The Triple Bottom Line Blog

Courtesy of the World Business Council for Sustainable Development, here's an important story from The Financial Times about how the looming recession is affecting corporate attitudes toward sustainability. Facing tough economic times, are companies backtracking on their environmental commitments? It turns out that the answer, at least for now, is no--because in the last few years, companies have come to see that energy reduction, streamlined packaging, and trimming waste are all money-saving as well as eco-friendly programs.

It seems to me that the sustainability challenges for companies will be greater on the social, labor, and community fronts. For example, will corporations with supply chains that trail deep into the developing world maintain their stated commitments to humane labor policies when sales begin to slump? Stay tuned.

Labels: Financial Times, Human Rights and Child Labor, recession, Supply Chain, WBCSD

Another fine post by Joel Makower at his blog Two Steps Forward--this one dealing with the complexities of greeen construction.

You've probably encountered the sound-bite version of the story, which was based on a survey conducted by the World Business Council on Sustainable Development. The sound-bite, which was widely picked up in the mainstream media, said that real estate executives and developers wildly overestimate the costs involved in sustainable construction--and greatly underestimate the benefits.

Interesting and significant in itself. But give Makower credit for digging deeper and uncovering the less-noticed story, which lies in the fact that the chief obstacles to green building lie not in high costs or even in misperceptions by developers but rather in the complex decision-making systems involved in construction planning.

These systems disperse responsibility and create perverse incentives, as individual players in the building game find it easier (and sometimes more profitable) to take traditional paths-of-least-resistance rather than trying new technologies that could save energy, reduce pollutants, and otherwise benefit the environment. Makower quotes Bill Sisson, Director of Sustainability at United Technologies: "It's sad, but in many cases you find the marble in the lobby gets higher preference to a new higher-performing chiller or mechanical system because of who makes the decision, and which one is valued more."

Joel's entire piece is, as usual, well worth reading, especially if you're involved in construction decisions. But it indirectly raises a broader point that applies to anyone pursuing sustainability strategies. Whether you're focusing on environmental issues, community relations, workers' rights, or the entire range of sustainability challenges, you'll almost certainly find yourself interacting with several company departments as well as people and organizations outside your company.

And that means that developing and implementing sustainability strategies will be more challenging than you think--more challenging, certainly, than simply vowing to "do the right thing" or even to "incorporate sustainability concerns into every decision." It also means examining your internal and external systems to understand how choices typically get made. Who makes each decision? What is the context in which decisions are considered? How are options framed? Whose input is routinely considered? How is the "rightness" or "wrongness" of a decision judged, both before and after the fact? Are managers penalized for long-term thinking and rewarded for short-term thinking?

The answers to questions like these will help you figure out whether and how you need to redesign your decision-making processes. That can be a thorny, complicated, and politically-sensitive challenge in itself. But it's also essential. Because unless you get your decision-making systems right, all the good intentions in the world won't carry you very far.

Labels: Green Buildings and Construction, Joel Makower, Management and Organization, WBCSD

If your company is among those that have begun monitoring and reporting information about your sustainability efforts, good and bad, for the benefit of your stakeholders and the general public, congratulations. And if you take the job seriously enough to have adapted the guidelines established by the Global Reporting Initiative (GRI), congratulations again. You're among the corporate vanguard that are leading the way on making sustainability a routine and important part of the business conversation.

Now it's time to take the next step: Talking just as honestly and realistically about the risks, threats, and problems you face on the sustainability front as you do about the opportunities you are embracing.

This article from the World Business Council for Sustainable Development highlights a recent study of 50 sample GRI reports from companies around the world. The study found that most companies shy away from addressing or even mentioning the downside of today's leading sustainability issues. For example:

The report finds that 90% of surveyed reports include climate change. However, only 20% of the studies reports mention any risks to their businesses from climate change. This lack of information on risks is in spite of evidence from a number of sources, including the UK government's Stern Report on the Economics of Climate Change, that say that climate change has serious ramifications for the world's economy,

Carbon emissions trading and credits, the report concludes, are the most focused on as new businesses opportunities created by climate change. Other opportunities from climate change vary widely from sector to sector, and include hybrid cars to energy efficient detergents.

The risk that was mentioned in the reports most often is the increase of energy costs, with about 20% of sustainability reports mentioning rising energy bills. Very few companies mentioned the risk of increased legal action, such as the risk of class-action lawsuits with regard to climate change.

It's understandable that corporations should want to emphasize the positive aspects of their sustainability efforts. Putting a happy face on the news, whatever it may be, is a common feature of corporate culture. (We know some companies where the word "problem" is practically forbidden; there are only "opportunities.") And particularly today, in the early days of the sustainability reporting movement, sustainability officers may be under pressure to accentuate the positive (i.e., the new businesses and new profits to be built around sustainability) rather than the negative, in order to justify the value of the sustainability concept.

Nonetheless, it's obvious that, in business as in life, there are practically no positives without corresponding negatives. And that certainly applies to sustainability. Take global warming as an example. Can you imagine a food company that isn't thinking about how climate change may affect their supply chain in the coming decades? A real estate developer that isn't looking at the effects of coastal flooding? A home supply company that isn't examining how water shortages and heat waves will impact house and garden designs? And that's not even to mention more obvious examples, from energy companies to utilities to transportation companies, all of which will be under enormous pressure to redesign their businesses as the cost of carbon emissions continues to climb.

Let's put it this way: None of us would want to invest in a company that is so short-sighted that it is not exploring the risks posed by global climate change. So why shouldn't companies discuss those risks--and the steps they are taking to cope with them--in their sustainability reports? To do so will only enhance their credibility.

Honest, realistic risk assessment may be the next big frontier in the world of sustainability reporting. You should be thinking about it now, as you begin planning for next year's report.

Labels: Greenwashing, GRI, Reporting and Transparency, WBCSD

In a world where everybody and his sister has a blog, it was only a matter of time before Bjorn Stigson, president of the World Business Council for Sustainable Development, would have his own online platform.

Based on a first perusal, Stigson's blog looks well worth reading. In this week's post, he asks, "On energy and climate issues, is the United States an emerging world leader or a “cacophony of chaos”, as one US Congressman described it?" Stigson then describes what happened when the WBCSD presented its document "Policy Directions to 2050" to an audience of lawmakers and business leaders in Washington D.C. recently, and while Stigson doesn't say it in so many words, the answer seems clearly to be closer to "chaos" than true leadership. But you can read his lively account and judge for yourself.

Labels: Bjorn Stigson, Personal Musings, WBCSD