Tuesday, July 1, 2014

A Sustainability Continuum

Sustainability in practice in the enterprise is a whole-system discipline.  Starting with source inputs and concluding with the final disposition of both waste stream and finished goods, a sustainability program has a cradle to grave scope.  All companies can be viewed through the sustainability lens, however, and one way to view the results is along a progression:

Legal-regulatory compliance: the company does only that which it must in order to comply with all applicable environmental regulations and statutes.  A reactive strategy.
Environmental Risk Management--The company anticipates potential future regulations and/or civil liabilities and executes strategies to limit corresponding risk.  A proactive strategy intended to reduce financial exposure.
Brand/Image/Reputation Enhancement.  Sustainability programs that are executed either piece-meal or without regard to a holistic, strategic plan can still create positive impact.  And the company may elect to celebrate such genuine efforts.  But a word of caution: low-impact initiatives (or worse yet, superficial programs undertaken to create the illusion of sustainability) may be perceived as "green-washing".
P&L Performance ("Value creation").  The company views sustainability as a profit center, and develops holistic, integrated strategies for both reducing costs and implementing line of business products and services.  The goal of Value Creation in sustainability is to improve financial performance while simultaneously reducing environmental impact.
Zero-net Enterprise.   Through aggressive strategies to improve resource utilization and multi-cycle the waste stream, total waste outflow is substantially reduced and remaining outputs are either fully remediated or offset.
Restorative Enterprise.  Beyond the achievement of a zero-net environmental impact, enterprise activities instead yield a net-gain for the environment, for example: C02 sequestiontration via industrial process.These require extensive planning, unwavering commitment from management, trail and error and an awareness that to migrate from business as usual to a zero-net impact is a complex evolutionary process.

No company arrives in the latter two stages easily or overnight.  This metamorphosis can be excruciating, complex and protracted, and brings to mind the observation of Teddy Roosevelt, himself a progenitor of environmental sustainability and the father of the National Park system: "It is only through labor and painful effort, by grim energy and resolute courage, that we move on to better things."

For most companies, "business as usual" probably falls into the first two strata; while management is awakening to the public concern with environmental sustainability issues, but remain skeptical that addressing them is anything other than a cost center.  Focused on shareholder value, management thus seeks to minimize costs, and therefore executes strategies focused on reducing legal and civil liability.

At this point, however, there is less and less room to simply comply with environmental regulations and go public with a position of "we are in full legal compliance with all state and local statutes."  This is because of both an increased cyncism among the green movement about the credibility of corporate PR, but also because of a recognition that most environmental laws do not go far enough.

When the Watchdog  Barks
Setting aside the frothy philosophical question of whether environmental solutions should be crafted by the hands of government or turned on the lathe of free markets, the reality is that current legal regimens are both not sufficient to address all sustainability concerns, and poorly enforced where they can.  As a result, groups like Greenpeace have entered the arena, and are actively pushing industry to do more.  Prodded by such external stakeholders, your firm may have to make a strategic, C-level decision about where it wishes to fall on the continuum.  If your enterprise has had a visit from Greenpeace or any other watchdog organization, residence in first three stages is probably no longer a comfortable accomodation.

Whether you like Greenpeace or not, you need to pay attention to organizations like them. They are a very real part of the sustainability landscape, and you must factor them in when developing any travel plans. Even if you are not in the electronics industry, Greenpeace provides an important lesson: someone may be watching your activities, and passive compliance as a risk management strategy is no longer sufficient. Instead, passionate advocates such as Greenpeace, especially ones with strong PR reach, have changed the rules: active involvement in sustainability activities is now the expectation and the yardstick against which industry can expect to be measured.

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