Success extends well beyond the bottom line

By Cecil Johnson, Mcclatchy Newspapers

September 24, 2006

Nike learned the importance of sustainability the hard way in the late 1990s and is now engaged in what Andrew W. Savitz calls "sustainability jujitsu."

In "The Triple Bottom Line," Savitz uses the word "sustainability" interchangeably with the term in the title. He argues that business should measure its success by criteria other than the traditional financial bottom line. Savitz says that businesses also need to measure their effects upon the overall economy, the community, and the environment.

"A sustainable business ought to be able to measure, document, and report a positive ROI on all three bottom lines -- economic, environmental, and social -- as well as the benefits that stakeholders receive along the same three dimensions," he writes.

Nike, Savitz points out, operated as if oblivious to one important layer of the triple bottom line. Human rights activists then persuaded journalists to look at the use of child labor by manufacturers and suppliers of shoes, sporting goods, and clothes at Nike and other American companies.

At first, says Savitz, Nike took a combative stance, but as the public pressure increased, Nike chief executive Phil Knight saw the light. Now Nike is engaged in "flipping an oncoming risk into an opportunity" -- an example of what Savitz means by sustainability jujitsu.

Among the first things Nike did was require that all new employees in factories making Nike products be at least 16, that free middle school and high school classes be made available to workers, and that independent nongovernmental organizations be allowed to keep tabs on working conditions.

The company later developed a code of conduct for suppliers, established a team of trained internal monitors to check factory conditions, and threw its support to the development of a common monitoring regime for the sportswear industry.

"Nike can now enhance the swoosh by portraying itself as the industry leader on child labor and social causes generally, forcing its competitors to make the kinds of costly investments in practices and processes that Nike has already made," he writes.

Savitz cites numerous other companies that, because of pressure from nongovernmental agencies, the news media, and public protests or out of self-generated enlightened self-interest, are awakening to the need to focus on more than short-term profits.

He notes that a growing number of CEOs embrace sustainability in what he calls this "age of accountability" as a generation of "people in search of deeper meaning in their lives" is taking over leadership of major corporations.

Of course, that trend is not universal. Savitz singles out Exxon as an example of a company that is "tone deaf to the politics of corporate responsibility." He points out that Exxon, while enjoying record profits, thumbs its nose at people who care about the environment and social responsibility.

By doing so, Savitz says, it has made itself the target of "the first unified anti-company campaign in the history of the environmental movement."

Click here to e-mail this to a friend