A New Way to Measure

 

Measuring and reporting sustainability is not only a growing trend, but it is a critical part of ensuring that customers and competitors know what a company is doing to move to address today’s concerns about corporate sustainability values. There are tens if not hundreds of “standards” that are used for ranking and measuring company performance, or a subset of the company like how they operate buildings, treat employees etc. A few are well known such as the Global Reporting Initiative (GRI), LEED for buildings, Energy Star for Energy Performance, and dozens of “lists” of top performers. This week on GreenBiz, an article was exploring these lists from an energy company perspective.

Their analysis was focused on the 2013 Global 100 list, the Corporate Knights Inc. list identifying the top 100 most sustainable large-cap companies in the world. Their surprising find? Two of the top five companies on the 2013 Global 100 list are oil and gas companies. For their full explanation of how these ranking stack up, see the article here. 

I appreciated that the GreenBiz article called out the inconsistencies between these lists. Different lists get different media attention in different market sectors, and in different countries, and each one ranks companies differently.

“… just to show you how crazily inconsistent this list-making business has become, only one of the top 4 companies on Newsweek’s 2012 green global rankings -- Santander Brasil, Wipro, Bradesco and IBM -- made it onto Corporate Knights’ Global 100. And not one of the top 5 on the Corporate Knights’ list made the Newsweek rankings.”

It does not surprise me when I see well known product brands like Clorox on the list; their efforts to make more sustainable products go directly in line with their customer marketing. What really grabs my attention is when industrial businesses, like oil and gas companies, are called out.

It has long been my personal mission to work with and understand these large industrial companies, and how to pivot their business into more sustainable models. This is a huge task, when the core of their business proposition is grounded in something that is in-and-of-itself, not sustainable. The oil and gas companies alone make up 54 of the wealthiest 500 companies in the world, with a combined 2010 value of $4.17 Trillion.  That is a lot of value tied up in a business model founded on a finite resource.

We are learning about developing businesses that are flexible, sustainable, and designed to make the world a better place balancing people, planet and prosperity. Clearly, these non-renewable energy companies are doing fine on the profit side, but what is their long term strategy? Many of these companies are participating in the reporting game, appearing on sustainability lists and reporting to the GRI. Reducing emissions associated with operations, making extraction methods more efficient, highlighting community development and employee benefits. These elements point to a more sustainable company by definition, but do little to address the underlying shift that is needed to move these companies to a truly sustainable business model.

From Shell: “We began reporting voluntarily on our social and environmental performance with the first Shell Report that covered 1997. We do it to be open and honest, and to show how we are contributing to sustainable development.” 

The high tech oil and gas companies have the skill sets and resources to pour into alternative models, but there is little incentive to do that right now. Investment in renewable alternatives are simply side projects, while the core business direction is how to keep producing what we always have, but more efficiently, cleanly and safely. I do not want to downplay the importance of these efforts. They are critical as we do not have a working alternative model at this point and need to carefully use the current models as well as we can. However, making things “better” does not solve the problem.

Until the core business focus shifts, these companies are operating on an unsustainable trajectory. The current system of rankings and reports does not help force this shift. While they continue to appear on lists touting their “sustainable practices”, how are they publicly held accountable? I believe that these reports slow down public demand for urgency to change. I think it is time to add a new metric in sustainability rankings: how sustainable is the underlying business model of the company.

Where Does Sustainability Fit?

As we kick off our second quarter at BGI, I am struck with a renewed sense of purpose for becoming a thought leader for sustainable business. We are surrounded by examples of “the status quo” and the inability to make decisions about the future. We cannot keep delaying action and pushing off decisions to the next leaders, generations, congress, CEOs etc. We must find people who are passionate NOW, and who are willing to make the tough decisions and stand up to lead our way forward to a more positive future.

My background is environmental science, with an emphasis on the science. I have never taken business classes before, and so all my experience stems from what I have experienced firsthand in organizations I have worked for. It has been fascinating, even just within this first week, to start unpacking the meaning of strategy and organizational structure…and where sustainability fits in to all of this.

