Train to Win: The 1, 2, 3 of Sustainability Best Practice
We all know the jargon: Sustainability. CSR. Shared value. Triple bottom line. Green. They all land somewhere between ephemeral concepts and a color. How did we manage to detach something so important from its twin value propositions of risk mitigation and cost reduction? More puzzling still is how the value of sustainability got so turned around at a time when regulation, investor pressure and consumer demand for accountability and transparency are more real and impactful than ever.
The answer is we’ve been misled into thinking sustainability – the idea of managing risk and resources well – is something new. Pundits and insiders have told us sustainability requires special knowledge, new “Key Performance Indicators” and exotic practices. Naturally, these remain inaccessible to the average executive and squarely in the domain of consultants, academics and innovators who are only too happy to share their insights for a “modest” (read large) fee. This is wrong.
So what's right?
“Sustainability” breaks down to three things:
- Businesses are on the hook for the (bad) actions of their suppliers and business partners.
- Investors and consumers are voting with their pocket books while governments regulate with their gavels.
These are not new issues. They’re just far more salient now. When energy was cheap, we could afford to consume more per widget manufactured – the marginal cost was inconsequential. But the Arab Oil Embargo exposed that the marginal cost of energy was, well, not so marginal. When a few large corporations used child labor in far away mainland Asia, it seemed to be a cost-effective, locally acceptable way to deliver better value to Western consumers. It turned out Asia wasn’t so far away and Western consumers expected the same labor practices to apply no matter the provenance of their sunglasses or TVs. The outcry and ongoing criticism toward supply chain tragedies such as the Rana Plaza collapse in Bangladesh and worker suicides at Foxconn are contemporary examples of this. When the President of the United States announced aggressive new carbon emissions limits for coal-fired power plants and used Executive authority to implement his policy, we officially entered a context where “voluntary” action and disclosure are becoming everything but. Today’s world is one where externalities are no longer external, they’re material and consequential. Governments, consumers and investors get this and want companies to “get it” as well.
The 1, 2, 3 of sustainability best practice
If we agree resource conservation and risk mitigation are smart business practices, the question becomes how to make them easy and profitable to perform? To do this, I suggest approaching sustainability the same way an athlete gears up for his or her first match: