Paul Hohnen considers some companies that would win medals in a sustainability Olympiad
With the London Olympic games and the 3rd UN Conference on Sustainable Development both being held in 2012, perhaps it’s time to use Olympic standards to rate corporate sustainability performance.
Based on private sector performance since the 1992 Rio de Janeiro Earth Summit, here’s my take on how the 2012 Sustainability Olympic medals might be awarded
Bronze medallists
Too many finalists to name, companies in this group have not necessarily changed the products and services they offer, but have changed some of the ways they go about doing business.
Internally, these changes have included staff consultations on how energy and resource costs can be cut, and how the company can improve customer service in building healthy communities.
Externally, there have been more focused efforts to understand customer, supplier and community interests.
Typical reported benefits have included operating cost reductions (eg energy), improved staff engagement, a better understanding of the sustainability dimensions of the business, and more community trust.
As a result, they are better run and ready to move to the next level.
Silver medallists
Companies in this category have typically engaged with stakeholders and mapped their sustainability issues. Internally, they have improved both existing product line and introduced new management systems.
Management structures, reporting systems and incentives schemes have been put in place that embed sustainability issues in strategy and governance. They communicate their sustainability policies, practices and dilemmas, and invite continuous stakeholder feedback and ideas.
In a performance distinguishing move, the business plan is often explicitly oriented to meeting the challenges of the future (eg GE’s Ecomagination or Siemens’ focus on low carbon cities).
Long term aspirational resource efficiency targets have been set (eg Unilever), while new manufacturing technologies have reduced the environmental footprint of key products (eg recyclability, energy efficiency).
Company sustainability policies and expectations are communicated along the supply chain (eg Wal-Mart).
CEOs engage in public policy advocacy, such as on climate change.
Reported benefits include lower operating costs, increased profitability (and business share) of sustainable product lines, improved stakeholder relations, and recognition on green indexes.
Fine performances from some BASIC country companies (Natura, Brazil; Woolworths, South Africa) show that sustainability isn’t an OECD-only game.
Gold medallists
Companies in this category are winners because they have embraced sustainability principles and integrated these into a commercially successful business model.
Some (eg Interface or Desso) have done so by using “cradle to cradle” design and technology to deliver existing products and services with a radically lower footprint.
Others have targeted new technologies and products such as wind power (eg Vestas), solar PV (eg SunTech), sustainable buildings and air conditioning (eg Broad Group) and waste water treatment (eg Natural Systems Utilities), which directly challenge the traditional “brown industry” model – in other words polluting, inefficient and energy-intensive industry.
Interestingly, in their sharp focus on winning still fragile sustainability markets, some of these might give lesser attention to traditional corporate responsibility approaches.
However, they win gold because their sustainability impacts are measurable – such as less carbon or more energy services – and their financial performance has been respectable.
Future challenges
There will be readers who point out that none of the companies in the groups above are actually yet 100% ‘sustainable’. Some will also point to companies such as Solyndra that have tripped on the hurdles.
There will be also those who note that the majority of the world’s companies don’t qualify for any medal. All have a point.
Companies work in a highly competitive and changing environment. Mistakes will happen among “green” businesses as much as among the “brown”.
The current incentives landscape still doesn’t sufficiently recognise and reward superior sustainability performance.
The challenge now – and the economic context makes it tougher than ever – is how to incentivise more companies to become medallists. In the absence of better regulations, superior and sustainable financial performance will continue to drive most change.
The good news is that all the evidence to date suggests that companies that better understand and respond to planetary system limits and societal needs don’t perform worse, and in most cases look like continuing to be winners.
Until governments step in more seriously, this continues to be our best bet.
Paul Hohnen is an Amsterdam-based consultant who advises, speaks and writes on global sustainable development and CSR issues. Among his affiliations he is an associate fellow of Chatham House and a member of the Ethical Corporation advisory board.