The core of my current job is helping organizations start the visioning and planning process to make change; change towards lower emissions, integrated communication, general sustainability, new building designs. I work with a workflow very similar to what was presented in class this week, a process that starts with a vision, ends with action, and emphasizes reiterations and revisiting original goals to track progress. No rocket science here, and it felt like I was just hearing about my daily job. I then heard one sentence that really hit me hard. It was a subtle, slight twist on the traditional vision/goal setting process that made so much sense I have used it in practice three times this week. It is a new way to look at your goal, and it offers much more opportunity for change than “what do you want to be”.

“What would a truly {sustainable, integrated, successful, etc} version of us look like? (from the perspective of what is NECESSARY  not what is FEASIBLE).

Wow. This is a conversation framing changer. I am currently working with a school district to define what a new school would look like, and how the facility can help accomplish it. Only when we started talking about what was necessary did we really start to unpack the true vision (and challenges!) of our task.

That brings me back to the role of sustainability in business. Clearly the organization must hold a vision or nothing will happen. But whose role it is to formulate that vision, and carry it out? We hear so much about the Sustainability Manager or Chief Sustainability Officer (CSO), or the grassroots green team that is making waves in an organization. I would argue that all these models are a great start, but are not the end answer. To me, they do not represent a sustainable organization.

How many businesses have one specific department that is concerned with revenue? Or public perception? Sure, there is the accounting department and public relations, but ultimately a successful business has every P&L on the lookout for revenue, and each project manager or staff member is personally aware and vested in this goal. It is the collective effort of all the individuals that drive revenue, and ultimately the success of the company.

Sustainability must be viewed in the same way. It has to be everyone’s interest, not just the responsibility of one department or individual.  The vision and plan must be integrated throughout the organization, and there must be accountability for progress throughout all levels. If all efforts are directed by a single upper-management role, this could also hinder creativity, and force out great ideas from individuals because it is “not their job”. Sustainable innovation must be part of everyone’s job for the organization to truly move towards a more sustainable future.

The GreenBiz Group just published their third annual “State of the Profession” report, investigating the unique role of the sustainability executive in industry. This immediately caught my eye, as I expect many of my classmates (myself included) see this as a possible career path after BGI. After reading this report, I am inclined to think that the market may be looking for something else by the time my class graduates. 

There were many interesting trends and insights into the sustainability profession. Two key metrics that intrigued me were the fact that more and more total companies now have a full time sustainability manager position, but the number being added each year has been decreasing since 2008. 

 The report goes on to investigate what this means for the future of sustainability positions, and relates it to the experience of current executives and the challenges they face.

If you are interested in what GreenBiz found, check out the report here. And if you just want to know the main takeaway, here is summary excerpt of the three main challenges they found to be facing sustainability managers and executives.

• There is no natural home for the function. There is no one department that most companies call out as the logical place for sustainability to reside.
• There is no professional accreditation or degree. Certificate programs and sustainability-themed MBAs have sprouted and are effective in providing context for sustainability executives, but they are not necessarily the end-all of what future sustainability leaders will need to succeed.
• There is no authority. The most effective sustainability programs h a v e u n equivocal support from the company’s CEO, who holds the entire company accountable. (In optimal circumstances, the CEO’s interest is driven by a mandate from the board of directors.) But most sustainability executives must operate in an environment of consensus building along with a wide range of both qualitative and quantitative measures of success, and even these metrics can shift unexpectedly based on changes in budget, leadership, or organizational priorities.

So where does all this leave me? Excited to learn more! As I continue to expand my understanding of organizational structure, and how different structures relate to sustainability efforts, I am curious to unpack a few solid options for how to most effectively integrate these visions into an organization, and spark change at all levels. Clearly, the market for a sole “sustainability leader” may be dwindling, but I hope that we can make this a mindset for business that it is a necessity, not an option, and that there are many other approaches to its implementation than simply hiring an executive.