I’m the CEO of a 30-person marketing communications agency. My firm has no shareholders to satisfy, no Wall Street forecasts to beat, and we don’t do any prognosticating about quarterly profits to anyone other than the 30 folks who work here.
So I don’t really know what it’s like to be in the shoes of a CEO of a publicly traded company … but I can’t imagine the tug of war related to sustainability is any fun. If you’re not sure what I’m talking about, go to any conference on sustainability — last month's was the GreenBiz Forum in San Francisco — and you’ll hear something like this:
“Corporations exist to create wealth for their shareholders, and profits must be reported quarterly. Yet investing in sustainability is a long-term play. An investment in sustainability today may hurt this quarter’s profits and help profits 10 to 15 years from now … but that won’t satisfy Wall Street’s demand for profits this quarter.”
It’s quite the paradox, isn’t it? CEOs are paid to hold the long view, to put wheels in motion to help a company thrive for years beyond their tenure. And if you were the CEO of a publicly traded company, you’d see the looming threats related to sustainability (looming legislation/carbon taxes in more and more countries, price spikes in raw materials related to scarcity of resources, increased competition from new, private companies without the quarterly reporting shackles, and growing consumer demand that companies “do the right thing” or fall out of the consideration set). Yet, you’d be punished for executing against that long view, for investing today to protect the company’s interests tomorrow.
A few CEOs have gotten away with it — Unilever’s Paul Polman is a good example. Lee Scott, formerly of Wal-Mart, was another. Here’s my view on what it takes to get off the quarterly profits treadmill and make the investment in sustainability now:
I’m certain these aren’t all the answers to the quarterly profits/sustainability investment tug of war, but it’s a start. If you’ve had success getting the top-down commitment required to invest in sustainability, drop us a line and let us know how you did it. We’d all benefit from your story.
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