vision statements, values and other elements of the corporate identity. Being at the core of who and what the organization is, sends a strong message both internally and externally.
Environmental / sustainability components should also have a prominent role in the organizational strategy. While many organizations have objectives and KPIs dedicated to these aspects, there is merit in considering sustainability a dedicated strategic perspective. The traditional approach of grouping organizational Balanced Scorecards in strategic perspectives is structured around: Financial, Customer, Internal Processes and Learning & Growth. One of the most powerful catalysts of increasing this profile is the inclusion of a sustainability perspective in addition to the traditional four perspectives of the Balanced Scorecard. Ultimately organizations don’t operate in a vacuum, as the environment influences their activity. A possible name for it is Corporate Environmental Responsibility or Sustainability, with objectives related to aspects such as: nurturing biodiversity, footprint reduction and community support.
A less drastic alternative to establishing a sustainability perspective is the use of a strategic theme that cuts across organizational strategy (and Strategy Map), linking sustainability related objectives and KPIs. A benefit of this would be a clear articulation of the financial support dedicated to sustainability aspects, as a subset of the financial perspective.
Some might say “we are in the business of making money for our shareholders”, however as the current system of ensuring biodiversity and sustainability is failing, perhaps the role of companies in this context needs to be revisited. While many programs are underway in organizations around the world, more can be done in terms of inclusion of staff across the organization, as well as inclusion of organizations of all sizes in aligning their performance management system with sustainability.
There is widespread awareness today about the climate change and other environmental issues we are facing today at a global scale. In a simplistic way, I would categorize companies in three categories: the ones that don’t care, the ones that do something about it and the ones in the middle.
Perhaps the largest group is formed of the companies that don’t care, adepts of the principle that there are out there suitable institutions (government, UN bodies) to do something about these issues. This group is embodied by Milton Friedman’s quote in his notorious 1970 New York Times Magazine article, The Social Responsibility of Business is to Increase its Profits:
“There is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”
Unfortunately, human behaviour oftentimes has difficulties with finding a balance and all too often issues with traffic of influence, deception and fraud emerge as unwanted consequences of the profit driven behaviour.
Many organizations are doing something about it. At the forefront of sustainable business practices is Interface, the world’s leading producer of soft-surfaced modular floorcoverings. Its mission embodies an emergent approach to sustainability as a value driver for the business:
“Interface will become the first name in commercial and institutional interiors worldwide through its commitment to people, process, product, place and profits. We will strive to create an organization wherein all people are accorded unconditional respect and dignity; one that allows each person to continuously learn and develop. We will focus on product (which includes service) through constant emphasis on process quality and engineering, which we will combine with careful attention to our customers’ needs so as always to deliver superior value to our customers, thereby maximizing all stakeholders’ satisfaction. We will honor the places where we do business by endeavoring to become the first name in industrial ecology, a corporation that cherishes nature and restores the environment. Interface will lead by example and validate by results, including profits, leaving the world a better place than when we began, and we will be restorative through the power of our influence in the world.”
The financial results of Interface prove that embracing sustainability translates into excellent financial results. The gross profit as a percentage of net sale was at over 33% for the last 5 years. In terms of stock performance, for the five-year period ended January 2, 2011, its total returns to shareholders (stock price plus dividends, divided by beginning stock price) outperformed both the NASDAQ Composite Index and competitors (Self-determined peer group of 13 stocks). For $100 invested in January 2006, Interface delivered a cumulative total of return in January 2011 of $197, compared to $ 126 for NASDAQ and $80 for competitors.
For the organizations that are in the middle and are exploring options, an important point to realize is that today’s interconnected society is much different than the one in 1970. Running successful organizations in the 21st century, requires a different mentality and management thinking compared to the 20th century. The level of complexity, speed of doing business, transparency and consumer influence is unparalleled. Continuous change and integration are the new value drivers in today’s business environment. Even separating the business environment from the environment overall is not an option. Natural disasters, climate change and environmental footprint are key to the viability of business ecosystems. Especially as the efforts of government and non-profit organizations are not enough to deal with the complex issues surrounding our environment, it is time for corporations to take a more active role in addressing sustainability for both the survival of their business and the protection of the Earth ecosystems overall. Considering that everything we do is possible due the resources provided by Planet Earth, a moral “Earth tax” on the use of these resources is a duty at both personal and organizational level. Efforts in this direction already exist at institutional level, a recent example being the Carbon tax scheme intensely debated in Australia this year. However complementing these efforts with a grassroots global commitment to sustainability would be exponentially more effective. The foundation for such an approach is the belief that sustainability is today a key value driver of organizational performance. The sooner companies will adopt this the better it will be for all the actors in the ecosystem.
