Embed Size (px)
Citation preview
1 of 22
Sustainability Maturity: Learning from Leaders
Case Study Compilation Sustainability Maturity Model
2 of 22
Contributors to this report included:
Clay Moran, Project Manager CollaborateUp
Minne Atairu, Fellow, CollaborateUp Whitney Tallarico, Fellow, CollaborateUp Richard Crespin, CEO, CollaborateUp
3 of 22
Table of Contents
Overview ..................................................................................................................................... 5 Figure 1: High-‐Level Sustainability Maturity Model .................................................... 5 Why leaders “do” sustainability ..................................................................................................................... 6 Getting sustainability programs off-‐the-‐ground ..................................................................................... 6
Table 1: Ranking Summary .................................................................................................. 7 Ranking Key ............................................................................................................................................................ 7
The Dow Chemical Company: Managing Through Shifting Public Opinions About Science & Chemistry .................................................................................................. 8 Table 2: Dow Chemical Ranking Summary ..................................................................... 8 Strategy….................................................................................................................................…....8 Culture….................................................................................................................................……..9 Governance….............................................................................................................................…9 Process….................................................................................................................................….....9 Training….................................................................................................................................…...9 Design & Usage…………………………………………………………………………………………9
GE: From Shareholder Value to Ecomagination ......................................................... 10 Table 3: GE Ranking Summary ......................................................................................... 10 Strategy….................................................................................................................................….10 Culture….................................................................................................................................…...11 Governance……………………………………………………………………………………………..11 Process…………………………………………………………………………………...………………11 Training….................................................................................................................................….11 Design & Usage………………………………………………………………………………………..11 IBM: From Scales to Large-‐Scale Sustainability .......................................................... 12 Table 4: IBM Ranking Summary ...................................................................................... 12 Strategy…………………………………………………………………………………………………..12 Culture……………………………………………………………………………………………………13 Governance……………………………………………………………………………………………..13 Process………………………………………………………………………………………...…………13 Training….................................................................................................................................….13 Design & Usage………………………………………………………………………………………..13 McDonald’s: Franchising Sustainability ........................................................................ 14 Table 5: McDonald’s Ranking Summary ....................................................................... 14
Strategy….................................................................................................................................….14 Culture….................................................................................................................................…...14 Governance…..............................................................................................................................15 Process……...................................................................................................................................15 Training….................................................................................................................................….15 Design & Usage……...................................................................................................................15 Unilever: From Soap to the Sustainable Living Plan ................................................. 16 Table 6: Unilever Ranking Summary ............................................................................. 16
Strategy…..............................................................................................................................…….16
4 of 22
Culture….................................................................................................................................…...16 Governance……...........................................................................................................................17 Process….................................................................................................................................…...17 Training….................................................................................................................................….17 Design & Usage……....................................................................................................................17
Walmart: Living Made Cheaper and More Sustainable in an Era of Growing Global Activism ...................................................................................................................... 18 Table 7: Walmart Ranking Summary ............................................................................. 18 Strategy….................................................................................................................................….18 Culture……....................................................................................................................................19 Governance…...............................................................................................................................19 Process….................................................................................................................................…...19 Training….................................................................................................................................….19 Design & Usage….......................................................................................................................19
Key Takeaways ...................................................................................................................... 20 What we learned from leaders...........................................................................................................20 How you can go and do likewise.......................................................................................................20 Figure 2: Sustainability Maturity Model Top Layer .................................................. 20 How to Start a Sustainability Program ..................................................................................................... 21 How to Revamp Sustainability Programs ................................................................................................ 21 Next Steps .............................................................................................................................................................. 22
5 of 22
Overview
The early bird gets the worm but the second mouse gets the cheese. Playing follow-‐the-‐leader has its benefits and its risks–especially in sustainability. Almost all of the literature up until now has focused on what leaders have done. Unfortunately what works for them won't always work for the rest of us. Call it the risk/adoption gap: the level of risk required to be a leader is simply too high for many of us. We can't afford the cost of experimentation or the risk of failure. At the same time, not every company is meant to be a sustainability leader. The type of company alters society’s expectations for adopting sustainable practices. There is no “right” sustainability program. Instead, companies must consciously determine what level of sustainability integration is right for them and communicate this to its stakeholders and shareholders. That said, clearly we can learn from leaders. The questions we must ask are which practices to take wholesale, which to adapt, and which to leave behind? To address this concern, we developed a Sustainability Maturity Model (SMM) based on:
• ISO 26000 • CR Magazine’s Corporate Responsibility Best Practices Study • CollaborateUp’s Sustainability Maturity Benchmark Study
Figure 1: High-‐Level Sustainability Maturity Model
6 of 22
This report applies the SMM retrospectively to the real world case of The Dow Chemical Company, GE, IBM, McDonald’s, Unilever, and Walmart to develop a “how to” guide that other organizations can follow. Utilizing the SMM, we examined each company’s performance on sustainability-‐related initiatives. We then used the SMM to evaluate how each company used its strategy, culture, process, training, and design & usage to achieve success, relative to its ability to deliver on external commitments to sustainability. From this research, other companies can use the SMM as a self-‐diagnostic tool to evaluate their own sustainability programs, determine the appropriate level of investment, and develop step-‐by-‐step approaches for improvement. Why leaders “do” sustainability From our review of these six leaders, we found a self-‐reinforcing set of drivers and benefits. They undertook these programs in order to derive these business benefits and deriving these business benefits in turn reinforced their success and their ability to “sell” these programs internally and externally. These benefits included: • Amplifying relationships with new or existing customers. • Aligning programs with the company’s core competencies. • Laying groundwork for new market entry or enhanced value in existing markets. • Reducing pressure from activists by publicly committing to sustainability efforts.
