The Leading Edge of Sustainability – New Spheres, New Mindsets, New Models

[This post originally appeared on the SustainAbility website.]

“Sustainability” has become part of the modern business lexicon. But what does it really mean?

In a 2010 survey of global CEOs by Accenture and the UN Global Compact, 93% of the 766 CEOs surveyed said that sustainability issues were “very important” or “important” to the future success of their businesses. In this same survey, 81% agreed or strongly agreed that “these issues are fully embedded into the strategy and operations of my company” (up from 50% in 2007).

We’re glad to see this evidence of the growing importance of sustainability issues on the global corporate agenda, and we celebrate the ambitious goals and substantial progress of many businesses. But we have to disagree that 80% of companies have fully embedded sustainability into their strategy and operations. The participants at our annual members’ workshop in London seemed to feel the same – in response to our informal pre-workshop survey, most said they “strongly disagreed” or “disagreed”.

Such a disconnect between what the CEOs think and what many others think comes from a disagreement over what sustainability means. Sustainability isn’t just about a few percentage point reductions in carbon emissions, or a selection of sustainably sourced product lines, or a supplier policy – as important as all of those are as starting points. But what is it then?
We kicked off our recent Engaging Stakeholders Program member workshops in London and New York by asking each other: “What is sustainability leadership?” Here are some of the themes we discussed.

New Spheres

Manage outside the walls of the company. Leading businesses are expanding their spheres of interest and influence, seeing both responsibility and opportunity in the value chain as well as in the direct footprint. This is reflected in commitments that expand outwards (for example, in 2005 Walmart committed to sending zero waste to landfill; five years later it has committed to increasing the income of one million small & medium farmer suppliers), but also in a new view of what it means to manage a business. One of our workshop participants said that his company had begun to think of suppliers as part of the organization, and that this approach shaped everything they did on supply chain management.

Set Big Hairy Audacious Goals that go beyond the value chain. Examples we’d put into this category include GlaxoSmithKline’s efforts to increase access to medicines; Nike’s goal to develop a closed-loop business model; Google’s goals to make renewable energy cheaper than coal and (less widely known) to maintain the viability of one of its key input industries, journalism; and most recently Unilever’s Sustainable Living Plan, which aims to define a sustainable model for consumer goods value chains.

Look for the best ideas everywhere. The age of “Not Invented Here” is beginning to seem out-dated even in mainstream business. P&G now sources 50% of all new product ideas from outside the company. GSK, Nike and Walmart are all taking open innovation approaches to achieving their sustainability goals through GSK’s Open Lab for R&D into developing country diseases, GreenXchange for patents and Earthster for life-cycle assessment analyses, respectively.

Support individual leadership and innovation – particularly by the young. Many of the examples cited were of leadership from young people or employees, and DSM’s presentation on their young employees’ global bottom-up sustainability network was one of the most popular sessions at the workshop. It is becoming a constant refrain and source of hope that today’s young people are, as a group, much more interested in sustainability than their elders – and are full of ideas and energy.

New Mindsets

Think in terms of economic ecosystems. The least-understood and most overlooked dimension of the triple bottom line, economic impact, is perhaps the most important of all. As SustainAbility chairman Geoff Lye noted in his presentation, we are at a time when the economic power of business today has never been greater. The total annual sales of today’s top 200 corporations is $11 trillion – just under the GDP of the United States, over twice that of China, and five times that of the UK.

Businesses exist to create and distribute value, and the way they do this must be fundamental to any definition of sustainable business. Think of it as corporate economic responsibility, corporate social innovation, business-led economic transformation, or, as one of our members suggested, quite seriously, “Making Business Beautiful!” Whatever you want to call it, sustainable business is a way of doing business that sees each business as part of a larger economic system:

  • Where suppliers and employees are better able to supply and to work if they are treated and paid fairly;
  • Where shared resources and infrastructure are invested in through a good tax base (and businesses pay their fair share of that tax base);
  • Where customers have affordable access to products that will genuinely enrich their lives, including the basics (water, sanitation, nutrition, healthcare, energy, ICT and finance); and,
  • Where competition is healthy and businesses are diverse, making the whole system more resilient.

