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How sure are you sure that you are directing your own behavior? Or are your actions a product of a context that has been carefully shaped by data, analysis, and code?
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Few companies have come right out and said that they serve stakeholders beyond their shareholders. But in 2015, the board of Sweden’s Atlas Copco set the bar for sustainability by including a statement of materiality and significant audiences in its annual report. Atlas Copco’s Statement shows how a company’s board can protect managers in the face of pressure from short-term investors so they can make the long-term decisions necessary for a sustainable strategy.
Sustainability Insurgents are professional insiders who seek to align their organizations with a global vision of a peaceful, prosperous, and sustainable world. This article explores how two insurgents, working for dramatically different organizations, developed a peer-to-peer network to help spread the sustainability insurgency.
As SOI matures and becomes more refined, businesses are finding more opportunities to use it as an alternative to their usual innovation processes, but more opportunities require a reliable framework for decision making.
While global custody banks provide the unseen but essential support system that ensures proper functioning of capital markets, they may soon become key players in the global battle against climate change. But whether that will happen depends on the boards that govern them.
The 1987 UN document Our Common Future notes that sustainability means ensuring that future generations inherit an intact planet. If sustainability is framed as a tradeoff between business and society, addressing this tradeoff for the short term may actually exacerbate long-term problems — compromising sustainability. Firms that find a win-win between profits and planet but fail to consider intertemporal tradeoffs may cost the planet in the long term.
How much information should a company disclose about its supply chain? In addition to having to be lean, agile, and sustainable, today’s supply chains are increasingly the focus of growing attention from a variety of external stakeholders. These stakeholders often want information beyond what the company is legally obliged to disclose. But many companies have limited visibility of their supply chain information and have not fully considered their disclosure strategy.
The G7 summit in June of 2015 and the G20 meeting in November both upheld the idea that businesses have a responsibility to respect environmental and human rights principles. As such concerns take center stage, business leaders must recognize their role in navigating the new regulatory environment. As environmental and human rights risks rise in importance, board members are at risk of being seen as negligent if they fail to ensure that their companies comply with the G20/OECD Principles and the standards to which the Principles refer.
The Aspen Institute’s Business and Society Program is focused on developing business leaders for a sustainable society. One of its fundamental founding questions was, “If we want business to operate in a way that’s attentive to long-term value creation and an array of stakeholders, what kind of leadership do we need?” The solution: Aspen’s “First Movers” program, cultivating creative intrapreneurs dedicated to products and management practices that enhance profitability without negative social and environmental impacts.
A new breed of social entrepreneurs has evolved. “Social scalers” focus on market-based solutions that can be scaled up to create social change. Their goal: transform social problems into business opportunities on a national or even global scale. The authors of Strategy and Competitiveness in Latin American Markets: The Sustainability Frontier (Edward Elgar, 2014) look at how companies seeking to address social issues can learn from these social scalers.
At its roots, life-cycle assessment (LCA) is a method to quantify total sustainability impacts — like resource use and environmental damage — over the entire life of a product, from “cradle to grave.” While there is informational value in the basic exercise, the real utility of LCA is comparison — that is, comparing one product’s sustainability impacts with another’s. Given the effort and cost involved, what are the strategic benefits of LCA? And should you be employing such a process?
Insurance companies are uniquely positioned to address challenges such as climate change and human rights issues in their roles as risk managers, risk carriers, and investors. The Principles for Sustainable Insurance (PSI) initiative launched by the UN Environment Programme Finance Initiative in 2012 serves as a global framework for this effort. The PSI are now backed by more than 80 organizations worldwide, representing 20% of world premiums and $14 trillion (USD) in assets.
Shareholders are just one audience a board of directors considers when making decisions for the corporation. Others include employees, customers, suppliers, and NGOs. In the face of limited resources, directors must make choices regarding the significance of the corporation’s many audiences. Given obligations to multiple stakeholders, the authors suggest that boards of directors issue an annual “Statement of Significant Audiences and Materiality” to identify the company’s significant audiences.
Corporate social responsibility initiatives run the risk of being seen as insincere. However, there are ways that companies can thoughtfully — and effectively — engage with the public about social issues. The authors make four suggestions for companies that are hoping to engage in a credible CSR dialogue with stakeholders. They include cultivating a balance between controlling and cocreating the dialogue, and creating platforms that invite stakeholders to influence the implementation of CSR initiatives.
Alberto Andreu Pinillos is a pioneer in business sustainability. Asked what a CSR director does, Andreu gave a three-part answer: A CSR director sees the future, nurtures sustainability projects, and makes the post of CSR director obsolete.
The convergence of communications technology, big data and globalized markets make ratings based on environmental, social and governance (ESG) performance indispensable for B2B and B2C exchanges. Credible, transparent and timely ratings are a powerful enhancement in a fast-moving global economy. As ESG issues are recognized as material to investment decision making, the need for trusted, transparent ESG ratings will intensify.
Soccer’s governing body, FIFA, is in crisis over corruption — and MIT Sloan Management Review’s guest editor for Sustainability, Gregory Unruh, says the situation offers a useful case study for corporate social responsibility. By looking at the FIFA scandal, Unruh argues, managers can learn how to identify corruption from a systems perspective — and understand why it harms their business.
Corporate Social Responsibility “is fraught with contradictions, subject to political challenges and demands deep commitment,” argue José Carlos Marques and Henry Mintzberg. Responsible corporate behavior, they write, isn’t simply “doing well by doing good.” Instead, six changes need to be considered, within and beyond our private institutions. These changes include fostering ethical judgment within the enterprise, rethinking compensation and acknowledging the benefits of regulation.
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