Getting sustainability programs off-‐the-‐ground When first starting, firms should consider taking the following steps to increase their probability of success:
• Aligning sustainability programs with business goals to maximize impact and engage the most important stakeholders.
• Forming cross-‐sector partnerships with cross-‐sector international programs, like the United Nations Millennium Development Goals (MDGs), the World Food Prize (WFP), and Clinton Global Initiative (CGI).
• Integrating sustainability goals into day-‐to-‐day operations; use a “coalition of the willing” approach to roll out – start with departments and teams that show interest/willingness and build off of their success.
• Supporting non-‐profit organizations to scale up programs that already work. We conducted the research in this report through a review of publicly available sources. We did not have access to internal documents or programs, unless they were publicly available. Where possible, we also interviewed on a non-‐attribution basis, people at each firm and/or with direct knowledge of their programs. The table below provides a summary of our assessment of the six sustainability leaders in this report. While some companies, like Unilever, led in several components, other companies, like McDonald’s, performed highly in select areas. Practitioners can use this table to quickly navigate this report and determine which evaluation criteria most pertain to their company, and see what actions these leaders took to improve their programs.
7 of 22
Table 1: Ranking Summary Defined Repeatable Managed Optimized
Strategy N/A McDonald’s IBM
Dow Chemical GE
Unilever Walmart
Culture McDonald’s Walmart N/A
Dow Chemical GE IBM
Unilever
Governance N/A McDonald’s Walmart
GE IBM
Dow Chemical Unilever
Process N/A Walmart IBM McDonald’s
Dow Chemical GE
Unilever
Training McDonald’s N/A GE IBM
Walmart
Dow Chemical Unilever
Design & Usage McDonald’s N/A
Dow Chemical GE
Unilever Walmart
IBM
Ranking Key The columns in Table 1 are defined as follows: Defined: Sustainability or corporate citizenship plan defined and goals measured through a reporting mechanism, usually including an annual report. Repeatable: Sustainability standards embraced and can be replicated, although not necessarily throughout the company. Managed: Sustainability embedded in how the company manages itself throughout multiple layers of the organization. Optimized: Sustainability and corporate responsibility programs drive business operations and deliver shareholder and stakeholder value.
8 of 22
The Dow Chemical Company: Managing Through Shifting Public Opinions About Science & Chemistry
Founded in 1897, the Dow Chemical Company has evolved from a diversified commodity chemical firm to an advanced materials company with sustainable products and services. After facing challenges with “legacy issues” around anti-‐chemical campaigns from consumer, and environmental advocacy organizations, the company undertook sustainability as a core business competency. Dow Chemical is listed as a top performer in its industry on the Dow Jones Sustainability World Index, with its most significant results-‐oriented achievement being reduction in carbon emissions by more than 30 percent since 1990. Its major success lies in sustainability reporting with third-‐party validation. From our review, although Dow Chemical drives innovation and transformation in sustainability, the company still needs to integrate it across the business, particularly among employees. Table 2: Dow Chemical Ranking Summary Dow Chemical Defined Repeatable Managed Optimized Comments
Strategy X Undertakes global and transactional commitments by accelerating ongoing efforts.
Culture X
Creating new 2015 Sustainability Goals, brands sustainability internally.
Governance X
Created Sustainability External Advisory Council (SEAC).
Process X SEAC integrates sustainability program findings into R&D.
Training X
Employees take action in their communities through personal commitments.
Design & Usage
X
Partners with other groups to meet sustainability efforts. Employees engage in skill-‐based volunteering.
