Magazine Winter 2017 Issue Research Feature

Sustainability Lessons From the Front Lines

Too many companies have approached sustainability initiatives in a way that is just plain unsustainable. To foster more lasting change, it’s important to address six of the biggest stumbling blocks.

CB Bhattacharya and Paul Polman Reading Time: 23 min 

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Sustainability Front lines Lessons City

The current corporate sustainability movement is unsustainable. Not because companies are pursuing the wrong goals — but because they are going about them the wrong way. Never before have companies been more conscious of the need to run their businesses in an environmentally, socially, and economically responsible fashion. Yet never before have theory and practice been wider apart. When it comes to practicing and not just preaching sustainability, many companies struggle, and most flounder in developing and implementing a sustainable business model. Executives know and feel the importance of making their businesses sustainable. But many of them can’t make the transformation occur. Worse still, many don’t even know they’re failing.

In our combined experiences as an educator and consultant (CB Bhattacharya) and as the CEO of a large consumer products company and the chairman of the World Business Council for Sustainable Development (Paul Polman), we have had the opportunity to observe and work with multinationals that have had various degrees of success developing and implementing a sustainable business model designed to integrate environmental and societal concerns into business decisions. Based on observations of a number of companies, we have now been able to identify six “pain points,” or thorny challenges, that seem to be the biggest stumbling blocks. (See “About the Research.”) Below, we identify these challenges and offer practical advice on how to surmount them.

1. Sustainability is more than just a change initiative.

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About the Authors

CB Bhattacharya is the Pietro Ferrero Chair in Sustainability and director of the Center for Sustainable Business at European School of Management and Technology (ESMT Berlin) in Berlin, Germany; he is coauthor of Leveraging Corporate Responsibility: The Stakeholder Route to Maximizing Business and Social Value (Cambridge University Press, 2011). Paul Polman is CEO of Unilever, chairman of the World Business Council for Sustainable Development, and a United Nations Sustainable Development Goals Advocate.

References

1. J. Shin, M.S. Taylor, and M.-G. Seo, “Resources for Change: The Relationships of Organizational Inducements and Psychological Resilience to Employees’ Attitudes and Behaviors Toward Organizational Change,” Academy of Management Journal 55, no. 3 (June 2012): 727-748.

2. M. Friedman, “The Social Responsibility of Business Is to Increase Its Profits,” New York Times Magazine, Sept. 13, 1970.

3. R. Isaksson, P. Johansson, and K. Fischer, “Detecting Supply Chain Innovation Potential for Sustainable Development,” Journal of Business Ethics 97, no. 3 (December 2010): 425-442.

4. J. Wollmuth and V. Ivanova, “6 Steps for a More Sustainable Supply Chain,” Jan. 24, 2014, www.greenbiz.com.

5. M. Khan, G. Serafeim, and A. Yoon, “Corporate Sustainability: First Evidence on Materiality,” Accounting Review 91, no. 6 (November 2016): 1697-1724.

6. Coca-Cola Enterprises, “Our Sustainability Plan,” 2015, www.cokecce.com.

7. Wollmuth and Ivanova, “6 Steps.”

8. D. Kiron, N. Kruschwitz, K. Haanaes, M. Reeves, S.-K. Fuisz-Kehrbach, and G. Kell, “Joining Forces: Collaboration and Leadership for Sustainability,” Jan. 12, 2015, https://sloanreview.mit.edu.

9. Asset Management Working Group of the United Nations Environmental Programme Finance Initiative, “Integrated Governance: A New Model of Governance for Sustainability,” June 2014, www.unepfi.org.

10. Kiron et al., "Joining Forces: Collaboration and Leadership for Sustainability.”

11. R.G. Eccles and T. Youmans, “The Real Duty of the Board of Directors,” Sept. 16, 2015, www.forbes.com.

12. Kiron et al., "Joining Forces: Collaboration and Leadership for Sustainability.”

13. SAP, “SAP Integrated Report 2015,” http://go.sap.com.

14. J. Peloza and L. Falkenberg, “The Role of Collaboration in Achieving Corporate Social Responsibility Objectives,” California Management Review 51, no. 3 (spring 2009): 95-113.

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Comments (6)
Dr Rabindranath Bhattacharya
Dr. Rabindranath Bhattacharya, VGSoM, IIT Kharagpur, India

I thank the author for this wonderful article. I agree with the author that any sustainability program  should involve 3Ps namely People, Planet and Profit. These are are not independent to each other but interdependent with each other. Any program not taken up involving any of these factors would likely to fail. 

Firstly, We must protect the planet because it cannot be taken as an inexhaustible source for minerals, metals, fuels, water etc. and as well as a dumping yard for industrial wastes. Planet would take its revenge anytime in future and we would be caught napping.

Secondly we must be concerned about welfare of the people who would be implementing our program. Let us maintain a clean atmosphere  for them and the community at large. They would give you the best ideas for sustainability which management would struggle to find out. 

Thirdly, any program without profit is very difficult to sustain in the long term and it loses steam ultimately. It should always be measured in terms of profitability which should be ploughed back into the business of sustainability only. Sustainability programs should be sustainable.

I would also like to mention here that any sustainable supply chain would survive if the incentives are aligned among the entities properly. Incentives can help build up the proactive/collaborative  culture  across the supply chain and that is where success lies for such programs. It is similar to "Quality Circles" developed long back by Japanese. Any law or instruction would not be able to bring the desired effect in view of the entities located across the globe and owned by different corporate or owners. 

I remember few of the programs which I had the privilege to watch in India
1) Use of waste water from toilet , wash room, Kitchens etc for gardening purposes in the factory after processing.
2) In 2013-14, about 50,000 tonnes of fly ash was utilized from the Fly ash dump hill for stowing underground collieries. This reduced high dust in summers, protecting communities residing in the vicinity (TISCO Mines)
3) Use of Solar energy for street lightings
4) Recycling of raw material like aluminium alloy, steel scraps etc. 

All these resulted in savings of millions of  dollars per year.

In a nutshell, all these sustainability programs are to be implemented by properly aligning the incentives among the stake holders' especially the people down the line like supervisors and workers and suppliers are to be suitably rewarded for their efforts. Stumbling blocks, as mentioned by the author could vanish, if this is taken as a serious business by all stake holders and implemented with right earnestness. The blocks would then turn into opportunities. It is high time that Corporates join hands with each other to make this world a beautiful place to live in and grow further. We are already late.
Kanti Savla
I would add real estate industries in India where initiative such as waste processing, water management, generation of renewable energy, IOT etc will make huge impact with little capital cost which can be recovered within 2 to 3 years beside this initiative will reduce carbon footprint to a considerable extent.
Lakshmanakumar Loganathan
I would  add water stressed crops Rice, Sugarcane to the list. Mostly the Cash Crops are causing the major impact in the water stressed areas of India.
Ranzi RUSIKE
A very good and  informing article for managers in these high economic turbulent times How ever,some advice offered such soliciting for services of sustainability experts may be unattainable to some companies in the developing world. Some of the suggested solutions may have to be adapted bearing in mind the contextual Macro and Micro issues.
The article should be expanded into a book.
Jean-Louis Roux Dit Buisson
This is a great review article. One could think of adapting the bonii calculation forms to include a 15-25 weight on items linked to sustainability.
The wallet is one of the 3 major engines of change. 
when it s your customers applying it to you it might turn out to be a boycott.
M L Bhatia
The above is just an Introduction of the project. Have not been able to read the whole report (being not made available). Hence, not in a position to comment. Otherwise I would have loved to comment.
M L Bhatia
12-13-16