Although widely unacknowledged, as declared by the United Nations, 2010 was the international year of biodiversity. It was meant to raise awareness in the fragile state of many species of plants and animals around the world and mobilize in safeguarding biodiversity. There is much talk about climate change, however the profile of biodiversity as a world crisis is somehow overshadowed. Perhaps many made terms with the idea that more and more species and threatened and disappear: ”…well, there are plenty…there is not much we can do…someone will look after them..”.
While on the short term the impact of the disappearance of species may be small, the medium and long terms implications may be considerable. A recent example is the jellyfish invasion in many parts of the Sea of Japan and other parts of the world, attributed by many to the overfishing of small fish and the growth in dead ocean zones (portions of the ocean with depleted oxygen levels in water due to chemical unbalance). Around the world, biodiversity is an issue of alarming proportions. One hundred species per million are currently estimated to be lost per year (Rockstrom and others, 2009).
3% of the total described 281,821 flowering plant species;
29% of the total gymnosperms (conifers, cycads, Ginkgo and Gnetales) species
are deemed endangered or vulnerable to extinction. Due to the large number of plant species only 12,914 had an evaluation completed and of these 73% are considered threatened.
The United Nations Environment Programme (UNEP) has been publishing the UNEP Year Book since 2003, which reports on new environmental science and recent developments in the environment. The latest report for 2010, outlines new research that illustrate the boundaries have been crossed for climate change, interference with the nitrogen cycle and mostly biodiversity loss, of the nine components of Earth systems that show signs of global environmental change driven by human activities.
Source: UNEP Year Book, 2010
The Global Biodiversity Outlook 3 report, published by the United Nations Secretariat of the Convention on Biological Diversity in 2010, confirms something many already knew: the target set by world leaders in 2002, to achieve a significant reduction in the rate of biodiversity loss by 2010 was not met. In addition, the five principal pressures directly driving biodiversity loss (habitat change, overexploitation, pollution, invasive alien species and climate change) are either constant or increasing in intensity. The report also states that the ecological footprint of humanity exceeds the biological capacity of the Earth by a wider margin than at the time the 2010 target was agreed. Progress in addressing such challenges is slow and made mostly at policy and governance level, thus having a delayed impact on biodiversity. While at least 31 bird species (out of close to 10,000) would have become extinct in the past century, in the absence of conservation measures, by comparison the figure is small. Among the conclusions and recommendations of the report, several highlight the need to elevate the profile of biodiversity as a key concern not only for governments and institutions, but for organizations and individuals as well:
Better decisions for biodiversity must be made at all levels and in all sectors, in particular the major economic sectors, and government has a key enabling role to play.
We can no longer see the continued loss of and changes to biodiversity as an issue separate from the core concerns of society.
The action taken over the next decade or two, and the direction charted under the Convention on Biological Diversity, will determine whether the relatively stable environmental conditions on which human civilization has depended for the past 10,000 years will continue beyond this century. If we fail to use this opportunity, many ecosystems on the planet will move into new, unprecedented states in which the capacity to provide for the needs of present and future generations is highly uncertain.
Such developments highlight stronger than ever the need for more emphasis on sustainability at organizational level. As existing efforts seem to be not sufficient, among the questions that organizations should ask themselves are:
Is it our business?
What can we do more?
How can we contribute to addressing biodiversity loss?
We live in a time when sustainability is becoming a rising priority for companies as a vast number of stakeholder groups such as investors, management and employees try to understand the social and environmental implications of the company’s operational and financial activities and decisions. Sustainability has become “both a strategic imperative and a performance driver” that strives to maximize business impact (Gorbach, 2009)
SAP is one of the major companies in the world with an interest in identifying new solutions for tracking and measuring Sustainability Performance Management. SAP BusinessObjects Sustainability Performance Management Application is an example of such a solution. It aims to help organizations measure and communicate their sustainability performance, by enabling them to “ set goals and objectives, manage risks and monitor activities” all these with the promise of shortening the time to collect data and significantly reducing the costs associated with this activity.