Strategy. To achieve its sustainability goals, Dow Chemical’s partnerships fall under two categories, global and transactional commitments, both of which it makes with like-‐minded “strange bedfellows.” Partnering with these “strange bedfellows” helps the company increase understanding about science and chemistry among a wider audience. Dow Chemical undertakes global commitments when it brings to scale initiatives already underway by international organizations, while transactional commitments occur when it utilizes its expertise to benefit a social cause and deliver ROI to the company by creating and selling new products. These two categories need not be mutually exclusive. Dow Chemical consulted the MDGs on affordable housing, human health, and clean water to help define its own 2015 Sustainability Goals. From this, the company created a global commitment by developing a multi-‐faceted program to address
9 of 22
some of the most pressing economic, social, and environmental concerns facing the global community. For instance, the company supported a global joint CGI and MDG commitment in 2012 by partnering with the Acumen Fund to scale innovative social enterprises in Africa and South Asia. Showing how its expertise in science and chemistry can positively impact global challenges helps Dow Chemical make the case for its business and practices. Culture. Sustainability goals have helped change company culture. After completing its first publicly released 10-‐year sustainability plan in 2005 (on the heels of an earlier internal 10-‐year plan), Dow is creating a new 10-‐year sustainability plan in 2015. This public commitment establishes a transparent external commitment to sustainability and builds an internal culture of sustainability. Governance. A key component of Dow Chemical’s sustainability success has been its Sustainability External Advisory Council (SEAC), established in 1992. SEAC members include leaders from non-‐governmental organizations, academia, the business community, and governments as well as the environmental and sustainability communities. The SEAC provides insight to corporate strategy, gives feedback on business-‐related issues, helps determine which stakeholders to engage, and identifies emerging global developments and challenges. Process. The SEAC drives the process for sustainability programs. These thought leaders provides advice and perspectives on sustainability related issues for to the company and is the capstone of an extensive set of internal processes for developing business unit level plans and programs cascading throughout the organization. Training. For this research we did not have access to internal training materials. We understand the company is working on internal training programs but these still need refinement. We did determine, however, that as part of an approach to meet the world’s most basic needs, Dow matches interested and capable employees with non-‐profits, social entrepreneurs, and local government agencies that need support for sustainable development projects, especially in emerging markets. Design & Usage. Dow harnesses partnerships to achieve its internal sustainability goals. In January 2011, Dow and The Nature Conservancy formed a partnership to help the broader business community incorporate nature into global business operation. Open source tools, models, and results were peer reviewed and shared so that interested parties could test and apply them to their projects. Employees also contribute to these programs through Dow Sustainability Corps (DSC). DSC engages employees to integrate sustainability into their everyday lives, but the program is only coordinated at the department level. Participation in the program is optional, and employees utilize their skills and expertise in NGO, entrepreneurial, or local governmental programs.
10 of 22
GE: From Shareholder Value to Ecomagination
Over a decade ago, GE saw a compelling business-‐ and sustainability-‐case in reducing energy, water, and waste. Its commitment to developing life-‐enhancing technologies in energy, transport, water, agriculture, and healthcare helped it earn a top rank on Corporate Knight’s list of Global 100 sustainable companies in 2010. By integrating sustainability into the core business strategy, GE believes sustainability is an investment. Commitments must focus on revenue generation and growth opportunities. The company’s most significant milestones in sustainability include;
• Generating $160 billion in revenue since 2005 through innovative solutions. • 34 percent reduction in greenhouse gas emissions since 2004. • 47 percent reduction in freshwater usage since 2006. • Realizing $300 million in cost savings.
Table 3: GE Ranking Summary GE Defined Repeatable Managed Optimized Comments
Strategy
X Strategies are defined as investments, which have currently generated revenues $160 billion.
Culture
X
Its external sustainability strategies shape company culture..
Governance
X
Board of Directors oversees, combined with strategy and risk management.
Process
X In order to qualify for an Ecomagination profile, a product must meet GE sustainability and revenue requirements.
Training
X “Ecomagination Nation” enrolls employees to protect the environment.
Design & Usage
X
Invests in R&D through crowdsourcing and encourages employees to improve their personal health.
Strategy. In 2005, GE launched two major initiatives as part of its sustainability strategy—Ecomagination and Healthymagination. Respectively, these initiatives highlight breakthrough in technology-‐ and health-‐related issues, maximizing the core competencies of the company. Ecomagination promotes technologies that foster sustainable development while saving money for customers and GE's operations. It is the company's most successful business initiative. Through Ecomagination, GE has made bold investments in research and development, securing significant returns for shareholders. The company leverages this initiative to encourage cooperative ventures and partnerships to curate products that can generate sales for its Ecomagination product portfolio.
