Sustainability 101

Corporate sustainability is a business approach that creates long-term value by embracing opportunities and managing risks derived from economic, environmental, and social developments. Specifically, environmental sustainability refers to maintaining the quality and longevity of environmental resources used by the business. This can include energy, water, waste management, emissions, and so forth. If a business puts back 100 percent of the natural resources it consumes, it is considered an environmentally sustainable business.

Economic sustainability is tied closely to an organization's environmental sustainability, and includes the overall financial model and productivity of a company. In a "green" context, it refers to evaluating the products and services customers purchase to determine if they are more or less sustainable. For example, purchasing energy-saving compact florescent lights (CFLs) is considered a "more sustainable" choice.

Social responsibility is a goal of sustainability. It refers to the social impact of a business. It includes factors such as ethical principles, giving back to society, health and safety, respect for human rights, equal opportunities, fair compensation, and ensuring a high quality of life.

Going Green

The sustainability of natural resources is emerging as a core business issue in the corporate world. Green businesses promise to operate in ways that solve, rather than cause, both environmental and social problems. In practical terms, being a green business means changing the way a business purchases, develops, produces, and provides products and services so it has a positive impact on the environment. In broad terms, green businesses must adopt principles, policies, and practices that improve the quality of life for their customers, employees, communities, and the environment. But what are organizations really doing in their move toward sustainability?

According to the 2008 SHRM Green Workplace Survey by the Society for Human Resource Management (SHRM), 50 percent of surveyed organizations have a formal or informal environmental responsibility policy, but 43 percent have no such policy and no plans to implement one within the next 12 months.

"The findings revealed a surprising paradox," says Susan R. Meisinger, president and CEO of SHRM. "The study shows that companies really do benefit from environmentally friendly practices, and yet a large portion of firms have no plans to go green."

The report also finds that the companies that implement environmental responsibility programs report considerable benefits, such as improved employee morale (44 percent) and employee loyalty (16 percent), a stronger public image for the company (42 percent), and increased consumer or customer confidence and choice (20 percent). However, respondents admit that it's not easy for them to become and remain environmentally friendly.

Not surprising, the most common barrier to creating an environmental program is implementation cost (85 percent) followed by maintenance cost (74 percent). Other barriers include lack of management support (43 percent), lack of employee support (25 percent), and concern for workplace inefficiency (20 percent). Still, nearly three out of four employees from companies without environmental programs say they want their employers to "go green." Seventy-three (73) percent of surveyed employees in companies without an environmental responsibility policy thought it was very or somewhat important that their organization develop an environmental responsibility policy.

HR professionals in the SHRM study ranked encouraging employees to work in a more environmentally friendly way as the number 1 environmentally responsible practice. This requires a major culture change in most organizations. To succeed, businesses need to move beyond simply encouraging employees to educating them.

Unfortunately, many organizations find informing employees about the greening process to be arduous and slow. Organizations can start by connecting their overall business strategy to their sustainability initiatives. In fact, many business schools are integrating sustainability into their strategy and leadership coursework. For example, all programs at Bainbridge Graduate Institute in Washington specialize in sustainable business. Instead of teaching separate classes on business strategy and sustainability, professors at BGI teach that sustainability is a necessary piece of strategy.

For instance, sustainability leader DuPont has developed a vision to be the "world's most dynamic science company, creating sustainable solutions essential to a better, safer and healthier life for people everywhere." Its strategy for achieving that vision is to "design products and processes that pass rigorous criteria for the use of renewable resources, energy, water, and materials."

Learning executives can help their organizations make the sustainability-strategy connection by assisting in the development of "green" mission, vision, and values statements. Be sure to state the company's sustainability beliefs, detail new behavior, outline core priorities and purpose for going green, and explain how the organization plans to rise above others by implementing sustainability initiatives.

Once an organization has a carefully crafted strategic mission and vision statement, there will likely still be a large knowledge and behavior gap. Even in environmental organizations whose mission already revolves around sustainability, training employees to work in greener ways can be challenging.

Companies typically address this gap by developing training programs that explain how employees should reduce, reuse, and recycle - the green business mantra. These programs review such steps as turning off lights in rooms that aren't being used and recycling paper, cans, and bottles. In addition, they cover proper equipment use, such as power-saving settings on computers, copiers, and printers.

For example, DuPont has in place several training programs to encourage and support its more than 60,000 employees to implement the company's energy efficiency goals to reduce its greenhouse gas emissions. DuPont's Energy Center of Competency has a series of tools to help business units implement sustainability practices. In addition to training, the center provides best practices documentation and an energy efficiency analyzer and other tools.

Sustainability leaders take educating employees to a personal level. In 2004, Wal-Mart launched the company-wide, long-term Personal Sustainability Project (PSP), which is a voluntary program focused on helping associates integrate sustainability into their own lives by making small changes to everyday habits.

At each Wal-Mart store and Sam's Club in the United States, as well as headquarters, "PSP captains" hold meetings to educate associates on the PSP project. Associates who choose to participate select a personal sustainability goal to improve their own health and wellness or the health of the planet. In-store training and tips throughout the project help reinforce the associate's commitment. By September 2007, more than 40,000 associate captains - about 10 per store - were trained advocates for sustainability in their stores and communities, including two market-level captains and one member of management in each Wal-Mart and Sam's Club. Over time, Wal-Mart hopes to expand the program internationally.

