Sustainability
Here we go again, throwing around another buzz word. Piggy-backing on our special report of last month focusing on corporate social responsibility (CSR), we look at another concept: Sustainability - meeting the needs of the present without compromising the ability of future generations to meet their own needs. It's a simple concept, yet it has only recently become more than a concept to many consumer goods companies and the like. It has become a priority, and increasingly, a built-in part of the business plan.
"A growing number of companies are using sustainability to create financial value through new products and market, and emerging development that is expected to increase over time," according to a report by SustainAbility, a corporate consulting group and independent think tank that specializes in the business risks and market opportunities of corporate responsibility and sustainable development. Jeff Erikson, U.S. director for SustainAbility, says, "In general, companies are moving beyond the fringe and addressing sustainability as a key part of their business strategy, building it in as an integral part of their plan."
RIDING THE WAVE
Going back through the history of the "green movement," SustainAbility describes three waves. The first took place in the 60s and 70s, at which time the movement -- through the growth of "non-governmental organizations" (NGOs) -- was focused on the government's environmental practices and policies. The "Cold War" status of the world was also a factor.
Going back through the history of the "green movement," SustainAbility describes three waves. The first took place in the 60s and 70s, at which time the movement -- through the growth of "non-governmental organizations" (NGOs) -- was focused on the government's environmental practices and policies. The "Cold War" status of the world was also a factor.
The second wave came in the late 80s and early 90s with the end of the Cold War and a string of environmental disasters, which put so-called big business into the media spotlight and onto the agendas of NGOs.
SustainAbility believes we are currently in the third wave, where the focus is ever more on responsible globalization, growth and development. The company's report, "Tomorrow's Value The Global Reporters 2006 Survey of Corporate Sustainability Reporting," found that companies leading in the area of sustainability are shifting their strategic focus to one of "a more progressive and entrepreneurial approach that seeks to identify opportunities for strategic innovation and market building." Erikson notes that Wal-Mart is one such company that is finding the business benefit here. He says, "Wal-Mart is pushing out the leading edge of business strategy even down through the supply chain."
THE WAL-MART PLAN
According to the company's Web site, "Ecologically responsible business practices result in significant gains for our customers, associates and shareholders. For example, by inventing trucks that get twice the mileage of our current vehicles, we will radically reduce emissions and fossil fuel, but we'll also save millions of dollars at the pump." So the start of Wal-Mart's sustainability "journey" begins at home.
According to the company's Web site, "Ecologically responsible business practices result in significant gains for our customers, associates and shareholders. For example, by inventing trucks that get twice the mileage of our current vehicles, we will radically reduce emissions and fossil fuel, but we'll also save millions of dollars at the pump." So the start of Wal-Mart's sustainability "journey" begins at home.
Janelle Kearsley, director, Wal-Mart strategy and business sustainability, says, "To focus our efforts, Wal-Mart Stores. Inc. President and Chief Executive Officer Lee Scott announced three overarching goals in 2005: To be supplied 100 percent by renewable energy; to create zero waste; and to sell products that sustain our resources and our environment. While these are long term goals, we also have short term goals, such as: Increasing our fleet efficiency by 25 percent in three years and doubling fuel efficiency in 10 years; and reducing our solid waste from U.S. stores and Clubs by 25 percent in three years."
With planned growth for 2008 being a 7.5 percent increase in global square footage and more than 600 new locations expected to open, how does sustainability jive with this plan? Kearsley says, "Environmental sustainability is a part of the Wal- Mart culture. It lives within our company. We've built our business on improving the quality of life for our customers, associates, suppliers and their communities. We are always making improvements up and down the supply chain to increase the value we offer our customers and grow our business in innovative directions. Our environmental commitments fit perfectly into this model."
SUPPLY CHAIN
Sixty-eight thousand supplier partnerships pose further issues for Wal- Mart when it comes to sustainability, and the company realized it must enlist these partners in its quest. "We created 14 Sustainable Value Networks that are made up of thought leaders representing our company, suppliers, academics, government officials and NGOs to develop a better understanding of the issues and opportunities we face both in our business and as a global community. Our networks encourage communication across departments, companies and countries to capture a wealth of knowledge and apply it to our business," explains Kearsley.
Sixty-eight thousand supplier partnerships pose further issues for Wal- Mart when it comes to sustainability, and the company realized it must enlist these partners in its quest. "We created 14 Sustainable Value Networks that are made up of thought leaders representing our company, suppliers, academics, government officials and NGOs to develop a better understanding of the issues and opportunities we face both in our business and as a global community. Our networks encourage communication across departments, companies and countries to capture a wealth of knowledge and apply it to our business," explains Kearsley.
Packaging reduction is a start here, and Scott announced this at the recent Clinton Global Initiative, saying "Packaging is where consumers and suppliers come together and can have a real impact both on business efficiency and environmental stewardship." Wal-Mart will measure its worldwide suppliers on their ability to develop packaging and conserve natural resources. This initiative, scheduled to begin in 2008, is expected to reduce overall packaging by 5 percent.
Kearsley notes, "In addition to packaging, those networks are collaborating to explore sustainable solutions in building design, logistics, alternative fuels, textiles, electronics, food and agriculture, forest and paper products, chemical intensive products, jewelry and seafood."
SMALL COMPANY - BIG THINGS
So how does a smaller company manage sustainability when it does not have the virtually unlimited resources of a Wal-Mart? Clif Bar & Co., makers of energy bars and other nutritional products, simply started out that way, being green from its origins in the early 90s. Initiatives at the company include using organic ingredients; adopting green business practices; joining the fight against global warming; and supporting its partners in sustainability
So how does a smaller company manage sustainability when it does not have the virtually unlimited resources of a Wal-Mart? Clif Bar & Co., makers of energy bars and other nutritional products, simply started out that way, being green from its origins in the early 90s. Initiatives at the company include using organic ingredients; adopting green business practices; joining the fight against global warming; and supporting its partners in sustainability
Diana Simmons, sustainability manager at Clif Bar & Co., says, "The challenges we face are the same challenges a small company would face in general, we have perhaps fewer resources and we all wear different hats. However, there are some advantages; we have the ability to change from within by educating and empowering our employees. We are able to provide our employees with the tools to ask questions about how their projects impact the environment. We bring in speakers and have educational programs, and it's really our employees that come up with great solutions. One of the employees came up with the idea to get rid of the shrink wrap on our boxes of bars, which eliminated 90,000 pounds of shrink-wrap a year but also saved us $450,000 dollars a year. Sustainability is really a source of innovation."
As a leader in this area, Clif Bar & Co. can serve as an example for other companies, large and small. Simmons notes, "The biggest piece of advice is, don't be afraid to start small, sustainability is a journey and everything you do can have an impact. We started six years ago with recycling bins at our desk and composting employee food waste, and now we purchase over 20 million pounds of organic ingredients every year. We also have a sustainability team and a staff ecologist dedicated to improving our business practices and reducing our environmental impact from the farmer's fields to the final product."
The company also looks outside to support its strategy. "Creating partnerships is critical, as you can always learn from other companies and organizations. For example, nonprofit groups can keep you on the cutting edge of issues that are important, while governmental groups can give you the tools to become more energy efficient or reduce your waste. Other businesses may also have their own programs in place, similar to what you are trying to do and it can be beneficial to work together," points out Simmons.
As awareness around sustainability and green practices rises, demands for responsible practices from shareholders and consumers alike also will increase. As Erikson mentioned, "Consideration of sustainability is going to get more embedded into business strategy." CG