The Two Sides of Enterprise Sustainability

Mick Dalrymple, director of university sustainability practices, senior sustainability scientist, and deputy sustainability ops officer at Arizona State University, says climate change is a crisis, and crises create both risk and opportunity. On one hand, he says companies should ask, “What supply chain risks for the company are growing?” On the other hand, he says they should also be asking, “How can the company capitalize on regenerative products and services?”

Olaf Weber, professor at the University of Waterloo’s School of Environment, Enterprise, and Development, suggests most businesses address sustainability to reduce business risks. “Businesses are driven by markets and by institutional pressure, such as regulations,” he says. “We need both to push sustainable business. Most companies are not proactive, but they will follow sustainability regulations. I think proactive corporate sustainability is quite overrated. It does not exist very often. Most of it is a response to outside pressure.”

On the flip side, there is opportunity in early action. Duff says, “We are seeing investors, consumers, and job candidates choosing companies that are making bold sustainability commitments. At this point, sustainability plans are no longer novel; they are required to stay competitive.” Duff says a significant shift from current practices to clean technologies and systems across sectors must happen in the next 30 years. “Global companies are in a unique position in that they are able to influence multiple stakeholders—from politicians to investors to suppliers to consumers—in industries and around the world,” she says. “Businesses play a key role in this needed shift.”

Creating a Strategy and Making It Stick

In developing a sustainability strategy, he says: “In order for a sustainability strategy to influence core business activities, the company must first understand their most material risks and opportunities. This should include innovating efficient and responsible technologies that minimize the adverse impacts of IT, as well as applying these technologies to accelerate solutions to pressing social and environmental challenges.” At HPE, Tippens says a commitment to sustainability has led to increased innovation, reduced regulatory uncertainty, and strengthened investor confidence.

Andrew Hoffman, professor of sustainable enterprise at University of Michigan’s Ross School of Business/School for Environment and Sustainability, says business leaders must first look at their business environment and figure out what’s driving the need for sustainability—is it regulation, consumer demand, cost of capital, or operational efficiency? “Try to figure out where the pressures are that make sustainability a business issue,” he says. “You can make this about ‘doing the right thing,’ but if you really want it to stick, then it should have a business imperative behind it.”

Source: CDP, Major Risk or Rosy Opportunity: Are Companies Ready for Climate Change.

Hoffman says from there, businesses must find people inside the company who can champion sustainability. “The CEO can make a strong statement that this is important to the company but then empower people within the company to act upon it,” he explains. “You want to get the people behind this. They have to buy into it. Just to have an edict from on high that says you must do this without connecting it to people’s individual rewards or motivation for coming to work is going to be a slow-go, but if you want to tap that potential of your employees to really focus on these issues and find creative ways to address them and advance the end interest of the company, then you’ve hit the sweet spot.”

Whenever I hear a senior executive say they are doing this because it’s the right thing to do, I always think, ‘OK, now I want the real reason.’ Because if you’re going to convince division managers or line managers that they need to do this, they need to feel that it’s going to impact their bonus at the end of the year (or) their division’s profit and loss statement. You’re going to have to do better than just ‘it’s the right thing to do.’”

Kareem Yusuf, general manager of AI applications at IBM, reiterates that enterprise sustainability is no longer just a corporate social responsibility issue. “(Sustainability) is a business imperative and one that is pushing organizations to reassess their priorities and practices,” Yusuf explains. “Business operations and supply chains have been disrupted by factors such as climate change and dwindling natural resources. At the same time, governments, employees, and customers are also demanding new levels of enterprise accountability. With so much changing, we all must rethink our operations as we navigate this new landscape and the many challenges we now face. Most importantly, though, it’s a matter of doing our own part to safeguard our planet and our future.”

Technology is often a critical part of how enterprises pursue sustainability, achieve new levels of transparency and accountability, and measure their progress toward sustainability goals. Technologies under the IoT (Internet of Things) umbrella help companies that have pledged to go carbon neutral reduce their carbon emissions. The IoT is also playing a role in how companies track their progress—for instance, using sensing instruments to measure emissions—and how they manage and analyze all the data they’ve gathered to turn it into actionable insights. Blockchain technologies are also helping businesses create operational efficiencies and transparency in supply chains.

Source: CDP, Major Risk or Rosy Opportunity: Are Companies Ready for Climate Change.

Companies must focus on prioritizing their needs and then understanding how leveraging technology can help them address those needs. “(At IBM,) we believe that a sustainability strategy can be approached through the lens of climate risk management, electrification, energy and emissions reductions, resilient infrastructure and intelligent operations, and sustainable supply chains,” Yusuf adds. “And that in this context, leveraging technology like AI (artificial intelligence), cloud, the IoT, and blockchain, companies can focus on meaningful operational transformation, whether it’s improving efficiency, driving decarbonization, meeting environmental regulatory requirements, or better managing resource consumption.”

IBM itself recently committed to achieving net zero greenhouse gas emissions by 2030. That was a bold step forward for the company, and Yusuf says it also helped align employees around what IBM is prioritizing as a company and how it is entering the future. To make a strategy stick, Yusuf says businesses must focus on the transformation of actual business processes and operations—only then will sustainability be more than just “another thing” and become a core part of what gets done every day. “This is critical to ensuring a sustainable practice that is ingrained in how (businesses) think and make decisions,” he adds. “Approaching sustainability in this way, along with governments, employees, and customers continually holding us accountable, will help prevent us from losing sight of our goals and the lasting impact they will have on the world.”

create official positions related to sustainability within the C-suite with supporting staff, and hold internal events that promote and highlight sustainability ‘wins.’”

Moss believes internal and external transparency of sustainability targets creates accountability. “So, when targets are not reached, it gives executives the opportunity and responsibility to account for the results and recommit to reaching targets in the future,” he says. Arizona State University’s Dalrymple similarly says transparency is key to success in creating enterprise sustainability strategies. “Communicating shortfalls and lessons learned and how those shortfalls are going to be addressed goes a long way in showing commitment to employees and an acknowledgement that this is complex, but that the company is determined to figure it out,” Dalrymple explains.

For sustainability to stick, an organization must also have clear goals that are periodically updated to reflect the knowledge and experience gained over time. Mark Milstein, clinical professor of management and director of the Center for Sustainable Global Enterprise at Cornell SC Johnson College of Business, says these clear, periodically updated goals, along with clear metrics for tracking progress (with the understanding that those metrics will improve over time), and making sure all employees within the organization understand, are incentivized, and are held accountable for the role they play in helping the firm achieve its goals are all critical to a successful sustainability strategy.

However, Milstein points out that sustainability should really be more than just a strategy. “Over the past 30 years, we have seen examples where either top-management vision and goals around sustainability or employee-based innovative ideas to achieve sustainability goals have failed to gain traction across the organization,” Milstein says. “The best companies understand the value of setting a strategy at the top, then empowering employees throughout the company in a way that encourages everyone to contribute to organizational success. The goal for managers today is not to set a ‘sustainability strategy’ but to recognize that an organization’s strategy is going to be shaped by the social, environmental, and economic trends in the market. That is, sustainability is the context in which all organizational strategies have to succeed or fail. If employees—from the CEO to the part-time hourly worker—do not see that link, it is not just a matter of buy-in; ultimately, everyone will be working at cross purposes from one another for the long-term success of the company.”

A Call to Action