Leading Sustainable Organizations
MIT Sloan Management Review asked two professors who are sustainability experts to comment on Caesars’ progress thus far — as well as possible next steps for the company.
Here are the experts’ perspectives.
Michael W. Toffel
Associate professor of business administration at Harvard Business School in Boston, Massachusetts.
Caesars Entertainment’s experience reminds me of many sustainability programs I’ve seen evolve at companies. Often started by enthusiastic employees who create environmental initiatives in their spare time, such programs typically begin with projects that are highly visible to employees and provide both environmental improvements and cost savings (“win-wins”). Picking this low-hanging fruit first makes a lot of sense to gain traction, build momentum and achieve some quick successes. And Caesars went beyond its behind-the-scenes facility operations to also focus on customer-facing activities, cleverly leveraging the power of defaults by switching off refrigerators in guest rooms and requiring customers to opt in if they wanted their linens changed daily.
Caesars’ CodeGreen scorecard incorporates some outcome metrics (such as carbon emission reductions) as well as some process metrics (such as employee engagement) that presumably are meant to be leading indicators of improved outcomes. While environmental indicators should be reported as both total and normalized rates, some of the rates being used — like waste costs and water usage per facility square foot — might not be the most meaningful rates. For example, if daily water usage is a function of the outside temperature and the number of customers and operating hours that day, each of these factors should be incorporated when reporting normalized water usage. Only then can you discern the extent to which improvement programs, whether equipment- or behavior-based, are actually improving performance.
While I believe Caesars needs to embed sustainability program responsibilities into job descriptions and move away from relying on employees’ volunteer efforts, I agree with Loveman’s opposition to using the CodeGreen scorecard as an input to manager compensation. There’s a big difference between a benchmarking tool meant to help managers identify potential opportunities — some of which won’t be relevant or feasible across all facilities — and an assessment tool meant to rate the extent to which managers are effectively leading their facilities to reach their environmental performance targets.