The “Pain” of Sustainability
Sustainability is not new. In fact, I argue that the roots of this emerging field extend back to the 1990s when Kathie Lee Gifford and Nike made headlines. The field is starting to be seen as a business driver in addition to being the “right thing to do.” Now, it is becoming an expectation of companies. For example, in our recent public opinion poll, over 83% of American consumers think companies should try to accomplish their business goals while trying to improve society and the environment. Despite this progress, sustainability is an industry with problems that hinder its ultimate inclusion into business plans and the “corporate DNA.” What are these problems? Here’s a short list:
- Companies are overwhelmed. Investors, consumers, academics, non-governmental organizations (NGOs), reporters, and employees all have a perspective of what a company should and should not be doing. A company can be returning a profit to shareholders, only to find protestors at their door or lawsuits filed. Retroactively managing these issues can drain resources, damage corporate reputations, and tire executives and employees.
- Sustainability is overwhelming. The Global Reporting Initiative (GRI) is a multi-stakeholder, multi-national organization that sets the standard guidelines for what and how companies can and should publicly report. Despite being a tremendous tool, the Guidelines themselves do not offer solid guidance on prioritization. There are over 80 “core” indicators the GRI suggests companies should report. How can one company, no matter how large, effectively manage 80+ issues? Granted, many of the core indicators are “easy” (e.g. a letter from the CEO) but the key to being strategic is making choices in what you do and don’t do in sustainability.
- Companies routinely fail to tell their story effectively externally and internally. Companies struggle with how to inform employees, shareholders and stakeholders about how the company is managing material social and environmental issues. This has increasingly become so due to the increasing popularity of social media. Frankly, some companies overstate their impact. Other companies, out of fear of being attacked, understate their impact or wind up not communicating at all.
- Some executives don’t “get it.” There is a perception in some of the Chief-Suites (corporate speak for the section of an office building where all the executives with “chief in their title have their offices) that sustainability is a marginal issue. They tend to look at sustainability as purely focused on philanthropy and volunteerism. It’s a rare executive that views these activities as core to the company’s business performance. Thankfully this is becoming less common, but it’s still a major barrier for most sustainability initiatives.
- Sustainability executives are often marginalized internally. Subsequent to some executives not “getting it,” sustainability executives in some companies are often “put in a corner” and given the resources that go along with being marginalized.
- Companies are tempted to “greenwash.” Environmental issues are becoming increasingly important for society and for business. Recognizing that certain consumer segments respond well to environmental issues and eco-friendly products, some companies have stretched the truth. Occasionally environmental claims can run afoul of Section 5 of the FTC Act which bans unfair and deceptive marketing claims. The FTC enforces this regularly and has issued “Green Guides” since 1992 to assist marketers in staying on the right side of the law.
- Sometimes you can’t win. People are tough to please. Often stakeholders, particularly external stakeholders, have different expectations of what companies can and should do in sustainability. Sometimes these expectations are valid concerns and sometimes they’re overblown. If stakeholders are advocating for a company to change the world overnight, it can actually slow down the adoption of sustainability because the far-flung expectations can seem too extreme.
- Profit makes some people uncomfortable. I’ve realized that some non-corporate advocates for sustainability are ultimately uncomfortable with the idea that companies exist to make profits. This might sound to blunt, but why else do companies exist? Rather, I argue, it’s the manner in which companies pursue such a profit that is becoming increasingly important. Still, sustainability professionals have to battle this perspective.
What do you think? Are there are structural problems facing the industry? What other hurdles must sustainability overcome in order to become a part of how most companies operate?