5 steps to defining and enforcing your social license to operate

5 steps to defining and enforcing your social license to operate

Image by szefei via Shutterstock

It is time for a fourth stage of environmentalism, one in which business internalizes an obligation to be sustainable or loses its social license to operate. The heavy lifting will fall on the shoulders of the groups that have carried us this far: environmental and social nonprofits and their civil society supporters.

The past 25 years have demonstrated that business and environmentalists do not have to be enemies and, in fact, can be constructive partners. The fourth stage implies a next level of maturity wherein business and environmentalists build on their common interests. Modern life has business and sustainability thoroughly intermingled in such a way that it no longer makes sense to support one and battle the other.

With creative leadership, we can acknowledge this reality and help business internalize day-to-day responsibility for sustainability while society, with a revised understanding of the role of business, encourages and enforces this obligation. We must define and enforce a social license to operate and grow.

Environmental advocates, take a deep breath. You will have to take a leadership role, but it is doable and worth doing. We never truly will "defend" or "conserve" the environment (or wildlife, or resources or nature) while business is authorized to destroy it.

The challenge will be to define, popularize and enforce a minimum set of standards a business must meet as an obligation to society for its continued operation and growth — a pre-competitive pact that all businesses are expected to follow. While there are certain to be legislative components of the license, it is ultimately a social norm whose violation makes one business non grata.

1. Focus on the cause, not the symptoms

Chest pain is a problem, but it's the heart attack that will kill you. We worry and organize around crises such as biodiversity loss, climate change, toxic chemicals and water shortages. But these are just symptoms of an underlying problem: a system that rewards business for harming people and the environment. UNEP estimates (PDF) the world's 3,000 largest publicly listed companies account for about a third of the world's $6.6 trillion in environmental costs. Business-as-usual is killing us. Focus there.

2. Be strategic

Cups image by Garsya via ShutterstockWe won't "fix business" one-by-one and we won't do it on the manufacturing floor looking for wasted electricity or improving coffee cups. We need to move upstream and look into society's enabling structures. We need to change the definition of success for business from "make a profit for shareholders" to "improve society, profitably."

This kind of change means engaging with the social institutions that define business — board rooms, business school curricula, investors, SEC regulations and unions. We need to engage in CEOs' and CFOs' offices, and with business news in print and on TV.

We need a mindset change about why business matters, not Band-Aids on individual environmental crises as they appear.

3. Collude with other nonprofits

Nonprofits should use advantages their social mission (and tax status) grants them. They can collude with each other, and we need a monopoly for sustainability. We know nonprofits are small relative to big business, but, really, they are very small. The three NGOs GreenBiz identified as "Trusted Partners" in their recent NGO Report — EDF, The Nature Conservancy and WWF — are also three of the largest environmental groups. Combined and measured by number of employees or revenue, they are almost as large as the smallest company in the Fortune 500.

The Urban Institute reports (PDF) more than 16,000 nonprofit groups in the U.S. are focused on "Environment and animals." They had a combined budget of about $13 billion, which is 25 percent smaller than Walmart's $17 billion in profit last year. Walmart's annual revenue is 36 times larger.

Environmental groups like to point to the fact that they have mailing lists with hundreds of thousands of supporters, but big businesses have hundreds of millions of customers. Unilever claims more than 2 billion people a day use one of its products, and has set targets to reach a billion more in the next few years.

To change the behavior of these behemoths, we all need to put our shoulders to the same wheel. While there is some truth that nonprofits must compete for donors, there is still plenty of room for their own pre-competitive agreement that they are all doing the same thing — fostering a business sector that doesn't damage society — and need to cooperate. Better communication, coordination and sharing will accelerate learning, promote innovative ideas, increase leverage and accelerate progress.

Perhaps most important, collusion will make it easier for nonprofits to raise the prices that businesses pay. Nonprofits "sell" themselves too cheaply and need to raise their effective price — what they require in exchange for what they contribute. Only 4 percent of businesses responding to GreenBiz's NGO Report don't work with nonprofits. The credibility and insights gained from partnerships have come to be instrumental to successful firms.

Use this power to exact a stiffer price from businesses. Set minimum conditions (maybe the Ceres Principles?) any business must meet to be allowed to partner with a reputable nonprofit. Demand that businesses support political activity in line with partnership objectives and cease activity that is in conflict. For example, businesses can't publicly support sustainable positions while at the same time funding the Chamber of Commerce to lobby against them.

Require businesses to cooperate with other businesses, share learnings openly, co-invest (yes, even with direct competitors), and set ambitious targets,

If nonprofits must work on eco-efficiency projects (where the environmental improvements also generate corporate profit) make sure some of these profits are dedicated to stretch projects that might not otherwise be undertaken.

4. Partner widely

Environmental advocates need to reach beyond the green enclave. Edelman's 2014 Trust Barometer reports that "Eighty-four percent of respondents believe that business can pursue its self-interest while doing good work for society." Large chunks of society support bettering business. We have business surrounded.

Look for partnership opportunities in at least two directions. First, many organizations focus on social issues with the same root cause environmentalists face: a broken business system. Nonprofits concerned with corruption food safety, hunger, immigration and labor rights are all potential allies expanding the circle of co-conspirators.

In the other direction, business stakeholders are under-appreciated but often willing allies. We all buy from or invest in businesses. We should deliberately engage with customers, community members, employees and managers, suppliers and even shareholders for support. Many of these people are also members and supporters of environmental organizations. Ask them to wear both hats. Likewise, organizations that represent these allies, such as consumers groups, investment clubs and retiree groups, have many shared interests.

5. Be ambitious

This isn't an easy lift and it won't be quick. But given a generation of effort with creative collaboration and leadership, we can transform the way society looks at business and how business operates. It won't solve all environmental problems, but it will make many environmental problems easier to solve.

Top image by szefei via Shutterstock