11 of 22
Healthymagination creates products, services, and enduring public-‐private partnerships to address health issues, especially in many of the world’s poorest nations. GE believes it can roll out innovations at a scale large enough to improve health for those who need it most and generate revenue in the process. Culture. GE’s external strategies form the base of its corporate sustainability culture. As part of Ecomagination, at the U.S. Africa Leaders Summit GE committed to investing $2 billion in Africa with partners to increase access to reliable and affordable core infrastructures by the end of 2018. In September 2014, through Healthymagination, GE committed to expand its healthcare program imPACT Africa to advance routine and emergency surgery safety procedures through GE's Healthcare technology, CARESTATION 30. Both commitments demonstrate GE culture to form the basis of corporate culture for employees worldwide, charging them to consider their impacts on other communities. Governance. GE’s Board of Directors oversees the company’s sustainability strategy through oversight of GE’s strategy and risk management. The Board and associated committees conduct regular reviews of operations such as risk, employee health and safety, operations, executive, compliance, and business to see where more sustainable practices can be integrated. Process. GE is interested in sustainable and financially sound investments. This process has been key for evaluating Ecomagination products. For example, the criteria to classify products as “Ecomagination” includes how much revenue the product can generate and the impact it has on sustainability. Training. “Ecomagination Nation” drives employee training as part of a GE global Power & Water initiative. This program enrolls employees to help protect the environment, particularly in reducing carbon footprint, energy and water use. As a result, consumption dramatically decreased in the workplace, with greenhouse gas emissions reduced by 49,597 metric tons and water use lowered by 669,384 gallons. This translates into a projected $2.25 million in annual savings.. Design & Usage. GE invests in R&D to accelerate innovative business operations. The company’s R&D focuses on molecular imaging, energy conversion, nanotechnology, and security technologies. In February 2014, GE committed $10 billion to support new research and development investments in clean energy through 2020. As part of Healthymagination, GE is committed to improving the health of employees and their families through HealthAhead. This program offers tools for employees to live healthier lives. In 2013, HealthAhead impacted about 220,000 employees, or about 70 percent of its workforce.
12 of 22
IBM: From Scales to Large-‐Scale Sustainability
In 1916, the Tabulating Machine Company, the International Time Recording Company, and the Computing Scale Company of America merged to form the International Business Machines Corporation, now known as IBM. Since then, the company has become a household name in computer processing, professional services, data collecting, and information sharing. Each of those operations contributes to transparency and measurement, necessary elements for successful sustainability programs. IBM’s corporate citizenship strategy, Smarter Planet, aims to improve resource efficiency and add value across its supply chain, while also investing in programs to support the global community in which they operate. Table 4: IBM Ranking Summary IBM Defined Repeatable Managed Optimized Comments
Strategy
X Engages stakeholders on numerous topical initiatives
Culture
X
Corporate Service Corps established culture of service
Governance
X
Part of Corporate Citizenship. Includes Corporate Citizenship Steering Committee and Corporate Citizenship Working Group.
Process
X
Uses networks and expanded to address daily challenges.
Training
X Technology permeates work culture and creative problem solving tactics.
Design & Usage
X Engages with partners to leverage strengths, involving the maximum amount of stakeholders possible.
Strategy. Smarter Planet has been one of the largest IBM initiatives over the past 6 years. This project leverages IBM’s strengths in data collection and analysis to maximize social good. Focus on mobile platforms helps reduce carbon emissions and energy use. Projects also help users cut costs. By 2020, Smarter Planet will increase machine-‐generated data to create mobile interfaces for employers and employees to connect, increase data sharing through cloud services, and enable the public to access information to make more informed choices. To date, collected data shows 73% of leaders that implement a mobile strategy have seen a measurable return on their investment. Under the Smarter Planet program, three major projects utilize core strengths of the company to provide solutions to large-‐scale problems:
• Data for Development uses data to reveal linkages between discrete events to accelerate better management practices for future development projects. In 2013, IBM collected data from cell-‐phone users in Abidjan, Ivory Coast to optimize its bus transportation system, based on people’s
13 of 22
movements from cell phone data. IBM is working with the telecom company Orange, and forecasts travel times can be cut by 10 percent.
• A Culture of Cultivation examines how data is collected and how it can be more effectively shared. The program identifies systemic and institutional barriers that IBM can help its clients overcome with smarter data.
• Smarter Cities challenges stakeholders worldwide to identify and make measurable progress on complex problems, ranging from food security to human trafficking. IBM invests $50 million into the challenge annually and selects a number of proposals submitted to become eligible for grants. Online portals help manage and share project-‐related information with participants and the general public, aiming to increase awareness of the problems’ complexities.
