Leading Sustainable Organizations
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Amy Hargroves exemplifies a certain kind of corporate social responsibility professional: the lifer who has seen enormous change over the decades. Hargroves has spent 30 years at the U.S. telecom company Sprint, in roles that have included managing the Sprint Foundation and being a manager in sales operations. For the last eight years, she has been director of corporate responsibility.
Hargroves’ primary responsibilities are Sprint’s strategy and implementation for CSR. “I oversee what we can do to benefit society and the environment and manage our own footprint, and then get the corporation behind that,” she says. A member of the Association of Climate Change Officers, Hargroves is Sprint’s internal expert on emission reduction initiatives, sustainable product standards and certifications, and building more environmentally responsible supply chains.
Her work has earned the company accolades, including being named the most Eco-Friendly wireless carrier in the United States (by Compass Intelligence), sector leader for mobile telecommunications in the Dow Jones Sustainability Index North America, and inclusion in the Carbon Disclosure Index Leadership Index with the second highest score (2012).
None of it has come easy. “It’s far easier to say you stand for something good and have it broadly accepted at the surface level, but when you turn what you stand for into actual practices — that’s so much harder,” she says.
In a conversation with David Kiron, executive editor for MIT Sloan Management Review’s Big Idea Initiative, Hargroves explains how her team gradually learned the best way to partner with the company’s legal and government affairs teams to advocate for green energy, drive the company’s standards for more environmentally friendly cell phones, and develop a “greener” supply chain through practices illustrated in Sprint’s new supplier handbook.
You’ve been in your role eight years. What kinds of challenges have you encountered and overcome in developing effective stakeholder relationships within the company?
There are two books that have been critical to both my success and that of my team members. One of them is Peter Senge’s Necessary Revolution, which is about owning the role of a change agent. That’s my interpretation of it. The second one is Crucial Conversations, which helped teach me the tools of facilitation and change management — the techniques you use to be a change agent.
So, there have been many challenges. The most important thing is being effective at influencing and finding wins for other people. You can have a solid vision of where you need to go, but you have to find a path that makes them want to join you. You have to inspire them to participate. You can’t tell them what to do. You have to help them see the good and also free them up to act on what I’ll call a values position. You have to find their win.
How have you inspired folks to participate?
One example was on the supply chain side. We had a supplier code of conduct that did not include many of the CSR principles that are necessary in today’s supplier relationships. There were no specifics on environment, human rights or labor. We ended up creating a new supplier code of conduct and then developed supplier criteria based on the new code. Eventually, this led to the development of a supplier handbook on CSR.
We thought a lot about how we could really influence or guide our suppliers to become more sustainable. In particular, we thought about the companies that haven’t embraced CSR – what can we do to help them embrace it? I don’t think you can force someone to adopt strong CSR practices, so how do we help demonstrate the benefit to them and help bring them to the table – help them want to do this work?
The first chapter of the guidebook is about why is CSR is good for business. But, we didn’t build CSR compliance into their contracts. There is nothing to comply to — just criteria we want our suppliers to meet and why. The carrot is a stronger business partnership and from our perspective, a stronger supplier partner. It’s a win-win. Our supplier assessment goal is to have 90% of Sprint’s suppliers, based on sourceable spend, meet our social and environmental criteria by 2017.
Asking our suppliers to meet our CSR criteria, and then providing guidance on how (and why) they should do it, resulted in a great dialog. If you think about it from an innovation perspective, when you have that kind of conversation with a supplier, covering pretty serious issues, it results in a different type of a trust, a partnership, than we had experienced in the past.
So in thinking about supplier engagement on CSR, we had to involve our key internal stakeholders — supply chain management, legal and government affairs. The specific example I’ll share is about our internal engagement that led to a supplier handbook [PDF], which provides guidance to our suppliers on how to measure and report greenhouse gas emissions and how to complete a materiality assessment. The normal response from a legal team about this type of engagement might be, “Why should we do that? Do we have to?” They might say, “What possible risks might there be to our business if we provide this type of document? What if one of our suppliers followed guidance in the handbook and it somehow harmed their business? What liability would we have? If we create supplier criteria for CSR, does that need to be added to their contact?”
These are legitimate questions. The challenge is finding a balance between the risks and benefits. You get to a point where you have to take a step back and weigh the risks against what you stand for as a company. We found that the incredible dialog that comes out of these conversations surfaces new risks that weren’t initially considered — for example, what if we don’t set a supplier standard for child labor?
So how do you address those kinds of concerns from your legal team, about things like liability and risk?
