Is Sustainability Obsolete or Does it Just Need a Tune-up? Reply

Jachen Zeitz, CEO of Puma, said “Sustainability has been slammed as an obsolete idea and only the starting point for companies and brands to play their part in helping the environment, social well being and economic prosperity.”  At the Boldness in Business Award Ceremony on March 16th he added, “We need a fundamental paradigm shift in the way we think and act beyond sustainability.”  His point was that we cannot and should not delegate sustainability responsibility to one department.  He emphasized that many shareholders are beginning to ask companies to behave in even more sustainable ways.  “A bold business is one that takes sustainability into the center of its vision and mission.”

At CAPACCIO, we have been making the argument that sustainability must become part of every business decision and part of how every employee does their job, day-in and day-out.  This is best accomplished by integrating sustainability into an overarching management system – a sustainability management system.  By creating an integrated management system with the social responsibility guidance from ISO 26000, a company will go a long way toward making sustainability part of our daily tasks. 

There are still countless publications addressing how different functional managers can address sustainability within the sphere of their control.  It would be more productive to have these functional managers work together in a strong governance position to make sure that sustainability is indeed integrated into the fabric of the business.  Instead of busting the silos as some pundits suggest, it is best to enable each specialized service to collectively use their skill to enable everyone to participate in this very important effort.  Management review has long been a requirement in ISO 14001.  The sustainability governance works on the same principle and enables all people to participate in the plan-do-check-act nature of sustainability in their business. 

 

Conducting a Sustainability Assessment Reply

Every business has a number of sustainability practices already in place.  Because the practices are spread across many operating functions, it may be difficult to identify all of them.  We often compare this to the tiles in a game of “Scrabble.”  You find the sustainability practices that you have in place, and then you strive to make sense with them.  In Scrabble, you select the tiles and then arrange them on a board to make words.  You link the words to other words to score more points.  Your sustainability program activities need to be ordered similarly in a transparent way to contribute value to your organization. 

Instead of the Scrabble board, you could use an integrated management system to help organize your sustainability effort.  With the introduction of ISO 26000 (social responsibility standard), it is easier than ever to integrate all three responsibilities (environmental stewardship, social well being and economic prosperity) into a single program.  This new guidance provides some of the program elements that need to be searched for within the scope of a sustainability assessment. 

CAPACCIO uses a pre-visit questionnaire to help an organization locate the sources of information, in order to determine activities and processes that address each of these responsibilities.  By conducting a site visit, it is possible to get a good picture of the current state of the sustainability program.  The components of an integrated management system help to identify the gaps in the program.  Sometimes there are not any gaps at all.  This information just resides in different functions in the company and the activities just have not been communicated internally.  The integrated management system provides a framework for both internal and external communications.  It also inventories the environmental, social and economic elements that should be captured in this program.

It is very important to have a complete sustainability baseline before attempting to benchmark the program with competitors and customers.  We always find more program elements than are captured in the pre-visit questionnaire.  This is why it is prudent to have a different set of eyes involved in the sustainability assessment.  You need someone that can communicate with all of the functional managers involved in the efforts.  There is no “one-size-fits-all” list to use for the interviews.  An experienced sustainability assessor will often find pertinent activities that are not on the “checklist.”

Once you begin to see the sustainability activities, you can form teams to link them just as you do in a game of Scrabble.  By increasing the value of sustainability to the organization, there will be a drive to fill the gaps and create yet more links.  It is now possible to create a “roadmap” to improve the program and getting more people involved.  All this – thanks to ISO 26000 guidance.

 

Sustainability Reporting – “Focal Point USA” Reply

The Amsterdam-based Global Reporting Initiative (GRI) has initiated a drive to get more US-based companies to use their reporting guidelines when publishing sustainability reports.  This drive was initiated on February 1st and is dubbed, “Focal Point USA.”  Of the Standards & Poor (S&P) 500 companies, 230 filed sustainability or other non-financial reports in 2010.  Only 97 of these reports used the GRI “G3” reporting guidelines. 

GRI offers 79 suggested results for companies to report on.  Some are called “core” results and others are “additional” (suggested).  All of these results are lagging indicators – the moment they are measured the results are in the past. 

Many companies are beginning to see the need to look at “leading indicators.”  These indicators are used to drive performance of the sustainability program itself into the future.  Leading indicators come from a number of performance frameworks used around the world.  The most widely used performance frameworks are EFQM (Europe), and Baldrige (US).  Australia, India, China, Japan, and Brazil also have similar frameworks.  CAPACCIO has posted a white paper on leading indicators to provide you with more information. 

Companies really need to use both leading and lagging indicators to have a sustainability that will be around for the long term. It is interesting that many US firms use leading indicators in corporate business performance assessments but do not mention them in their sustainability reports.  The sustainability/corporate responsibility professionals are getting interested in leading indicators to associate their programs with other corporate performance programs.

Performance programs refer to the lagging indicators (results) as “merely the outcome of performance.”  Good performance, as measured by the leading indicators, should lead to better results in the future.

Now that ISO 26000 (social responsibility standard) recognizes the EFQM performance standard, GRI will need to reconsider its insistence on sticking with the lagging indicator-only stance.  Maybe they will hear this message in the Focal Point USA effort. 

Related Papers: “Using Leading Indicators to Drive Sustainability Performance” http://www.capaccio.com/sustainability

LINKS:

Focal Point USA:  http://www.globalreporting.org/AboutGRI/WhoWeAre/FocalPoints/FocalPointUnitedStatesLandingPage.htm

GRI:  http://www.globalreporting.org/Home

S&P 500: http://www.standardandpoors.com/indices/sp-500/en/us/?indexId=spusa-500-usduf–p-us-l–

EFQM: http://www.efqm.org/en/

Baldrige: http://www.nist.gov/baldrige/

New Stewardship Action Council Reply

There is a new association in the sustainability space. It is called the Stewardship Action Council (SAC). It is competing with the Corporate Responsibility Officers Association (CROA) and the GreenBiz Executive Network. SAC has an interesting mix of companies, state organizations, non-governmental organizations and universities. Participating members must set improvement goals and report progress against the goals. This looks similar to the now defunct Performance Track Program (US Environmental Protection Agency).

It is interesting to note that Level 3 members must have an environmental management system in place and it must be verified by a third party. These members must have independent audits conducted every three years and self assessments in interim years. These companies must also have no criminal violations in the past three years and no more than three notices of violation in any three-year period.

SAC has a “concept paper” that outlines the following goals:

• Create a sustainability standard that lays out the elements of and a path for achieving sustainable business practices

• Provide a mechanism to share company efforts to improve performance

• Create opportunity for collaborative efforts to address social and environmental issues that an organization cannot adequately address alone

• Provide a forum where different stakeholders can work together to accomplish common goals

There seems to be a decided focus on the environmental responsibility that is one of three responsibilities in a sustainability program. We’ll have to wait to see a glimpse of the sustainability standard that the members of this fledgling group are working on. With the recent release of ISO 26000 social responsibility standard, and the final voting on the ULE 880 (Sustainable Manufacturing Standard), we can look for some more choices in this very active area.

RELATED LINKS:

Stewardship Action Council:

http://www.stewardshipaction.org

Corporate Responsibility Officers Association:

http://www.croassociation.org

GreenBiz Executive Network: http://www.greenbiz.com/intelligence/

ExecutiveNetwork ISO 26000: http://www.iso.org/iso/iso_catalogue/management_standards/social_responsibility.htm

ULE 880:  http://www.ulenvironment.com/ulenvironment/eng/pages/offerings/services/organizational/ule880/