Andrew Savitz on the Sustainable Business
How some companies are making social responsibility pay off.
By Sheena Mohan • CIOInsight
Andrew Savitz knows how to get companies to take corporate responsibility seriously. The trick? Make it profitable. In his new book, The Triple Bottom Line: How Today's Best-Run Companies Are Achieving Economic, Social and Environmental Success - and How You Can, Too, written with Karl Weber (Jossey-Bass, August 2006), Savitz demonstrates how building sustainable businesses can reap big rewards.
CIO Insight: How do you define sustainability?
Savitz: It's not philanthropy. Philanthropy's good, but this is much more about how you change your business to both meet your needs and the needs of society at the same time. I believe that true sustainability locates the "sweet spot" between narrowly defined business interests and society's interests. Sustainability is directed more at doing something positive for the company. And my very strong view is that whether you call it corporate responsibility or sustainability, it's not going to take hold unless there's something in it for the company's bottom line.
CIO Insight: Any examples?
Savitz: A good current example of that might be the Prius, Toyota's hybrid vehicle, which is obviously good for the environment. But it's also good for their shareholders, because the Prius is the hottest-selling car in the world. The Wall Street Journal has recently reported it's the wedge that Toyota is using to become the world's largest car company. So the hybrid car has gone from environmental lunacy-as it was in 1980s, when this idea was first proposed-to being the center of Toyota's strategy.
Another good example of finding the sweet spot is General Electric. They've just announced their "Ecomagination" campaign, in which the CEO has decided they're going to be doubling their investment in clean technologies-clean water, clean air, site remediation. They realize that solving the world's environmental problems is a huge business opportunity for them.
CIO Insight: How can IT departments get involved?
Savitz: One of the problems with sustainability in large corporations is that it covers a huge range of topics-social, environmental and economic. So it's very hard for companies to get internally organized on this. It's not the ostensible responsibility of one particular department. As a result, many companies are starting to establish virtual sustainability departments that are, essentially, loose connections of experts within the company who are either focused on social responsibility, or on specific issues.
IBM, as an example, has a group of people who are interested in sustainable development, and it's sort of a virtual department. People just sign up, and now they're on an e-mail list and a bulletin board. And this is very important for sustainability because it is so broad; not one department can be charged with focusing on it. You need a purchasing person, an HR person, someone from R&D, an environmentalist and someone from investor relations. Software can aid both knowledge management and relationship management. For example, if you suddenly need to know everything about, let's say, the pension program in Peru, you can find out who in your company knows about that pretty quickly. Using technology, you can develop centers of excellence in a short amount of time.
CIO Insight: Why do you think this is finally catching on now?
Savitz: I think it's an evolution in thinking, from "this is a responsibility and a burden and a risk," to "there may be an opportunity in this," as was the case with GE. And businesses like to talk about opportunities much more so than problems.
Society is also putting a lot more pressure on businesses. Companies are now expected to do everything. It used to be the government's responsibility to protect the environment and regulate industrial waste. Now it's the responsibility of businesses to police themselves. As a rather graphic example, look at the emergency response after Hurricane Katrina, when companies such as Wal-Mart were bringing water and supplies to victims. People expect businesses to fulfill a lot more roles than just making profits for their shareholders. You've got to support the community.
No sooner had Microsoft brought us the personal computer, than it became responsible for bridging the digital divide. People just expect companies to address issues. Look at how the pharmaceutical industry is expected to make AIDS drugs available for free. So there's a societal push, as well as businesses seeing an opportunity.
Kofi Annan has brought corporations in under the United Nations tent for the first time because he realizes, as many people realize, that the problems of the world are not going to get solved by government. Business is the only sector that really creates economic development; government can help, but some of the huge problems that we're facing, you need the direct involvement of business.
And my theory is that there's plenty of area for sweet-spot growth- places where companies can find more and more ways to meet their own needs and the needs of society. And, in so doing, they will also become more profitable.