What’s been the most helpful was having a specific person assigned to act as a kind of intermediary for legal, ethics and government affairs issues We bring issues or project to this person and then he ends up figuring out who we need to involve or get approvals from. We interface with him and he interfaces with them — disagreements are handled within that team and then brought back to us.
What’s the value of this person as a translator, a language link, from the language of sustainability to the language of legal affairs or government affairs?
For the most part, as a sustainability team, we’re all about passion — passion for the greater good and the cause. The legal team and the government affairs team is focused on practicality and risk management. We constantly try to push the corporate envelop to lead in CSR, but they are constantly trying to reduce our risks. You can’t fully do both. If you only do what’s safe or standard, you can’t ever lead. So, this intermediary’s job really is working with these teams to understand what is a real risk and what is less important. He works to create a path that both meets Legal and Government Affairs requirements (risk mitigation) and allows us to lead in CSR.
He might say, “I’ve gotten ten risks back from this attorney, if we make these changes, the attorney will approve your document.” He has a much better understanding of the risks they are concerned about and which words need to be modified to still keep our intent, but reduce our risk.
He allows us to respect the legal risk and also accomplish what we need to accomplish. His role has been just essential.
Can you pull back and tell us about Sprint’s big-picture framework for corporate responsibility?
Yeah, sure. We have developed a strategic model for our CSR efforts. It’s based on shared value creation (creating value for society, the environment, and the corporation) and focused on 3 leadership practices — walking the talk (doing the hard work), using our influence effectively and accelerating social and environmental benefit through innovation. I’d like to share an example of using our influence effectively taking the supplier guide I mentioned earlier. This demonstrates how different our approach is regarding supply chain management and CSR. We have established five things (CSR practices) that we really care about for all of our suppliers.
The first is that they complete a materiality assessment, which means that they understand what their social and environmental impacts are. The second is greenhouse gas emission management. The third is having a public statement on human rights. The fourth is labor safety — essentially ensuring the health and safety of their employee base. And the fifth is having a rigorous environmental management system.
For some suppliers there are more specific criteria, but those are the five core ones.
How were the supplier criteria received?
Pretty well. We sent our suppliers our assessment and then called them to review the results.We were surprised when we heard, “Well, no one’s ever followed up after an assessment and then asked us what we were doing and how might we get better. It was always yes or no, pass or fail.”
So, we actually have gone further, seeking to establish a deeper relationship with them. To me, what that can lead to is co-creation. Are there opportunities for us to work together on sustainability challenges that we share? We’ve started to see some of that, particularly in the printer space where we are the most advanced in our supplier management processes.
What kinds of collaborations do you participate in that are beyond the supply chain? And what are the most important ones?
Well, there are quite a few. When you do a materiality assessment, you identify the most important issues. What we’ve done is select top NGO partnerships for each of these areas of impact. They represent an outside voice and in many cases a partner of some sort.
I’ll give you a specific example. We use a lot of lead-acid batteries in our network. We work with an NGO in the [San Francisco] Bay Area that is really moving and shaking on this topic. They have been a tremendous advisor to us regarding the rules and regulations on lead-acid battery manufacturing and recycling in Canada versus Mexico and what a lead-acid battery policy should address. They have become a trusted partner and we have even participated in conferences with them about the risks of poor management of lead-acid batteries. To me, that is perfect example of a nice collaboration between Sprint and an outside expert/NGO who really cares about this space. We use them as an advisor to improve our business processes, and then use our influence to help other suppliers or people in the lead-acid battery life cycle chain improve their sustainability performance.
What would you say is the most important collaboration that you’re participating in?
The most impactful collaboration we’ve had to date is the work we’ve done with Underwriters Laboratories — Underwriters Laboratories Environment (ULE) in particular.
When we created our own green phone standard (for cell phones to be more environmentally responsible), we went to ULE and asked if they would be willing to be a certification body for our standard. You can’t self-assess your own devices. People should question green labels or claims that are not third-party certified. We needed a credible partner with scientific testing capabilities to give our standard meaning.
To our surprise, ULE’s response was, “Yes, but why don’t we work together to create a real standard?”
Yes. And we did. It was an incredible opportunity. It’s taken several years, but we were able to bring many of our suppliers to the table and create a standard, UL110, which is going through the final stages of technical review for submission as an ANSI standard. We also worked with both ULE and EPEAT (Electronic Product Environmental Assessment Tool — a resource of the U.S. Environmental Protection Agency) so now it’s being adopted into EPEAT registry. This sounds like a lot of alphabet soup, but being added to the EPEAT registry is important. The U.S. General Services Administration (GSA), as well as the nine or so countries that adopt GSA purchasing standards, requires that government agencies purchase only those electronic devices that are included in the EPEAT registry. We were a strong advocate for getting that to happen since it essentially ensures the global adoption of UL110 as the mobile phone sustainability standard.
