3 reasons sustainability isn’t sticking
Sustainability as a management practice can mean many things to many organizations. In 2012, I presented in my University of Oregon Sustainable Leadership Program workshop that there are currently over 60 major guidelines, standards, methods, and regulations governing sustainability efforts in the world today, and that number continues to grow with the roll-out of new state and federal mandates, including Dodd-Frank compliance. Organizations can get bedazzled by so many compliance efforts and simply resort to throwing money and people at the problem until it goes away (which I submit accounts for the rise in spending around sustainability efforts). Organizations – I am fond of saying – do things for one of two reasons: they want to, or they need to. So far, the “need to” side of the equation is outweighing the “want to” side of the equation for most global companies.
This isn’t to say that sustainability programs aren’t bubbling up from employee engagement activities like “green teams.” But to move past feel-good “uber recycling” programs, companies need to understand the free market drivers which favor sustainable business practices. And so far those drivers are still a mystery to most large corporations.
2. Lack of understanding as to economic benefit
The same root cause impacts from the Great Recession facing my automotive supplier CXO colleague continue to this day. So why have many organizations embraced sustainable business practices – greening the workplace, reducing energy consumption, and improving product packaging as quick hits – and others have not? Part of this I believe is the overwhelming force on large and particularly mid-sized organizations (revenues normally $0.5 billion to $2 billion annually) to continue to “do more with less resources.” While this is changing – slowly – as employment expands, particularly in the U.S., costs are being contained by increased worker productivity. According to the Conference Board periodic studies on worker productivity, productivity in the U.S. grew over 10% from 2005 to 2009, and those practices have continued with diminishing returns. With less than 2% total global productivity gains realized in 2012, CXOs now need to try something different and change behavior. The turnip is now dry.
When I speak to executives who have engaged in product redesign and greening the workplace to increase employee engagement as well as other business practices, I find sustainability becomes less of a cost item and more of an item to create a better place to live and work. This may seem altruistic, but economic gains from reduced staff turnover and increased employee engagement can push worker productivity to new levels. When the economic benefits of the triple-bottom line become clearer, CXOs and directors in companies who undertake GRI and Dow Jones Sustainability Index reporting to demonstrate their status generally find this “shift” in thinking makes the decision to commit resources to document and report less of a “need to” function and more of a “want to” after effect of realizing economic benefit. In short, it’s good business.