Culture. The Corporate Service Corps program helps establish a culture of service among IBM employees by sending 10-‐15 person groups from different countries to complete development projects worldwide. Internally, program participation is seen as a leadership development opportunity. Another component of the Culture of Cultivation program impacts company culture through an entry-‐level-‐leader program. New hires are provided direct access to senior leadership, aimed at promoting a collaborative community throughout the IBM community. Governance. Sustainability for IBM falls under corporate citizenship, which is integrated across its business operations through its Corporate Citizenship Steering Committee and Corporate Citizenship Working Group. The former consists of senior executives and the latter covers 11 functional areas to manage its activities, reporting, and stakeholder engagement across the company. Process. By seeking opportunities to apply technological expertise to societal problems, IBM supports outside partners and their sustainability initiatives vis-‐à-‐vis technological expertise. For example, IBM recently developed a reporting and mapping application for the government of Sierra Leone in order to better track and provide medical support to the victims of the Ebola virus. Training. Leadership provides a training program for each new employee to ensure the access to senior leadership, aimed at promoting sustainability throughout the IBM community. The Corporate Service Corps program is a cornerstone of IBM’s training program for future leaders in the company. Design & Usage. IBM consistently partakes in sustainable partnerships that utilize its core business competency in data analysis and processing. Involving its expertise allows IBM to deliver maximum value to the sustainability programs it supports and scale up programs once they’ve matured. The programs engage employees to use their technical expertise in bringing data-‐related breakthroughs to sustainability commitments and company projects.
14 of 22
McDonald’s: Franchising Sustainability With more than 35,000 franchise locations globally, McDonald's serves 70 million customers in more than 100 countries daily. The company has experienced decreased revenue, operating income, and shareholder value in FY 2014. In response, McDonald’s President and CEO Don Thompson called for a change in the way that the company conducts business. This year’s McDonald’s Corporate Social Responsibility Report outlined the company’s first Corporate Social Responsibility and Sustainability Framework, based on the input of subject matter experts. Despite initial efforts, it needs to further define its strategy and secure internal buy-‐in to get the new strategy off the ground and deliver additional value. Table 5: McDonald’s Ranking Summary McDonald’s Defined Repeatable Managed Optimized Comments
Strategy
X
Recently launched Five Pillars for sustainability.
Culture
X
Sustainable commitments have started internal culture change with limited effect.
Governance
X
Sustainability Committee and Charter in operation at Board-‐level.
Process
X
Partners with international initiatives already underway on food-‐relater programs.
Training X
Sustainability training outlined but difficult to enforce.
Design & Usage X
Initiatives underway support the Five Pillars. Has joined sustainability-‐related associations.
Strategy. The framework focuses on Five Pillars for sustainability: good food, good sourcing, good planet, good people, and good communities. In 2012, 51 percent of consumers wanted McDonald’s to focus on nutrition and supply chain practices, so those two areas are the current focus. Food pillar goals for 2020 include serving 100 percent more fruits, vegetables, low-‐fat dairy, or whole grains. Other health targets commit to reducing sodium, sugar, saturated fat, or calories in its top 9 markets (Australia, Brazil, Canada China, France, Germany, Japan, United Kingdom, and the United States). Priority stakeholders also requested that McDonald’s address two sustainable sourcing initiatives: 1) purchase more beef from verified sustainable suppliers by 2016, and 2) buy 100 percent sustainable palm oil, fish, and fiber-‐based packaging by 2020. Culture. The company has been looking for ways to be more sustainable across its value chain. International partners and external commitments increase accountability while smaller-‐scale efforts to implement recycling programs and diversity in management builds up the McDonald’s brand. These programs are
15 of 22
promoted across individual McDonald’s locations, even if some cannot be universally implemented. Governance. The Sustainability and Corporate Responsibility Committee Charter governs its sustainability program. The Sustainability and Corporate Responsibility Committee is one of the company’s six Board Committees. We could not find evidence of governing committees for sustainability at lower levels of management. Process. McDonald’s has partnered with outside initiatives to enhance its sustainability reputation. Under the CGI umbrella, McDonald’s partnered with the Alliance for a Healthier Generation to increase customers’ access to fruit, vegetables, and nutritional information to empower them to make health-‐conscious decisions. Training. McDonald’s outlines food safety and sustainability training programs that company-‐owned franchises should conduct on a regular basis. The company also conducts assessments of sustainability for its franchises and provides materials and information on how to increase efforts in recycling, cooking more efficiently, and providing more nutritional information to patrons. The decentralized nature of franchised operations may limit McDonald’s ability to enforce training. Design & Usage. The company frequently joins sustainability-‐related associations and initiatives to help meet its public goals. Recently, McDonald’s joined the International Food & Beverage Alliance, the Global Roundtable for Sustainable Beef, the Roundtable on Sustainable Palm Oil, Conservation International’s Business and Sustainability Council, and the Sustainable Agriculture Initiative. In prior years, the World Wildlife Fund helped the company better monitor its supply chain by developing future sourcing initiatives. McDonald’s employs partnerships to increase sustainability expertise and impact. McDonald’s actively seeks to implement sustainability programming to accompany the Five Pillars. Despite efforts, it can only directly enforce programs in company-‐owned stores. This leaves about 80% of restaurants, which are independently owned, meaning the company must rely on franchise owners to enforce the Five Pillars. Contractual agreements pose one difficulty in implementing change, while consumer tastes present a different obstacle. Changing consumer preferences complicate menu changes since consumers may not buy the most sustainable sourcing options.