Starting from the premise that in today’s business world more than 80% of the Global FORTUNE 250 companies report their sustainability performance, SAP identified a large number of business challenges that companies face when reporting their sustainability performance and built the application by targeting these challenges with key features, expected to deliver specific benefits:
Business Challenges, encountered while measuring sustainability performance:
• “Resources tied up in collecting sustainability data
• Multiple overlapping sustainability standards and guidelines
• Lack of auditability and transparency in performance reporting
• Lack of alignment between sustainability activities and other management activities
• Inability to implement a sustainability strategy that the rest of the organization will follow” (SAP BusinessObjects, Sustainability Performance Management, 2009)
Key Features of the SAP BusinessObjects Sustainability Performance Management application:
• “Defining reporting frameworks – Manage multiple sustainability frameworks and key performance indicators (KPIs) while optimizing opportunities for reuse
• Data collection – Automatically gather quantitative and qualitative sustainability performance data from people and systems
• Performance management – Align sustainability KPIs to corporate objectives and risks; turn sustainability data into actionable information to improve financial and sustainability performance; and set goals to motivate improvement
• Integration – Leverage existing data and management processes by integrating with other SAP applications” (SAP BusinessObjects, Sustainability Performance Management, 2009)
Business Benefits of the SAP BusinessObjects Sustainability Performance Management application:
• “Reduce the cost of measuring sustainability performance
• Turn strategy and data into actionable insights where sustainability performance improvements also improve profitability
• Improve enterprise transparency and performance by making key drivers visible
• Provide sustainability results to the right levels in the organization so information is actionable
• Manage and mitigate stakeholder risk
• Incorporate sustainability into existing management systems and processes through strategic planning, initiative creation, risk management, and process streamlining” (SAP BusinessObjects, Sustainability Performance Management, 2009)
By incorporating a streamlined tracking, measuring and reporting performance management system the SAP BusinessObjects Sustainability Performance Management application can be a good alternative for companies interested in addressing sustainability issues.
Green Bay saves money by going green with green fonts
An excellent example of going green and saving money is provided by the University of Wisconsin – Green Bay. In order to reduce campus printing costs, their Computing and Information Technology Department had the initiative to change their preferred font from the most commonly used one – Arial to the Century Gothic font.
The new font uses 30% less ink or toner. Taking into account that ink accounts for about 60% of the cost of the printed page, and it is also quite expensive – about $10,000 a gallon, with toner cartridges and drums not far behind – the savings are substantial(University of Wisconsin – Green Bay, 2010).
The IT department switched automatically the default font for Outlook across campus to Century Gothic, and strongly encouraged everyone in the campus to do the same for other software programs too, such as Word, Excel and Entourage for Macintosh.
Such initiatives to reduce ink and toner, can be complemented with initiatives that address paper consumption. Both types of initiatives – targeting the volume of paper and volume of ink used can have a big impact on lowering printing costs. More than reducing costs, a green attitude like this one will generate supplementary benefits for the people involved and gradually can make and impact on environment overall.
smartKPIs.com (2010) contains a variety of measures and eco KPI examples that can help keeping track of the impact of efficient paper use initiatives:
Efficient Paper Use: Where the Environment and Business Intersect
Paper is an omnipresent element in any office, both indispensable for current activities and seen as a great burden when it starts to create piles of documents which need to be looked after.
According to the World Resources Institute the global paper and paperboard consumption per capita per year in 2005 in countries like Australia, Austria, Belgium, Canada, Denmark, Finland, Luxembourg, the Netherlands, and United States of America exceeded 220 kilograms, and some even 300 kilograms.
Companies spend huge amounts of money on purchasing paper, but also with paper storing, labor in handling paper, postage, lost or obsolete documents and with printing and copying. In their efforts to improve their internal operations and reduce costs, many companies managed to save thousands or even millions of dollars through their paper reduction efforts, and also improve efficiency. Additionally, they also earned a reputation for being environmentally responsible.
In order to achieve efficient paper use, a company should follow the next steps:
smartKPIs.com contains a variety of measures and KPI examples which support campaigns of paper reduction and efficient paper use:
Using KPIs in projects of paper reduction and efficient paper use not only that are vital, but can make the difference between an initiative and a great success.
General Electric, through their Make Side initiative, managed to identify approximately $1.5 billion in potential cost-savings by 2001, and estimates an up to $10 billion cost reduction in the coming years through digitizing many of its processes.
Legacy Health Systems saved $279,000 in reduced paper consumption by centralizing files, reducing distribution lists, and consolidating forms.
Lockheed Martin estimates savings of eight million sheets of paper and $250,000 by putting a 100-page manual on the Internet.
One of the important events of 2009 for the Retail industry and Sustainability community was the launch of the Sustainable Product Index initiative by Walmart and the establishment of the Sustainability Consortium.
The Sustainable Product Index is intended to be an open source worldwide standard of measuring the sustainability of a product.
The Sustainability Consortium is an independent group of scientists and engineers from leading academic research institutions around the world who engage with other leading researchers from the NGO, Governmental and Industrial sectors. The primary function is to develop the science to support the indexing of consumer products throughout all phases of the products life.
The initiative was announced by Mike Duke, president and CEO, Walmart at the July 2009 Milestone Meeting. The 20 minutes video of the address is available below:
Key discussion points:
On measurement
Retailer at hart, with engineering training (Alumni of Georgia Tech)
I like metrics, I like measurements, I like to set goals and measure results. I guess it comes with that qualitative measurement approach.
If you can’t measure it, you can manage it.