And we still have just a great relationship with ULE. Now we’re extending into new areas, like repeating the same process for tablets and hot spots. So, this is a repeatable model.
What are your thoughts about bringing in or not bringing in competitors when defining standards?
It’s a very interesting question. ULE likely extended an invitation to some of our competitors to participate in the standard development. We did not specifically say, “No, you cannot do that,” but our preference was not to do that in the initial standard development. The reason is basic competition — we believed that driving the creation of a standard was a competitive advantage. We knew we had the resources and knowledge to do it, as well as the influence with our device suppliers. We like to choose what projects we can fully own and accomplish without our direct competitors and what projects we need to work together on.
There are many problems in our industry that require us to work together conflict minerals is an example. One carrier can’t really do much on its own to make an impact in conflict mineral sourcing in the Congo, especially when it’s so far removed from our direct supply chain influence.
Essentially our model is that we keep some things as a competitive advantage, then, open it up and embrace anybody who wants to come and participate. It is a really fine balance, and I don’t think it would always satisfy some of the — I’ll call them the sustainability purists, where everything should be done collectively. We’re a business in a fiercely competitive industry, and need find and take advantage of any opportunity to have a competitive edge.
I am a strong believer in fast following — we try to be the first to take action on something and then share our lessons learned, policies and results publicly to allow others to take advantage of our efforts. This still results in the win-win that the sustainability “purists” look for, but also provides a competitive advantage for our company. For example, we could have chosen to keep our supplier handbook private — sharing it only with the suppliers we were working with — but instead, we’ve made it public and have blatantly encouraged others to use/adopt it as they see fit.
You mentioned conflict materials, which as I understand it, are resources that might come from a conflict zone such as the Congo and whose economies can contribute to fighting.
Yes. There are a bunch of really interested stakeholders on conflict minerals, as you would imagine there would have to be. The cell phone business is probably not as directly involved in it as we would like to be because it’s so far removed in the supply chain (the actual mining takes place many layers down in our supply chain — our suppliers’ suppliers’ suppliers’ suppliers’ …). The way that it has seemed to evolve is that the wireless phone manufacturers are taking the load in terms of ensuring there are conflict-free tracking process in place. Our position is that we care about conflict minerals, support a public/private alliance to address conflict minerals, and we want to have devices that we can prove are conflict free.
We work collectively through CTIA [the international nonprofit association of wireless carriers and suppliers] on the issue in terms of what is our position going to be, and then several of us have chosen to join the public-private alliance on conflict minerals, which to me is one of the best solutions because it addresses the issues at the source — in the Congo. The Congolese government has to be involved. It isn’t something that the U.S. can solve here or that we can solve just by saying we’re going to put a policy in place.
It was frustrating to see the potentially negative consequence of the Dodd-Frank [a 2010 U.S. consumer protection act] because of what was happening to people in the Congo — companies were simply avoiding the Congo for sourcing, hurting that economy rather than helping it. But through GeSI, the Global e-Sustainability Initiative, another organization that the whole industry participated in, all of the telecoms have been very engaged with creating bag-and-tag processes. Bag-and-tag means that if you’re taking materials out of a copper mine, you’re tracing the source, so you bag it and you put an identifying tag on it. At each step along the way, you know exactly where it’s been sourced from.
Early in our conversation, you talked about the identity of the company, what it stands for. Typically, those kinds of questions won’t go very far unless the person who’s responsible for the company’s direction is involved or is at least sort of is backing you.
Yes. It’s really important. I hate to say it because it’s difficult for companies that don’t have an engaged CEO, but it’s your leverage. When we can say our CEO Dan Hesse cares about it, it’s our license to operate widely within the company because we’re known to be doing what Dan wants us to do and that he supports the direction we’re going in.
Even when you do have the CEO support, it’s challenging. As you can imagine, there are many levels of detail for every issue. For every CSR challenge or issue that you identify, you will uncover nuances you never imagined and people you wouldn’t have expected that have a voice as to whether or not you can implement a more sustainable solution. As you work through the layers, that’s when your conversations go back to what the company stands for — whether or not the proposed action or program supports our company vision. It is hard to slog through that because you’re going to get 30 different objections from all different layers of the operations. It is not an easy fight. It isn’t as simple as, “well, the CEO supports this, so, do it” — although it is a meaningful tool to get attention.