16 of 22
Unilever: From Soap to the Sustainable Living Plan In the 1890s, long before Corporate Social Responsibility (CSR) became “a thing,” the founder of Lever Bros created “Sunlight Soap” with the hope “to make cleanliness commonplace; to lessen work for women; to foster health and contribute to personal attractiveness, that life may be more enjoyable and rewarding for the people who use our products.” As a large-‐scale producer of hygiene, food, chemical, oil-‐based products sold in over 190 countries to over 2 billion consumers, Unilever impacts stakeholders across the value chain and is a leading company for sustainability strategy. The company boasts one of the most innovative sustainability strategies worldwide at such a large scale, and should be regarded as the leader in sustainability maturity. Which is why, in 2009, Unilever’s current chairman Paul Pollman set out to follow in Lord Lever’s footsteps and make “Sustainability Commonplace”. Table 6: Unilever Ranking Summary Unilever Defined Repeatable Managed Optimized Comments
Strategy
X
Focuses on areas of expertise and uses brands and market share to maximize sustainability.
Culture
CX
Commitment to growth through sustainability instilled in culture.
Governance
X
Extensive network of Committees with internal and external persons to advise on sustainable practices and trends
Process
X
Transparent partnerships help achieve sustainability goals and affect real change
Training
X
Extensive training for new hires, particularly Future Leaders Programs. Less integrated programs for mid-‐level staff.
Design & Usage
X
Commits to external initiatives, which become sustainability targets. This process can limit its control over targets.
Strategy. Unilever’s Sustainable Living Plan draws upon product capacity, partnerships, and internal and external capacity. The strategy amplifies other initiatives already underway. It drives commitments to internal and external stakeholders by improving wellbeing, reducing environmental impact, and enhancing livelihoods across their value chain. Key focuses include:
• Improving Health and Well-‐being • Reducing Environmental Impact • Enhancing Livelihoods
Culture. Internal culture reflects Unilever’s external commitments to sustainability. Operationally, it actively pursues a culture of sustainability engaging employees
17 of 22
throughout their work and home lives, including programs that aim at changes in employee lifestyle, less travel and energy use, and more recycling. Progress reports share information regularly on various initiatives, including its CO2 reduction targets. Unilever committed to halving greenhouse gas output per consumer by 2020, bringing its CO₂ emissions to pre-‐2008 levels. It can achieve this goal by producing consumer products with half the amount of water needed and halving waste materials through recyclable packaging. Governance. Unilever forms governing structures to enable it to deliver on its Sustainable Living Plan. This includes management structures integrated into its organizational framework, independent oversight by the Corporate Responsibility Committee consisting of Non-‐Executive Directors, an Independent Oversight Audit Committee to identify corporate risks and related mitigation and/or response plans, a Global Code & Policy Committee chaired by the Chief Legal Officer, and external insights from the Unilever Sustainable Living Plan Council which consists of independent experts worldwide. Process. Sustainable efforts rely heavily on partnerships and relationships with suppliers. In 2012, Unilever reached its 2015 target to source 100 percent of palm oil from sustainable sources three years ahead of schedule. After committing to the Carbon & Water Disclosure Project (CDP) in 2011, Unilever requested its suppliers disclose climate change-‐related information through CDP’s supply chain program from 2013 onwards. In the same year, Unilever reported that 75 percent of its sites were sending zero non-‐hazardous waste to landfills as a result of national waste contracts. To ensure supply chain compliance, Unilever works with Solidaridad to seek grants, cross-‐sector partners, and microfinance projects to reach suppliers. Training. Unilever’s Future Leaders Programme enables new recruits to receive training that builds management skills and creative leadership. It also trains suppliers via workshops, which include a range of sustainability-‐related topics. Unilever then incorporates their skills and ideas into product design. This initiative also focuses on incorporating women. By 2013, 42% of managers were women, attributable to its Future Leaders Programme. No programs as powerful as the Future Leaders Programme were found to support strong training programs for mid-‐level employees. Design & Usage. The Sustainable Living Plan uses the Unilever brand to promote sustainability and health awareness. By 2020, its programs aim to provide more than one billion people with better lives by focusing on accessible sanitation, primarily via hand washing, aimed at disease reduction through it numerous products. As of 2013, Unilever had reached 303 million people through its brand reputation and partners. The Plan pushes employees to link their work to sustainable principles and asks suppliers and consumers to evaluate their choices through the lens of sustainability. Consumer taste, however, can limit the effectiveness of these techniques.
