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For firms, sustainability isn’t simple

I recently co-led a workshop on strategic sustainability planning. The participants worked with organizations that understood that sustainability is important. Their challenge was how to turn the desire for sustainability into a plan for the future.

While these organizations had some sort of team focused on sustainability, by and large, it wasn’t yet integrated into their businesses. Participants wanted to move beyond the initial steps they’d taken such as low-cost energy efficiency measures and simple waste reduction.

In listening to examples of other businesses, their biggest question was: How did the sustainability get absorbed into these companies’ DNA? How does one get beyond the so-called “low hanging” fruit and into the systemic challenges that all of us face?

Most sustainability literature points to the same factors: commitment from the CEO or equivalent, accountability for execution through sustainability reporting and/or key performance indicators and a business case for sustainability.

Article after article highlight the efforts of Wal-Mart, Nike, UPS and other global companies. While global companies are a long way from operating sustainably, the efforts they are making are remarkable. Many of these companies are finding that sustainability efforts are not just providing intangible benefits, but contributing to their profitability as well. In many instances it began with the aforementioned eco-efficiencies: reduction of waste, increase in energy and material efficiencies.

To their credit, many of these companies are not just harvesting efficiencies, but also investing in the future. Much of this investment focuses on the supply chain and customers.

Recently, Greenpeace challenged 14 apparel companies to eliminate toxic discharges from their supply chain. Nike, adidas, Puma, H&M and others have taken up the challenge. The companies themselves are not discharging the toxins, so this initiative requires a look up the supply chain. Of course, the question is how far can they go?

Ultimately, the challenge requires the apparel industry to come together with the chemical industry and agriculture. Whether materials are grown or manufactured, it is necessary to go all the way upstream. Think of the possible collaborations. In the future we may see Nike working with Dow or DuPont to develop fully sustainable fabrics, or Kaiser Permanente working with city planners to develop healthy neighborhoods.

How do we get to a model where thinking all the way upstream is a business norm? It has to contribute to profitability.

According to “Sustainability Nears a Tipping Point” in the winter 2012 issue of MIT Sloan Management Review, “having a commitment, a business case and an ethical stance are important. But commitments can falter, execution can fail and belief can be supplanted. The reality is that an organization’s sustainability agenda often becomes deeply embedded in business processes when it adds to profitability over time.”

What does it mean to integrate a sustainability agenda into business processes? Many businesses create a position responsible for sustainability. Hiring a sustainability director or officer is a good first step, but it isn’t enough to embed sustainability into the organization. Companies must engage each of their business units, and those units must work with the sustainability director to develop performance goals and indicators.

In our workshop we encouraged organizations to look at all parts of their business: material sourcing, manufacturing, packaging and retailing, consumer use and disposal (where appropriate). When looking from start to finish, participants begin to see not only the short-term actions but mid-term and long-term opportunities as well. Their next step will be to incorporate these longer-term opportunities into their business plans.

Articles in magazines like Forbes and Fast Company, MIT studies and numerous sustainability books focus on the work of global companies. It is important to remember that the challenges faced by large companies are challenges to businesses of all sizes.

Relationships with customers are extremely important for small companies. Do you serve or supply larger companies? What happens if a letter comes tomorrow that asks what your sustainability program is? Are you ready?

Our workshop participants were from small businesses and organizations. They see that the world is changing, and that natural resource constraints and a growing economy present a paradox that requires innovative solutions. For them, the biggest challenge is to get the sustainability business case integrated into their core functions in order to execute their intentions. What’s your challenge?

Regina Hauser is a board director for The Natural Step International and a sustainability consultant. Contact her at hauseregina@gmail.com.

About Regina Hauser