Social Responsibility

Corporate responsibility and citizenship is another piece of the sustainability puzzle. The concept is that organizations should consider the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities, and the environment in all aspects of their operations. In essence, it simply means striving to do what's right and give back to the community.

At IBM, achieving corporate social responsibility requires innovation that runs deep, such as new workforce models, new management systems, and new curricula. In 2007, the company announced the IBM Global Citizen's Portfolio, a new way to empower employees to chart their own future career paths. One program under this framework is Enhanced Transition Services, which expands on IBM's successful Transition to Teaching program that launched in 2005. The enhanced program draws on many IBMers' strong math and science backgrounds to help meet critical shortages in U.S. schools. IBM reimburses transition services participants up to $15,000 for tuition and stipends, and provides up to a four-month leave of absence while they student teach.

Piloted in the United States, this innovative program has since expanded and is poised to launch in Australia and the United Kingdom. Enhanced Transition Services will bring to bear the same approach in addressing the needs of governments, not-for-profits, and educational and economic development agencies. Work is currently underway to target needed skills, to create collaborations, and to support employees as they transition to their new careers.

In addition, IBM employees and retirees around the world volunteer their time, skills, and expertise at schools and not-for-profit organizations. IBM's On Demand Community program, now in its fifth year, supports community efforts in multiple ways, including an online repository of nearly 200 presentations, documents, and educational modules that volunteers can adapt to share their knowledge of technology planning, project management, and more. Other resources make it easy for technical professionals to visit schools and promote science and technology careers, or to help teachers use technology in their classrooms. Many are available in up to 10 languages, with new resources and translations added every year.

According to David Eisner, CEO of the Corporation for National and Community Service, "With more than 100,000 registrants and more than 6 million total hours of volunteer time, the On Demand Community is an extraordinary example of corporate philanthropy. Even more than the massive numbers, it is notable for leveraging the core strengths of IBM - its technology and the vast skills of its employees - to make a global difference."

Other IBM volunteer initiatives include MentorPlace, through which 6,000 IBM employees mentor students in 37 countries. MentorPlace is a structured program that includes mandatory training, safety and security procedures, weekly communication, evaluation, and face-to-face opportunities. IBM works with teachers to determine what online activities they would like their students to work on with their mentors. Activities cover all core academic areas, including science and math. Traditional mentoring conversations also take place.

Similarly, consumer products company Proctor & Gamble (P&G) inspires and engages employees to build sustainability thinking and practices into their daily work. To achieve this goal, P&G uses career discussions, informal network support groups, and mentoring programs to provide informal support and guidance, in addition to coaching and training provided by each direct manager.

P&G employees experience a bonus benefit from the company's social responsibility programs. Employees volunteering for the Live, Learn, and Thrive program, which helps build schools in disadvantaged areas and ensures that life skills are taught to disabled children, find that they're building their personal individual and team skills while making a difference for the children they help.

For example, one team from the Cincinnati headquarters regularly stocks shelves and creates some learning tools for preschool classrooms at Crayons to Computers, a store that provides free school supplies to teachers of more than 75,000 children. "It is great to spend our time helping children in need throughout our community," says one team member.

Bottom Line

The need for truly sustainable options for 21st century life remains one of the most critical challenges facing the global community. Sustainability growth initiatives strive to demonstrate how business and economic growth are compatible with strong commitments to society and the environment. But how do sustainability projects affect a company's bottom line?

According to the Dow Jones Sustainability Index, corporate sustainability leaders achieve long-term shareholder value by gearing their strategies and management to harness the market's potential for sustainability products and services while at the same time successfully reducing and avoiding sustainability costs and risks.

An extensive survey of 1,254 international executives (half from the C-suite; 26 percent of them chief executive officers) by the Economist Intelligence Unit on corporate responsibility finds that companies that pay the most attention to so-called sustainability issues, such as climate change or treatment of workers in developing nations, far outperform those that do not. The study "Doing Good: Business and the Sustainability Challenge," which was sponsored by several blue-chip companies, including Bank of America, A.T. Kearney, and SAP, reports that leading-edge companies saw profits rise 16 percent in 2007 and enjoyed price growth of 45 percent. Companies that rated their own sustainability practices poorly registered only 7 percent profit growth and 12 percent price growth.

While not necessarily proving that it pays to be good, says Gareth Lofthouse, the EIU director who supervised the survey, "it scotches the idea of skeptics who say that if you adopt corporate social responsibility practices you will become uncompetitive."

Embracing corporate sustainability may have an even more valuable - but less quantifiable - impact on the organization's bottom line than profit and price growth. The SHRM study reports that human resource professionals cite improved employee morale (44 percent) and a stronger public image for the company (42 percent) as top benefits. It also reports increased consumer-customer confidence (20 percent) as a result of the organization's environmental responsible program, as well as increased employee loyalty (16 percent).

These findings indicate that sustainability initiatives can be a selling point to attract potential employees, particularly among younger workers. "These employees check the background of organizations and talk with employees to find out for themselves if the corporate social responsibility messaging delivers on its promise," says Gerlinde Herrmann, president of the Herrmann Group and a member of SHRM's Corporate Social Responsibility Expertise Panel.

Indeed, few people can question that it's good business for businesses to embrace strategies and projects that improve the environment, promote social responsibility, and grow the economy - now and for future generations.