Corporate sustainability is growing up, but can it evolve?
Many companies have reached the highest levels of the five stages of sustainability, but experts see a growing gap between these and those that have yet to evolve.
Corporate sustainability has grown and matured in the past decade, but there is a widening gap between organizations with strong sustainability commitments and those without in terms of activities, attitudes and infrastructure, according to new research from Siemens.
And within those companies already embracing sustainability, there is a growing divide between chief sustainability officers and the C-Suite related to the role of sustainability and the impact it has on the organization. Meanwhile, the CSO community’s own view of its influence and impact continues to change.
The Siemens research, discussed during a recent GreenBiz webinar, identified five "stages of sustainability." During the initial stages, 1 and 2, companies view environmental initiatives as costs rather than investments, and sustainability is not part of the organization mission, or enters into the organizational mission only as it is legally required.
Stage 3, the middle stage of sustainability, is when companies view sustainability as a way of saving money, which compels them to to be proactive about sustainability in pursuit of profit.
At the highest level, organizations approach business as a holistic, restorative endeavor.
The mature stages of sustainability, Stages 4 and 5, describe companies that have made sustainability part of their corporate mission, viewing it as more of an opportunity than a cost. At the highest level, organizations approach business as a holistic, restorative endeavor.
As might be expected, between 2009 and 2012 there was a noticeable shift from the lower to the higher stages, with more contributing and transformational CSOs. But Siemens’ 2015 research update found that some companies may be regressing a bit on the sustainability scale.
"We think that this is going to be a plateauing effect in terms of the role of sustainability and where organizations fall within these stages," Kobb Ari Kobb, director of Sustainability and Green Building Solutions at Siemens, said during the webinar. "But also at the same time the definition continues to evolve.”
As sustainability becomes more institutionalized within companies, fewer may be claiming to be "transformational" due to a changing understanding of what sustainability means. The research found that there is a growing awareness that sustainability is about more than just taking a few environmentally friendly actions. For companies that do choose to pursue sustainability, doing the bare minimum is becoming much more rare than it was just a few years ago.
Bridging the 'green gap'
There is a major difference between companies on the higher end of sustainability and those on the lower, Kobb said. While those on the lower end tend to focus on the "Big 3" — energy, water and waste — those on the higher end take a more holistic view of sustainability.
Having a steady flow of resources to sustainability projects remains the most important determinant of whether or not a company makes it to the higher stages. And some firms have an easier time accessing these for sustainability initiatives than others.
Siemens, for example, was able to make the business case for sustainability with relative ease.
"It wasn’t a hard sell early on that sustainability is integral to the bottom line," Alison Taylor, vice president of Siemens Infrastructure & Cities, said during the webinar.
Siemens, being an engineering firm, already had a culture that was innovative and sustainability-oriented, and there weren’t many barriers engaging employees on sustainability.
The company’s European market also was relatively savvy about sustainability due to the continent’s stringent environmental regulations, which made many of the initial goals a given, she said. But the U.S. market was much slower on the sustainability uptake.
"The U.S market was a little slower to embrace climate change, and that had a lot to do with the political atmosphere, but certainly now I would say that energy efficiency and the cost savings around sustainability and cost competitiveness and productivity really have become more understood," Taylor said.
Siemens’ suppliers also have become increasingly more interested in sustainability, looking to the engineering firm for advice on best practices, which provides a dual challenge and opportunity for Siemens to stay at the top of its game.
Now that it has reached the higher stages of sustainability, Siemens recently redefined how it looks at sustainability, seeing it as something that should be deeply integrated within its business units, rather than something set apart.
To take its sustainability operations to the next level, Siemens recently decided to redefine its focus. Siemens plans to reduce its greenhouse gas emissions by 50 percent by 2020, and hit carbon neutrality by 2030.
"We recently went through that process and decided that we want to become a carbon neutral company and to go about that in ways that really match with our core competence in energy efficiency," Taylor said. "So we’ll be deploying distributed energy products, we’ll be deploying innovations in our fleet, and we’ll certainly be deploying energy efficiency technologies in our factories, really demonstrating what we do but also certainly walking the talk."
To court the C-Suite
It’s not always easy to spark or maintain the interest of CEOs and CFOs in sustainability initiatives, but this can make or break success. Interestingly, sustainability initiatives can sometimes become victims of their own success.
"As sustainability becomes more embedded into business practices, the CEO may not be as aware of activities and progress and how it was a sustainability emphasis that drove a successful initiative," Taylor said.
To make sure sustainability strategy is embedded in the overall business strategy, sustainability executives must keep the conversation going with the C-Suite, several webinar speakers said.
"From a chief sustainability officer’s perspective, it’s important to make sure that your sustainability strategies are embedded within your business strategies, so they aren’t created in a vacuum," said Kim Frankovich, global sustainability director at Wrigley. "And make sure that the resources and the commitments that are needed are integrated into the operating plan, so that as things change over time you have that connectivity to your finance teams."