In some ways we have got measurements already, we think there is a need of much more in this area of measurement.
On customer expectations
Consumers have much higher expectations from retailer and suppliers:
Savings. The Global Financial Crises brought on new expectations from consumers. Customers want to save money even more and they are smart about what and how they are spending.
Transparency. The speed of information is higher. Greated transparency in the future is expected and will accellerate. If businesses are not transparent, they will not have the trust of consumers.
Sustainability. World population is currently 6.7 billion, growing to over 9 billion by 2050 . We are depleating the natural resources of the world if consumer patters will be mantained or accelerate.
On the Product Sustainability Index
A global standard to be used across the world with all retailers, in all countries. Will help raise quality and lower cost, while enabling innovation across the supply chain.
1. Supplier Assessment
A 15 questions questionnaire will be provided to suppliers to evaluate therir approach to sustainability. The questions are dedived into four areas:
Energy and Climate
Natural resources
Material efficiency
People and Community
Piloted with the top 50 suppliers from the USA and gradually rolled-out globally to over 100,000 suppliers.
2. Lifecycle Analysis Database
Consortium of universities that will collaborate with suppliers, retailers, NGOs and government to develop a global database of information on the lifecycle of products – from raw materials to disposal.
Arizona State University and the University of Arkansas will jointly administer the consortium.
The company will also partner with one or more leading technology companies to create an open platform that will power the index.\
3. A Simple Tool for Consumers
Standard database available to tell customers about the sustainability index of they product they are purchasing.
The sustainability consortium will help determine the scoring process in the coming months and years.
Quotes
“The index will bring about a more transparent supply chain, drive product innovation and, ultimately, provide consumers the information they need to assess the sustainability of products. If we work together, we can create a new retail standard for the 21st century.”
Mike Duke, President and Chief Executive Officer, Wal-Mart Stores, Inc.
Walmart Sustainability Milestone Meeting, July 16, 2009
“I think from a business perspective there is another opportunity that Since the beginning of modern retailing in the US, there has never been a retail brand that’s transitioned from one generation to the next. This is our opportunity to connect with the next generation. By leading in sustainability and being able to deliver quality products at low prices, to be able to deliver our value proposition, we will connect with these consumers. We may never be cool, but we care and we can make a difference.”
John Fleming, EVP and Chief Merchandising Officer, Wal-Mart Stores, Inc.
Walmart Sustainability Milestone Meeting, July 16, 2009
Videos from the Walmart Sustainability Milestone Meetings, July and November, 2009
Retailer at hart, with engineering training (Alumni of Georgia Tech)
I like metrics, I like measurements, I like to set goals and measure results. I guess it comes
with that qualitateive measurement approach.
If you can’t measure it, you can manage it.
In some ways we have got measurements already, we think there is a need of much more in this
area, of measurement.
Consumers have much higher expectations from retailer and suppliers.
1. Savings. The Global Financial Crises brought on new expectations from consumers. Customers
want to save money even more and they are smart about what and how they are spending.
2. Transparency. The speed of information is higher. Greated transparency in the future is
expected and will accellerate. If businesses are not transparent, they will not have the trust
of consumers.
3. Sustainability. World population is currently 6.7 billion, growing to over 9 billion by
2050 . We are depleating the natural resources of the world if consumer patters will me
mantained or accelerate.
Walmart Sustainability Index
A global standard to be used across the world with all retailers, in all countries.
Help raise quality and lower cost.
Create innovation across the supply chain.
1. Supplier Addessment
A 15 questions questionnaire will be provided to suppliers to evaluate therir approach to
sustainability. The questions are dedived into four areas:
Energy and Climate
Natural resources
Material efficiency
People and Community
Piloted with the top 50 suppliers from the USA and gradually rolled-out globally to over
100,000 suppliers.
2. Lifecycle Analysis Database
Consortium of universities that will collaborate with suppliers, retailers, NGOs and
government to develop a global database of information on the lifecycle of products – from raw
materials to disposal.
Arizona State University and the University of Arkansas will jointly administer the
consortium.
The company will also partner with one or more leading technology companies to create an open
platform that will power the index.
3. A Simple Tool for Consumers
Standard database available to tell customers about the sustainability index of they product
they are purchasing.
The sustainability consortium will help determine the scoring process in the coming months and
years.
“I think from a busines sperspective there is another opportunity that Since the beginning of modern retailing in the US, there has never been a retail brand that’s transitioned from one generation to the next. This is our opportunity to connect with the next generation. By leading in sustainability and being able to deliver quality products at low prices, to be able to deliver our value proposition, we will connect with these consumers. We may never be cool, but we care and we can make a difference.”
John Fleming, EVP and Chief Merchandising Officer, July 2009 Milestone Meeting – Sustainability Index
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