See values, norms and cultures as crucial enablers. Two participants at our London workshop named the end of the Catholic Church’s absolute ban on condom use and the work of Mechai Viravaidya to popularize the use of condoms in Thailand through humor as favorite examples of sustainability leadership. More generally, almost all agreed that understanding and influencing the expectations and values of everyone from consumers to investors would be crucial to the success of future sustainability initiatives. This is now mainstreaming as a topic of discussion – see, for example, the theme of the upcoming 2011 World Economic Forum, Shared Norms for the New Reality.

New Models

As SustainAbility co-founder John Elkington wrote last year in The Transparent Economy:

Properly understood, sustainability is not the same as corporate social responsibility (CSR)—nor can it be reduced to achieving an acceptable balance across economic, social and environmental bottom lines. Instead, it is about the fundamental, intergenerational task of winding down the dysfunctional economic and business models of the nineteenth and twentieth centuries, and the evolution of new ones fit for a human population headed towards nine billion people, living on a small planet already in ecological overshoot.

Indeed, the search for these new business models is becoming increasingly vocal. At last year’s Clinton Global Initiative meeting, Ceres, Nike, the Skoll Foundation and CalPERS launched a working group on this subject.
Two key goals of these new models:

Collaborate to deliver solutions. Sustainability leadership has moved well beyond compliance (‘because it’s the law’), and even accountability* *(‘because we are pushed, we must’), towards solutions (‘because we can, we will’). Increasingly, leading businesses are looking at their core competencies and asking how these can solve pressing social and environmental challenges, often in collaboration with other industries. As former Harvard Business School professor Shoshana Zuboff has written, “For a century… the manager’s job was to oversee and control what was inside ‘my company.’ Everything else was a distraction. [Now] you need to collaborate… you can’t do it alone because the needs of individuals don’t conform to existing organizational and industry boundaries.” At our London workshop, Vodafone’s Sarah Sanders presented on their work to partner with pharmaceutical companies to make healthcare more accessible through Vodafone’s mobile platform.

Influence consumption – and defy waste. Our workshop participants agreed that addressing consumption was crucial, but admitted that this was also one of the greatest challenges for their business models. Product portfolio changes such as PepsiCo UK’s commitment to increase the percentage of whole foods and low-fat dairy in its global portfolio are important steps, but more is needed. One fascinating trend in this direction is collaborative consumption, web-enabled platforms that allow people to share the use of existing assets. One of our workshop participants named Streetbank, which allows neighbors to borrow household items from each other, as her favorite example of sustainability leadership.

What’s Next?

The leading edge is out there. As author William Gibson famously wrote, “The future is already here, it’s just not evenly distributed.” Here are three leadership themes we’d like to see more of in 2011. We welcome your additions to this list.

  • Sustainability strategy as large-scale collaboration and change management. “Traditional” approaches to sustainability strategy have been heavily focused on the company’s own performance, planning and processes, with partnerships and organizational change as a second step. We now expect to see leaders increasingly placing collaboration and change management at the heart of their strategies. A key part of this will be formal and informal structures to encourage and harness insight and innovation among employees as well as stakeholders. Interestingly, a look at the business section of any bookstore will demonstrate how collaboration and behavior change, once on the sidelines, have now become part of the global business and economic conversation.1
  • Business initiatives to understand and affect values and behaviors. Many businesses have access to deep insight into human behavior through their market research capabilities and relationships with consumers. We want to see more of this directed towards positive change. The power of brands to change our values and aspirations has been a key theme at the Sustainable Brands conferences.
  • Efforts to systematically identify and scale new business models based on creating value from fewer physical resources, such as Daimler’s Car2Go pilot based on the Zipcar car-sharing model.

1 See Macrowikinomics; Collaboration; Drive: The Surprising Truth About What Motivates Us; Nudge: Improving Decisions About Health, Wealth, and Happiness; Switch: How to Change Things When Change Is Hard; Sway: The Irresistible Pull of Irrational Behavior; etc.

Employee Engagement: Hearts and Minds

Once considered almost as a by-product of a company’s sustainability strategy, employee engagement on sustainability is now a hot topic, recognized as a crucial driving force for delivering on that strategy. And persuading people to change requires engaging both the rational, analytical mind and the emotional heart.

