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green@work : Magazine : Back Issues : May/June 2003 : Happenings

Happenings

The Two Faces of Sustainable Business
Examining the successes and shortcomings of government and business

by Hamlet Paoletti


The fact that the World Resources Institute just hosted its Sustainable Enterprise Summit for the sixth time is proof that the juxtaposition of sustainable development and business corporations is becoming a lingua franca in today’s world. During the two-day conference, which was held in mid-March in Washington, DC, nearly 200 corporate, government and NGO attendees, all with their PowerPoints and brochures, talked about green initiatives, corporate sustainability and emerging markets.

Throughout the two days, keynote and plenary speakers discussed the necessary frameworks in which new leaders and markets for sustainability could thrive, while breakout sessions including “Corporate Venturing in Emerging Markets,” “Policy as a Market Accelerator,” and “Developing Sustainability Strategies” showcased innovative approaches to incorporating sustainability into operational strategy.

One of the case studies was the success of the Brazilian company Natura Cosmetics in working with indigenous communities in the Amazon to develop products based on the local traditional knowledge, while at the same time becoming the largest cosmetics company in South America. Peter Zollinger, executive director of SustainAbility and an expert on corporate governance, presented similar success stories in the Czech Republic, South Africa and China.

But while the meeting had as its stated goal the practical question of how to translate vague concepts of sustainability into applicable business strategies, some key participants, most of them WRI board members, raised fundamental questions about political and business practices that hinder such lofty goals from being achieved. These questions echoed throughout the summit.

The first was David Gergen, bi-partisan presidential advisor extraordinaire, perennial pundit and, officially, professor of public service and director of the Center for Public Leadership at the Kennedy School of Government, Harvard University. Confessing to not being as well-informed about green topics as other participants, Gergen brought up issues regarding the current political and business environments and how these affect plans and policies that may, or may not, be put in place.

As far as corporate leaders are concerned, he said, there is no mechanism in Wall Street or elsewhere in the financial world to recognize the value of a triple bottom line (financial, social, environmental) business strategy. Even though going green can be good for the bottom line, it does not (yet) raise the value of a company’s stock on Nasdaq, thus it does not provide a fundamental reward in a language, and through mechanisms, that any CEO can easily grasp. So, while the sustainable development gospel keeps finding more and more converts, until its tenets are made into the “law of the land” no fundamental change can really be said to be in place.

“This is what happened with civil rights,” remembered the North Carolinian Gergen. “First the good people came around, but then a national law was needed.” Such legislation, he concluded, though overdue is unlikely to happen in the current political climate.

Most CEOs, added another panelist, only act if, in the short-term, it is good for the bottom line—or if the law mandates. With Wall Street not rewarding the bottom line for green initiatives and with the current federal government in no mood to increase business regulations, there is little hope for significant change in the near future.

Keynote speaker and WRI board member Senator Jon Corzine (D-NJ) echoed Gergen’s message, emphasizing its political ramifications. “I’m troubled that this isn’t the front-burner issue that it should be,” stated Corzine, former CEO of Goldman Sachs. “Traditionally, these have been bipartisan issues. Nixon was the grandfather of our environmental laws. But now what we see is a reversal, backing away from progressive initiatives. We need a climate change in Congress to be able to move legislation, but until the 2004 elections not much is going to happen other than occasional initiatives. Sustainability policy is not a top priority of our fiscal policy. We have to make it a ballot-box issue and demand that political candidates speak out about it.”

During a plenary discussion on “Building Public Trust,” the influential role major corporations play in setting the political agenda was the topic of one of the panelists. James Harmon, chairman of the investment bank Harmon & Co. and former president of the Export-Import Bank of the U.S., reminded the audience that “some of the best companies [in terms of sustainable development initiatives] are among the worst lobbyists” working against any form of governmental pro-environment regulations. “In case after case,” he said, “money makes the decision.” Then, looking to the packed audience, he added, “Some are here.”

This theme of profits and/or a real commitment to sustainable development principles was highlighted time and again during the summit. As when David Buzzelli, retired vice president and director of Dow Chemical and a WRI board member, recalled on another panel how during his time at Dow it had reduced the number of waste incinerators by 70 percent in 10 years, he was reminded by Linda Greer, a fellow panelist and senior scientist at the Natural Resources Defense Council, that a very successful pilot project she had developed at Dow had not been picked up by any of its managers for permanent implementation, despite all the kudos she had received from those same managers.

Likewise, when Randy Overbey, president, Energy Division of Alcoa and WRI board member, gave the event’s corporate keynote speech underscoring Alcoa’s commitment to sustainable development, he was questioned by a representative from Greenpeace as to Alcoa/Australia’s opposition to the Kyoto treaty. He responded that Alcoa abides by the government rules in each of the countries in which it operates, adding that if the Australian government adopts Kyoto, for example, it would inevitably raise energy costs.

Another participant in the last plenary discussion, Yolanda Kakabadse, president of World Conservation Union and a WRI board member, touched a chord in the room by noting that public perception would shift dramatically if business decisions fully demonstrated their companies’ commitment to integrated social and environmental considerations. “The environment is a social issue,” she said, “we are talking about and affecting people’s lives.” Author David Batstone, professor of Social Ethics at the University of San Francisco, added that a change in the currently accepted business model is required. “With corporate leaders deciding beforehand the profit margin that their business must generate, it is impossible to make the system work,” he said. To check the real commitment of any corporation to its stated sustainable development principles is easy, added Batstone, “just see what they are keeping track off; what’s important is what gets measured.”

In an earlier session, WRI senior fellow Matt Arnold tied these ideas together by suggesting that aligning sustainability principles in corporate strategy, operations, policy, design and technology was the key to success. Too often, he argued, organizations undermine sustainability by supporting opposing political strategies. This despite a previous presenter, Hal Brill, president of Natural Investment Services, having demonstrated that not only has socially responsible investment grown from $630 billion in 1995 to $2.3 trillion in 2001, but that stocks from socially responsible companies have been consistently outperforming the market.

“It is important,” said WRI’s Sustainable Enterprise program director Liz Cook, “to show that a sustainable business model can succeed.”

SUSTAINABLE ENTERPRISE SUMMIT ON-LINE
WRI’s sixth annual Sustainable Enterprise Summit showcased leading corporations and strategic partnerships that transform vague concepts of sustainability into concrete actions. The conference focused specifically on actions that support new “green” markets and that train business leaders to manage for sustainability. WRI introduced a new feature to the structure of this year’s summit; many of the sessions were supplemented by tools sessions that were designed to equip participants with “take-home” actionable strategies for implementing sustainability in their corporations. To download copies of
remarks and presentations, visit http://wri.igc.org/wrisummit/2003_agenda.html


Hamlet Paoletti is a freelance writer based in Washington, DC.

 


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