Sustainability – what’s real?

There are a belwildering array of sustainability ratings – but what do we believe? How do we know they are measuring and evaluating the right things?

In their Rate the Raters documents, SustainAbility identified over 50 sustainability rating agencies. SustainAbility will offer insights into how credible each rating system is, but I suspect that many imponderables will remain.  For example, in part two of the study, the Dow Jones Sustainability Index was ranked highest in credibility by the study’s participants. But in his article titled,When Pigs Fly, RP Siegal noted with incredulity that Haliburton is now listed in the Dow Jones Sustainability Index.

Here are two reasons that determining a company’s sustainability will remain problematic:

  • the bureaucratisation and commercialisation of quality processes
  • determining sustainability

 The bureaucratisation and commercialisation of quality processes

In the galaxy of organisation endeavour, sustainability reporting can be regarded as a quality measure. For example, while the ISO 9000 series deals with operational quality matters, the ISO 14000 series deals with environmental management. While ISO 14,000 may not be classified as sustainability reporting, it serves the same purpose, in that it provides third party assurance of a quality measure.

I like Tom Peters perspective on quality. He quotes Richard Buetow, a Motorola executive.

With ISO 9000 you can still have terrible processes and products. You can certify a manufacturer that makes life jackets from concrete, as long as those jackets are made according to the documented procedures and the company provides next of kin with instructions on how to complain about defects. That’s absurd.

Where quality processes are formalised, they can divert resources from the product or service itself. Any product or service will justify a finite amount of resource input, so ideally, any quality process will add value equal to or greater than its cost. Too often, compliance-driven quality processes militate against quality as they divert resources away from product or service delivery. This is a big issue in service delivery sectors such as education and health. When teachers spend more time on quality assurance processes, they spend less time on preparation for delivery. It may be that, unless there is a compelling reason to get third party assurance, that resource is best invested in enacting sustainability aspirations, rather than measuring them.

I’m not arguing against quality processes – but I am stressing that they have to add value. Sustainability reporting processes will add value to the economic bottom line where there are game-changing benefits. For example:

  • a supplier demonstrating conformance with a client’s ESG (environmental, social, governance) standards to ensure continuance of business
  • securing a listing in a sustainability index
  • remediating reputation losses.

But unless there are clear benefits from quality process third party assurance, why bother?

BP’s gulf oil spill illustrates this issue. Along with Shell, BP scored consistently highly in GRI (Global Reporting Initative) reports, and I believe the company’s leaders had, and have, genuine sustainability aspirations. BP invested a lot in rebranding as “beyond petroleum.” But the gulf oil spill incident has undone a lot of the energy BP had invested in sustainability initiatives. What the GRI couldn’t assess, were complex embedded processes, such as the quality of engagement between BP and its suppliers, and the impact of budgets and deadlines on safety and operations. (This video recounts BP’s PR problems)

Commercialisation

No doubt ratings agencies are also well motivated, but budget pressures will typically create pressure to grow the business and perhaps make processes than they need be. SustainAbility’s Rating the Raters cites commercial pressures as an impediment to more transparent report, partly because the raters are paid by those being rated.

Determining sustainability

Part two of this blog will explore what sustainability means in different industries, and from whose perspective.

Sustainability, engagement and the end of empires, part 2

We are nearing the end of the age of empires (see part one of this post). As the old world is crumbling under its own dysfunction, the new shoots of a new civilisation are discernible. This is the context for the shift to sustainability.

Civilisation by engagement and community building

With the old world essentially a spent force, impotent to deal with the complex issues we now face, the required course correction is a radical reorganisation of human communities and patterns of civilisation. In addition to developing the new institutions to support a new world order, we face the far more profound challenge – that of disrupting ancient and ingrained assumptions and patterns of behaviour, and supplanting them with new ones. This is no simple task.

Current sustainability discourse calls for change, but it is frequently posited as incremental change (albeit challenging enough itself). The environmental and social challenges facing us are enormous. We will struggle to reverse, or slow down some of the alarming trends, such as climate change, species extinction and resource depletion. But In some ways, the task of supplanting old patterns of behaviour, anchored and expressed in age-old human behaviours, is even more challenging. But the good news is, when we can achieve this, new patterns of human interaction will make it much easier to build sustainable communities.

The changes we are facing require the displacing of these old patterns of human behaviour with often diametrically opposed new patterns. For example, most human communities have used slavery as an economic resource. The practice persists today in locations where the prevailing cultural norms of subcultures view humans as objects for exploitation. This practice is unsustainable where human dignity is a dominant value and poverty is banished.

At present, we are in a twilight zone, where many are working hard to implement sustainability interventions, but are doing so on the foundations of the old order. Many corporates struggle with schizophrenic personalities – the old “profit maximisation at any cost” personality, and the emergent “sustainability” personality. BP’s gulf oil spill personifies this. I have no doubt, the companies’ leaders are genuinely aspirational, but the hyper-competitive marketplace invokes “profit maximisation” behaviours. We are attempting to build a new world on shaky foundations.

Green shoots – community building

There are encouraging developments. Take community building for example. I am hopeful that we have reached the nadir of dislocated urban and suburban communities and we are beginning to connect more with our neighbours. In this Ted talk, Rachel Botsman talks about the growth of “collaborative consumption” – a phenomena driven partly by new peer-to-peer technologies.