18 of 22
Walmart: Living Made Cheaper and More Sustainable in an Era of Growing Global Activism
Walmart’s initial business focus was on growth, operational efficiency and profit. Criticism from activists prompted the retailer to incorporate sustainability into business operations. As a result, sustainability now stands at the core of the Walmart's growth strategy, focused on delivering innovation to create products at low cost to customers and at no cost to the planet. These goals are integrated within corporate strategy and existing business models, and include diverting 80% of waste from landfills, doubling the amount of local food sold, and generating over 1 billion kilowatt-‐hours of renewable energy. Walmart takes pride in its ability to rapidly scale sustainability efforts for shareholders, stakeholders, and customers. Table 7: Walmart Ranking Summary Walmart Defined Repeatable Managed Optimized Comments
Strategy
X
Uses international platforms to lead change across the value chain
Culture X
Focuses on workforce diversity to promote diverse internal culture
Governance X
Sustainability assigned to Compensation, Nominating, and Governance Committee
Process X
Partnerships are the enabling force of the sustainability strategy
Training X
Compelled workers to live healthy lifestyles via the My Sustainability Plan program for employees.
Design & Usage X
Participates in multi-‐stakeholder platforms to enhance its business operations. Internal focus on employee diversity
Strategy. Walmart approaches sustainability by publicly announcing extensive goals that have the potential to make measurable progress on food-‐, conservation-‐, and gender-‐related issues. Its commitments, mainly through CGI, have credibly responded to customer demand for promoting healthy living by identifying sustainable products in its stores with special tags. Walmart recently pledged to create a sustainable food system, to ensure sustainable food production and hunger reduction through programs with various partners. This CGI food systems commitment guides sustainability strategy, aiming for food to be:
• Accessible: Increase access to sustainable food by providing home delivery and providing food to the disadvantaged.
• Affordable: Reduce the “true cost” of food by decreasing the environmental impact of agricultural practices.
• Healthier: Ensure its customers eat healthier by regulating certain chemicals in product ingredients
19 of 22
• Safe and Transparent: Provide more information and transparency about the products on its shelves for customers to make healthy choices.
Culture. In recent years, Walmart has focused on promoting internal and external culture change. Within the company, it focuses on workforce diversity, particularly increasing the percentage of women in the workplace. To external stakeholders, the company engages with partners around food security issues designed to increase the perception of sustainability in Walmart’s culture. The two approaches to culture have limited cohesion and remain responsive to activist and consumer demand.
Governance. The Board of Directors assigned oversight of sustainability to its Compensation, Nominating, and Governance Committee. The committee advises management regarding social, community, and sustainability initiatives. In recent years, the committee has focused work on transparent sourcing and supplying for customers and shareholders. This is a lot to add to an already packed committee agenda and may limit the effectiveness of its oversight.
Process. Recognizing the interconnectivity between these issues and NGO networks, Walmart works with partners for most programs to maximize impact. In particular, the retailer has focused on gender diversity in the workplace. Facing 2,000 cases of discrimination against female employees in the United States early in 2012 drove Walmart to support women’s economic opportunities. As part of a CGI commitment, Walmart began helping women-‐owned businesses advance their operations in new markets. This commitment helped identify, develop, and scale high-‐potential women entrepreneurs to become strong corporate suppliers.
Launched in 2011,Walmart’s Women’s Economic Empowerment International commitment caused wide-‐scale change in women empowerment through partners like CARE, Vital Voices, CountMeIn, WBENC and WeConnect International. Such large-‐scale partnerships deliver measurable progress on related sustainability issues and ROI for the retailer.
Training. Walmart created My Sustainability Plan (MSP), a worldwide initiative to help employees improve their lives. This program encourages employees to choose goals most relevant to their own lives and convert them to everyday actions. My Sustainability Plan highlights healthy eating; tobacco use; water, waste, and energy reduction; and skills training. At CGI in 2010, Walmart offered royalty-‐free licenses to organizations interested in customizing MSP.
Design & Usage. Through its Sustainable Value Networks program, Walmart engages supplier companies, academia, government, and NGOs to explore sustainability challenges and develop solutions that can be implemented at scale. The retailer may then adopt the solutions. For example, it established a Sustainable Product Index with CGI in 2009, a tool that allows suppliers to improve their sustainability efforts and helps consumers choose sustainable products. Internally, it has focused on diversifying its workforce. Between 2007 and 2012, female managers increased by 89 percent and people of color in employment increased by 73 percent. Between 2013 and 2018, it projects over 100,000 hires of veterans.
