By proactively addressing environmental, social and governance (ESG) issues, businesses of all sizes and industries can uncover risks, performance gaps and innovation opportunities to gain competitive advantage and improve relationships with stakeholders.
In fact, two recent reports from the U.N. Global Compact and Goldman Sachs found that corporate social responsibility (CSR) and sustainability practices created additional market gains and higher stock prices. Goldman Sachs looked at six sectors -- energy, mining, steel, food, beverages and media -- and found that businesses with ECG policies have outperformed the general stock market by 25 percent since August 2005, and that 72 percent outperformed their peers over the same period.
Indeed, over the last few years, the option of implementing socially responsible practices is evolving into a broader strategy of sustainability due to an urgent need to address ESG issues globally.
Established CSR leaders, such as Advanced Micro Devices, Gap, Interface, Levi Strauss, Patagonia and Starbucks, have had initiatives in place for decades. Other companies are just getting started. To help ensure that sustainable management practices benefit people, planet and profits, they must be a fundamental part of an organization's management strategy.
Fortune 500 companies often have a chief sustainability officer and environmental health and safety departments. Small to mid-size enterprises may not have either department. Regardless, businesses are no longer approaching CSR as an add-on capability but view sustainable management as a new way of doing business that touches on every department.
Interface, an Atlanta-based carpet tile company with a mission to eliminate any negative environmental impact from the company by 2020, estimates its sustainability efforts have saved it more than $336 million since 1995. The company attributes its success to a comprehensive, across-the-board approach.
"If you begin with a company and say, 'We are going to green this company by bolting on these green programs,' you are going to end up with costs up, not down," said Interface CEO Ray Anderson. "We stepped back and said, 'Let's look at the whole system.'"
Schooling Executives in Sustainability
This change to the "business as usual" mentality is driving changes at the hiring level to attract smart new talent, and at the educational level to teach executives how to green their businesses. MBA with degrees in sustainable management are advising companies such as Kaiser Permanente, Pacific Gas and Electric Co. and Wells Fargo. Businesses are sending senior level professionals to sustainable educational programs offered by schools ranging from Bainbridge Graduate Institute to Boston College to the University of Vermont.
Executives and senior-level professionals who attend these programs gain a basic understanding in sustainability and learn how to develop practices and ideas that can increase leadership and industry advantages.
What to Look for in Educational Programs
Senior professionals that want to take an active leadership role in this area can choose from more than a dozen intensives and executive education programs that teach sustainability concepts and frameworks. Programs range from 15 to 40 days over five to 10 months and allow professionals to choose the one best suited to their needs. Executive education programs will typically consist of select curriculum through the school's sustainable management MBA program and which help organizations rethink every business discipline such as:
- Management
- Operations and Facilities
- Design and Process Innovation
- Human Resources and Corporate Culture
- Marketing and Communications
- Partnerships and Stakeholder Engagement
- Governance
For example, the Presidio School of Management, which will begin offering an executive certificate program in January of 2008, features courses modeled after its MBA in Sustainable Management program.
The MBA program has four strands in the curriculum: people, numbers, sustainability and markets. "People" courses include 'effective management, communication and action.' "Numbers" courses include 'accounting' and 'operations and production.' "Sustainability" courses include 'sustainable product and services' and "markets" courses include 'ecological economics and macroeconomics.'
Real-Life Applications and Results
Both programs go beyond the transfer of information by integrating ESG concepts into every course, with traditional business acumen taught from the perspective of sustainability.
Students attending the school's 10-month executive certification program must create a purpose statement of a business challenge, idea or project that addresses a specific opportunity within their business and that can be explored during the program.
Through coursework and hands-on learning, participants will implement sustainable practices that lead to new ways of doing business as well as innovative products and services.
For example, if you work for a product manufacturing company and are charged with reducing e-waste, you can learn how to initiate and manage a take-back program to recover unwanted equipment for recycling. One CSR leader, Dell Inc., recovered 40,000 tons of unwanted equipment in 2006, a 93 percent increase from 2005.
If you work for a retail company and oversee the supply chain, you can learn how to encourage distributors to innovate hybrid and biofuels vehicles. Wal-Mart is providing funding to the biggest truck manufacturers to develop the first heavy-duty diesel-hybrid 18-wheeler. It will test prototypes next year.
If you want to start your own business and make it sustainable from the beginning or start a business that helps other organizations improve their sustainability, this program will give you everything you need to succeed in pursuing your passion.
By providing today's leaders with knowledge and business skills in an environment that encourages new ways of thinking -- as well as the courage to adopt, implement and maintain sustainable management -- we can turn challenges into innovative opportunities and help realize triple, or integrated, bottom line advantages that benefit all.
Ron Nahser, Ph.D., is provost of Presidio School of Management Presidio School of Management, former chairman, president, and CEO of The Nahser Agency of Chicago. Author of "Learning to Read the Signs: Reclaiming Pragmatism in Business," he has developed a consultative business model that has been used by 3-M, Levi-Strauss, Time, Inc., Stanford Graduate School of Business, and many other organizations.