And in my corner of the world, the city of Christchurch recently experienced two devastating earthquakes. Amidst the tragedies, it was heart-warming to see neighbours looking after neighbours. Two “armies” were mobilised – the student army, and the “farmy” army, the former, tertiary students, and the latter, Canterbury farmers. These armies cleared away the tonnes of liquefaction that covered streets and suburbs.

More green shoots – the global community

A hundred years ago most of our exposure was to homogenous others – those that were much like us. It was very easy to be embedded in and “us and them” world, when most other nationalities are strangers. Now we mix a lot more, we are broadening our empathy far beyond the homogenous cliques of the past. We are more likely to respond to the plight we see our fellow humans suffering. And science has taught us to that biologically, we are all much the same.

The attitudinal foundations

In the previous post, I outlined the underlying assumptions that supported the empire building ethos – “growth is good” – “extracting value” and “us and them”. Our new world requires an entirely different assumption: unity of action. Rachel Botsman advocated a shift from competition to collaboration.

We also have to overturn some deep-seated beliefs about human nature. For example, we can live peaceably together, and we can transcend self-interest.

Is it arrogant to think that we are living in the midst of epochal change? Could it be that we are indeed part of a transformation of human consciousness? I believe so, and in my next post, I will assemble some supporting evidence. What do you think?

Sustainability leadership report

How do you know if a company is green-washing, or over-promoting its sustainability performance? Brand Logic’s recently released Sustainability Leadership Report compares the perceptions of sustainability of 100 prominent brands, with their sustainability reality.

Their matrix, sorts the brands into 4 categories:

  • leaders – those who perform well in environmental, social and governance (ESG) dimensions of sustainability and successfully communicate their achievements
  • challengers  – who are performing well, but not getting enough credit
  • promoters – who are credited with ESG performance ahead of their actual performance
  • laggards – who are low in both dimensions
brandlogic’s Sustainability Leadership Report matrix
Notice that IBM hits the sweet spot of high sustainability performance and high sustainability perceptions.

The great news

This report surveyed three groups, purchasing/supply management professionals, investment professionals and graduating students.  They were asked :
When evaluating a company as a potential:
  • investment or investment recommendation
  • supply chain partner
  • employer
how important is it to you that the company act as a good corporate citizen, operating in a socially and environmentally responsible manner?
An impressive 88% felt that this was somewhat important or extremely important –  45% responding that it was extremely important.

Reporting or engaging?

If resources in your business were tight, and you had to choose between reporting and engaging, which would it be? Here is why I would choose engaging.

Reporting is a quality assurance process with its roots in twentieth century industrial processes. I regard the current day sustainability movement to have started in the early sixties, when Rachel Carson and others raised concern about the negative impacts of commercial activity. Initially the companies that found themselves the target of criticism ignored it, but over time they, initially reluctantly, realised they had to take action.

Shell is an excellent example of this. In the mid-nineties, Greenpeace and others protested about the disposal of the Brent Spar and Shell’s alleged complicity with the Nigerian Government’s execution of activists. Initially the company attempted to repel criticism, but over time internal discourse changed to include sustainability. Shell was an early adopter of the Global Reporting Initiative (GRI) and soon regularly ranked in the top ten of global reporters. BP also performed consistently highly in GRI reporting and appeared genuinely committed to its rebranding “Beyond Petroleum”. But recent events in the Gulf of Mexico illustrate how reporting processes do not necessarily ensure a good outcome. In this case, better engagement with suppliers appears to be desirable.

Reporting is essentially a compliance process. The great thing about compliance processes is that they provide assurance that the plane we are about to fly on is well maintained, or a product we buy is fit for purpose. The downside is, that if they become the default organisational strategy, they can generate a compliant and uninspired workforce. The compliant workforce knows what it can and can’t do and tends to operate within these parameters.

These days, for most commercial activity, compliance is unavoidable. One or more industry bodies or standards organisations and multiple local, state, national or federal government departments require our compliance. And we are often complied to report. Why impose further voluntary compliances on your workforce? Might it not be useful to foster other methods? This is where stakeholder engagement processes are useful.

Engaging in the 21st Century

While reporting is a twentieth century practice, stakeholder engagement is of this century. Complying (through reporting) and engaging are diametrically opposed. The former follows prescribed practice while the latter seeks opportunity. Engagement is essentially a communication process and our twentieth century organisations didn’t do that very well. Now we understand communication processes better, and our workplaces feature more diversity (in age, gender, culture and ethnicity) of necessity, we have to learn to engage better. Engagement can thus pursue sustainability aspirations, but also improve communication internally and externally – the stakeholder engagement win-win.

Zappos is a great example of excellent engagement. In CEO, Tony Hsieh’s great read Delivering Happiness, he outlines “happiness frameworks”. Tony highlights happiness as one of the foundations for Zappos stellar success. His first happiness framework includes four factors, perceived control, perceived progress, connectedness and vision/meaning. These factors foster happiness and create a motivational culture. Lets look at how these might stack up with reporting and engagement.

Of course this is a very stark contrast, and in reality the gap will not be so great, and some companies (such as Canada’s Vancity) do a great job of both reporting and engaging.

It takes some courage to prioritise engagement over reporting. A business’s capacity to engage is enhanced by effective internal engagement – where every staff member is an ambassador for the business. So it takes courage and commitment to first accurately assess the quality of internal engagement, and then to relentlessly pursue better engagement. But the payoff, socially, environmentally and financially is huge. Failure to engage will accelerate mass business extinctions.