Trends in Corporate Sustainability

April 6, 2011

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One of the best things about Fortune's 2011 Green Brainstorm Conference is that organizers didn't prescribe a theme in advance. Instead, the conference brings together high-level executives from big name brands (AT&T, Dell, Disney, Walmart, Ford, IBM), smart journalists and provocative questions, and let the true trends naturally emerge.

So what's trending among the companies that have seen big value in sustainability? With the challenges and opportunities facing Fleishman-Hillard's corporate sustainability clients, the following themes emerged for me:

1.)  A company cannot meet its sustainability or reputation goals without a smart strategy that incorporates employees. From the very first panel, the necessity of employee awareness and involvement in corporate social responsibility efforts emerged. One of the first “case studies” discussed was Walmart's toolkit to help employees live greener personal lives so they could better understand the company's actions and bridge the gap between the corporate office and the in-store customer.

If employees don't know where CSR goals come from, what the company wants to achieve or how their work fits into the equation, new policies are likely to lead to lackluster buy-in and compliance. In this scenario, a company is not able to tap into its own workforce to identify opportunities and barriers, and to generate the kind of authenticity required to convince consumers, shareholders and other stakeholders that the company is the real deal.

2.)  The “bold, but humble and transparent” approach has helped big brands save big on money and gain big on reputation. Many companies are implementing water and energy efficiency measures and finding new, innovative ways to reduce their footprints while increasing shareholder value. But we haven't heard of many because they're nervous to put themselves out there. It seems risky when detractors may find imperfections.

I posed the question of the risks vs. rewards of making public commitments to Ford and McKinsey executives. Both agreed that the key is transparency and not being afraid to say, “We tried. It's hard. We're committed to figuring out new ways to get there.”

Humbly acknowledging the challenges to achieving sustainability goals can actually increase credibility.  Turning up the volume on the company's commitments can also help rally employees around a shared, public goal.

3.)  Return on investment (ROI) and “integrated reporting” (adding sustainability to the annual financial report) are buzz words, but the big brands don't see a trend. The idea of encouraging companies to put their environment, social and governance data into financial reports emerged from good intentions: further entwine the business with sustainability and force a data-driven conversation between CSR and ROI.

However, although consultants and outsiders are talking a lot about integrated reporting, most companies don't think it will start anytime soon. This is primarily because no major mainstream investor is asking for it, but there's also a more interesting reason.

Executives from Walmart and UPS got the question, “When do you think integrated reporting will take off?” The answer: Not soon, and maybe never. Why? Because some ROI is not financial, and companies don't want to diminish the value of reducing risk and raising reputation, which can't fit neatly within a financial report.

A fourth theme also emerged, and it was my personal favorite: we can solve the major sustainability issues of our time. New companies are popping up to create green crude oil, deliver new technologies that reduce as much energy waste as solar and wind can create, and to deliver business models that save forests while dramatically raising the standard of living for the poor around the world.

While the mood often soured on the inability of Washington, DC, to either help or get out of the way, these new start-ups and the rising bar of big companies left me more optimistic about these issues than I've felt since my college years.