20 of 22
Key Takeaways
While the early birds figured out how to catch their worms, the fast followers need to know how to get and keep their cheese. Sustainability seem like a messy, unstructured concept. Therefore knowing where to start can be the hardest part to get sustainability programs in motion. What we learned from leaders. These leaders show that sustainability programs need to align with core business competencies to deliver ROI. They created new business opportunities from ambiguous situations, demonstrating that being sustainable and being profitable are no longer mutually exclusive. Even though their sustainable business practices often incurred short-‐term expenses, they ultimately delivered medium-‐ and long-‐term profits. How you can go and do likewise. CollaborateUp’s Sustainability Maturity Model (SMM) gives fast followers a step-‐by-‐step process so they can replicate the leaders’ successes while avoiding the risks, distilling down strategies other companies can follow to start or revamp their sustainability and corporate citizenship-‐related programs. Figure 2: Sustainability Maturity Model Top Layer
21 of 22
How to Start a Sustainability Program Getting a sustainability program started can be daunting precisely because no one person or department actually “owns” sustainability. Responsibilities stretch across departments and organizations. Don’t let that deter you. If your company doesn’t yet have a sustainability program, start by outlining a strategy that aligns with your company’s competitive advantage. Recognize that, at first, these programs will probably cost more money than they make. As the program matures and enhances pre-‐existing operations, it will begin delivering ROI. Using four collaborative processes will help determine which priorities your company should adopt:
1. Determine expectations. Consult stakeholders and shareholders to determine their priorities and expectations of your industry overall and of your organization specifically. That will determine how far you may eventually want to move on the horizontal axis of the SMM (see Figure 2).
2. Look for comparative advantage. Inventory transnational commitments (CGI, WFP, MDGs) and match those up with your internal capabilities / competencies. This helps provide a “taste test” for companies to determine which commitments may align with business operations, if any. If your company decides to commit, determine the comparative advantage you can add. That will determine how far down you may eventually want to move on the vertical axis of the SMM. Actually signing up for commitments usually correlates with society having high expectations for the company.
3. Assess current maturity level. Self-‐assess how you’re doing so far on each layer of the SMM. Survey employees and consult with stakeholders (including customers) for their assessments as well. Mark off where your organization currently sits on each row of the SMM.
4. Set a path forward. Knowing how far you ultimately want to go (vertically and horizontally on the SMM) and where you are today, set specific realistic targets for moving the needle. Work with external evaluators (e.g., auditors) to provide added focus and credibility to your initiatives.
How to Revamp Sustainability Programs The first challenge for course corrections is determining when it’s necessary to do so. Once you’ve determined the need to revamp your sustainability program, take the following steps:
1. Determine expectations. Take the pulse of your external stakeholders (e.g., NGOs, regulators, outside advocacy groups) to determine their priorities and expectations of your industry overall and of your organization specifically. Check in with your employees to find out what matters to them as well. This combined picture will tell you how far you may need to move on the horizontal axis of the SMM (see Figure 2).
2. Assess opportunities for comparative advantage. Survey your customers to determine their top sustainability-‐related priorities for your different products and services. That will determine how far down you may eventually want to move on the vertical axis of the SMM.
3. Assess current maturity. Compare the above elements of data with your core business competencies. Look for overlaps. These are most likely to produce
22 of 22
the greatest business value. Mark off where your organization currently sits on row of the SMM.
4. Establish a maturation plan. With this “heat map” in hand, inventory what’s going on with your current sustainability program. Shut down what doesn’t resonate with the data you collected and scale up what does. When shutting down programs, make sure to consult employees involved with those initiatives and gather their input during the transition process. They earned a voice from their prior work and gathered valuable insight on its successes and failures. In addition, s/he may be able to secure buy-‐in among other employees for new initiatives being proposed.
Next Steps This document presents only the very top layer of the SMM. At this level it is a powerful self-‐diagnostic tool and strategic planning framework. Following the steps outlined above, firms can determine the level of reasonable investment needed and plot out a maturation process to achieve a rational ROI. Firms can also go deeper into each layer, row, and box on the model to focus their strategies on areas likely to produce the greatest level of business and societal impact. Once you’ve completed the self-‐diagnostic portion, you should be able to clearly outline a sustainability strategy. At that point, regardless of whether you’re starting from scratch or revamping an existing program, you can start thinking about the other elements of the SMM by asking yourself:
1. How can sustainability improve existing business operations, and processes? 2. How can you train employees on this strategy to accelerate culture change
and internal adoption? 3. How can employees begin to re-‐engineer the design and usage of company
products and services to meet sustainability commitments? Answering these questions will help guide your future use of the SMM and the future maturation of your strategy. Everything in this report is open source and we encourage readers to use and adapt these tools and frameworks for themselves and share their experiences with us online through our Collaboration Nation. When using these tools, please credit them to CollaborateUp. We’ve also developed tools supporting each row and box on the model, including a set of ISO-‐relevant practices. We offer additional training and access to these tools and templates through CollaborateUp Academy. For more information please contact [email protected].