At SustainAbility’s recent Engaging Stakeholders Program members’ workshops in New York City and London, we explored employee engagement by asking:

  • How are leading companies motivating their employees to take action through practical guidance and compelling communications? In New York, Intel’s Suzanne Fallender updated us on Intel’s initiatives to make sustainability relevant to specific business functions and link it to compensation and professional objectives. In London, DSM’s Jacqueline van Zundert discussed the DSM Next initiative, a self-organizing global network of younger employees passionate about sustainability and business.
  • How do we properly harness the power of language? Using language strategically to communicate and to persuade was a major thread of conversation throughout the workshop. For our employee engagement session, guest speaker John Marshall Roberts of Worldview Learning introduced us to a (literally) colorful way of thinking about the different ways people see the world, and designing targeted messages to suit.

John’s talk proved such a hit that we asked him to share his thinking with our broader network. Our illustrated interview features John in conversation with SustainAbility’s Patrin Watanatada on how to engage colleagues and stakeholders more effectively by putting yourself in their shoes – in other words, engagement through empathy.

Here’s the video….

Think locally, act globally

“I’m getting bored of global governance,” said my friend Vikrom to me today over late afternoon tea and mangoes.

We were catching up on the last seven years, and he was telling me about his doctoral research on perceptions of climate science and risk at Oxford’s Institute for Science, Innovation and Society (how much do I love their tagline “Wicked problems, clumsy solutions, uncomfortable knowledge”). 

“Global governance is fine for things like security and human rights. But I think meaningful environmental action is increasingly going to be taking place at the local level and not at the transnational level.”

This wasn’t a normative statement. He wasn’t saying that meaningful action on climate change or water or biodiversity shouldn’t be taking place at the transnational level. Only that he didn’t think it was going to happen.

This reminded me of a blog I read last week by Shoko Takemoto, an MIT grad student working on a project to understand how communities perceive climate risk. She writes fascinatingly about her work this summer with Laotian rice farmers (via David Hodgson):

Before coming to Khammouane, I was a little nervous to ask the villagers about climate change. For me, I have understood that climate change adaptation is about estimating the impacts of climate change using the best science, scenarios, and models available… I was worried about how to communicate such complex ideas to farmers and villagers who perhaps had very little knowledge of science or future projections.

However, as soon as I started talking with the farmers and community members, I was stunned by their wealth of knowledge, experience, and insights regarding how seasonal weather patterns, extreme events, and frequency and scale of disasters are changing, how that is impacting their lives, and what needs to be done to solve these issues.

Ninety-five percent of the people in Nonbok are rice farmers… they must survive through damages from flood and drought almost every year. [Adaptation] to climate change and reducing the risk of disaster is not a matter of science or predicting what might happen in the future; instead it is an issue that impacts their well-being and their everyday lives, and needs to be dealt with today.

…I began to understand that at the community level, the terms disaster risk reduction and climate change adaptation may be too limited to capture and address the villagers’ concerns.  In vulnerable communities… it is difficult to isolate and identify whether a disaster is due to climate change, [poverty] or natural hazards.  From the perspective of the communities, such differentiation seems irrelevant, if not confusing.

There’s something here fascinating here about language. One of the things that we continually bump up against is making the complex, long-term, global nature of sustainability challenges meaningful to each of us in our daily lives as individual citizens, consumers and professionals. Ironically, the language of sustainability – as increasingly abstract and sanitized as it has become  (think “overnutrition” or “350 ppm” or “stakeholder” or, indeed, “climate change adaptation and mitigation”) – serves to distance us from a gut understanding – and therefore, from acting.

There’s something, too, about an over-reliance on modeling at a global or corporate or non-individual level without attention to what this means on the ground today – whether that’s in a village or a corporate meeting room. Of course, it often seems like there isn’t anything to care about on the ground today (that’s why it’s a sustainability challenge) but I’m increasingly thinking that we have to try harder to find those connections, rather than railing against the cognitive limitations of all of us humans to grasp what’s happening in the long-term or the broader sphere and asking “why they don’t just look at the data.” Perception is not to be dismissed. We need to meet people where they are.

Hence – again – why stories and the one-to-one model (as Tom’s Shoes says) are so important. And just yesterday, my colleague Kyle forwarded me a project he’d come across to tell stories that personalize the Millennium Development Goals.

Need to keep thinking about this a bit more.