White Paper: Sustainability and the C-suite
Introductory letter from William Newman, managing principal of Newport Consulting Group:
Earlier this year Principal Cindy Jennings and I were debating what should be done to address the issue of CXO engagement in a number of key strategic initiatives, including sustainability and corresponding triple bottom- line business practices. Given our education and consulting work over the past three years, we found sustainability just wasn’t sticking with mid-tier and large businesses as organizations exited the Great Recession and began to build and grow. The sustainability lexicon simply wasn’t in the board room. Given Dow Jones Sustainability Index (DJSI) companies show 7-25% performance gains over their peers, it seemed to us that many CXOs weren’t getting the “sustainability is good for the bottom-line” message. Why a gap?
About this time, Dr. Jake Pollack from the University of Oregon Sustainability Leadership Program – which our firm has worked with as education partners since 2009 – was pondering a thought leadership program with its media partner, Sustainable Industries magazine. After quick, synergistic conversations between myself, Cindy, Jake and Brian Back – founder and president of Sustainable Industries – a survey project emerged. This project would address head-on the issue of CXO engagement in sustainability issues, not just those perceptions within the C-suite but a 360° view including what staff thought of the C-suite and what tools could be used to increase engagement across the enterprise. A first-of-its-kind study on the topic.
Over 200 companies responded to our survey across a balance of organization sizes and industry segments. Cindy gets a big “hat tip” as the architect of this project, as do Jake and Brian for being great partners during the survey period, leading up through the findings presentation and this final report which you are reading. Additionally, several companies chose to respond with qualitative interviews including Alaska Airlines, SAP America and Kitsap Bank. Special thanks to these and other organizations who provided detailed interview contributions.
A word on the CFO, who one might think we take special pleasure to prosecute in our report. We are very mindful that the CFO is in today’s economy the quintessential CXO – wearing many hats in the organization and doing their best to hold the line on costs. The image isn’t pretty. However we believe there is a unique opportunity now for the CFO to embrace sustainable business practices. The need for integrated financial reporting, Dodd-Frank, and emerging standards (like SASB) could create an ideal time for CFOs – with the support of their CEOs – to dive into the sustainability space beyond compliance measures. A 2012 study by Deloitte also suggests a promising convergence of CFO interests. We certainly hope so, as an overwhelming number of staff and management level respondents of our survey hope the CFO becomes more strategically engaged in sustainability efforts.
In this final report Cindy kick things off with an overview of why now is the right time to consider the issue of CXO engagement. I then chime in with the five board room “megatrends” of the study. Cindy will provide key findings and background materials. Jake will offer some tips on leadership skills needed to drive a sustainability program. And Principal Joe Stockemer shows how the City of Santa Monica has emerged as a center of sustainable public policy.
I hope you find these offerings of interest.