Three stages in corporate sustainability strategy

chowby Daniel Chow, MEM Class of 2014

At Duke, students are taught why companies across all industries are pursuing sustainability, what barriers exist for different businesses, and what tools are necessary for organizations to achieve their goals. Kristina Ronneberg (MEM ’14) explained a useful framework that she learned in Professor Dan Vermeer’s Sustainable Business Strategy class, which focuses on three key aspects: Expansion, Translation, and Embedding.

Expansion, Translation, and Embedding

“First, you need for a company to think about how it fits into the greater system, what its impacts are as a whole. That is the expansion piece, or looking outwards. Next, you need to identify where you can reduce the environmental and social impacts, whether that is through changing your supply chain or reducing your inputs. Once you identify actionable items, you often have to translate them into a value proposition that your audience understands. This might mean cost savings if you are talking to a manufacturing plant manager or employee recruitment and retention for human resources. Lastly, you need to embed sustainable thinking and practices into the organization. There needs to be a push for a coherent structure that aligns the corporate values with the goal of minimizing environmental and social impacts. That might be through training, incentives, or any number of other initiatives.”

While this framework provides helpful guidance for how businesses can integrate sustainability into their practices, each company’s strategy must be tailored to their individual needs and motivations.What is a Sustainable Business?

The  Brundtland Commission would answer the question above by saying it is a business that grows while meeting “the needs of the present without compromising the ability of future generations to meet their own needs.” However, that is an extremely broad definition, and, even amongst the many different sustainability ratings and rankings, it isn’t always clear what is being evaluated. There are a lot of reasons behind this, but it can be easily summed up by the following: sustainability is really, really complicated. There isn’t a cookie cutter approach to measuring companies within a single industry, let alone between them. For example, up to 80% of the power in the northwest comes from hydropower. That means drastically lower carbon footprints for businesses operating in the area, which is often a key performance indicator for sustainability metrics. However, dams can have huge impacts on local ecosystems, which may or may not be reflected by a rating system. Due to these complexities, Duke’s Business and the Environment Club decided to explore how companies are “going green.” We wanted to see what the buzzwords mean at the front lines.

Therefore, we organized meetings with six Chicago-based companies to discuss the sustainability challenges and opportunities in their respective industries, and the environmental initiatives their organizations were working on. The businesses included McDonalds Corporation and United Airlines Incorporated, both huge, consumer facing entities; JBT Corporation, a mid-sized B2B, technology solutions business; Cannon Design Incorporated, an international architecture, engineering, and design firm; Delta Institute, a non-profit that finds innovative, market based mechanisms to stimulate environmental solutions; and Baxter Healthcare Corporation, a healthcare products company that has been working on its sustainable practices since the 1970s. With that list confirmed, our group of eight Duke Students left Durham’s temperate weather to brave the Chicago winter.

Classrooms to Conference Rooms

Throughout the trip, we saw how the ideas that we learn about in our academic work at Duke are applied in the “real world.” Specifically, we saw how businesses move through the stages Kristina mentioned and what skill sets they need as they go forward.

Expansion

Cannon Design had the most experience driving sustainability strategies because they were constantly doing it for their clients. For each project, Cannon Design has to ask, “How will this building interact with its environment.” Rand Eckman, Director of Sustainability, discussed how architects only recently started to incorporate this mentality into their profession, but that it is rapidly gaining traction.

Mr. Eckman described how his firm uses data to accurately reflect how each building affects its environment(s), and he believes that the ability to model and analyze these outcomes will be crucial for young professionals. Only through those analyses can you ask the hard questions about what to do. Do you want to cut water consumption? Do you want to eliminate toxic chemicals from your products? No company has the time and resources to go after all of their impacts at once.

Translation

Translation was by far the most discussed barrier to implementation for many of the initiatives that sustainability departments want to work on. When asked what they look for in new hires, everyone focused on the ability to communicate clearly and change the way you frame issues based on your audience.

JBT Corp only began their CSR program eighteen months before we arrived, and they had already realized that the primary barrier to an initiative’s implementation is how it is presented to management. Will Drucker, CSR analyst, reflected on how flexible he had to be to connect sustainability investments to business value. For example, even if he found new equipment with a 6-month payback, many plant managers couldn’t take the plant offline during busy times and they didn’t have the funding during lean times. Therefore, Will was working with them to set aside money so that it was there for the machinery upgrades when the factories weren’t as busy.

On the consumer side, both McDonalds and United Airlines talked about the need to communicate what they are doing behind the scenes into something that their stakeholders care about and understand. This might mean clever marketing to describe the 1/8th of an inch that they eliminated from Big Mac boxes in a way that is meaningful to the person buying that hamburger.

Embedding

All of the people we met had different ways of making sustainability a core part of their company’s mission. For instance, Baxter tries to engage each of its stakeholders: the sustainability director meets with other management regularly; the employees are provided training and incentives to improve their understanding and involvement; and they have started an array of environmental and educational programs in the communities that they work in. Whereas the Delta Institute works towards embedding sustainable business in the private sector by leveraging their partnerships and identifying market mechanisms.

Get Out There!

Duke offers a host of opportunities for students to engage the people who are actually making business more sustainable; I recommend everyone take them. This Career Trek and the “Week in Cities” trips to Silicon Valley, Houston, and Washington, DC that happen throughout the year act as informational meetings. Programs like the Fuqua Client Consulting Practicum (FCCP) or internships enable students to make a difference at a particular organization. Kevin Dick from the Delta Institute concisely summed up his advice for students saying, “Be interested. Keep learning. Keep meeting people. By doing those things, you will become interesting, and people will want to work with you.”

Submitted by Daniel Chow

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