The ‘Pain’ of Sustainability
Most consumers want companies to engage in sustainable business practices. In a recent public opinion poll we conducted, more than 83% of respondents said they thought companies should try to accomplish their business goals while trying to improve society and the environment. But companies continue to struggle to implement sustainable approaches to doing business. Why? Here’s a short list of reasons:
- Companies are overwhelmed. Investors, consumers, academics, non-governmental organizations (NGOs), reporters, and employees all have their own perspectives on what companies should and should not be doing. A company can be returning a profit to shareholders, only to find protestors at its door or lawsuits filed. Retroactively managing these issues can drain resources, damage corporate reputations, and tire executives and employees.
- Sustainability is overwhelming. The Global Reporting Initiative (GRI) is a multi-stakeholder, multi-national organization that sets the standard guidelines for what and how companies can and should publicly report. Despite being a tremendous tool, the Guidelines themselves do not offer solid guidance on prioritization. There are more than 80 “core” indicators the GRI suggests companies should report. How can one company, no matter how large, effectively manage 80+ issues? Granted, many of the core indicators are “easy” (e.g. a letter from the CEO) but the key to being strategic is making choices about what you do and don’t do in sustainability.
- Companies routinely fail to tell their story effectively, both externally and internally. Companies struggle to inform employees, shareholders and stakeholders about how they are managing material, social and environmental issues. With the increasing popularity of social media this has become more of a challenge. Some companies overstate their impact. Other companies, out of fear of being attacked, understate their accomplishments or wind up not communicating at all.
- Some executives don’t “get it.” There is a perception in some of the Chief-Suites (corporate speak for the section of an office building where all the executives with “chief” in their title have their offices) that sustainability is a marginal issue. They tend to look at sustainability as purely focused on philanthropy and volunteerism. It’s a rare executive who views these activities as core to the company’s business performance. Thankfully this is becoming less common, but it’s still a major barrier for most sustainability initiatives.
- Sustainability executives are often marginalized internally. Sustainability executives in some companies are shunted to the side and given the resources that go along with being marginalized.
- Companies are tempted to “greenwash.” Environmental issues are becoming increasingly important for society and for business. Recognizing that certain consumer segments respond well to environmental progress and eco-friendly products, some companies have stretched the truth. A cautionary note: environmental claims can run afoul of Section 5 of the FTC Act, which bans unfair and deceptive marketing claims. Since 1992 the FTC has issued “Green Guides” to help marketers stay on the right side of the law.
- Sometimes you can’t win. People are tough to please. Sometimes the expectations of stakeholders are valid; other times they are overblown. Trying to change the world overnight can slow down the adoption of sustainable practices when far-flung expectations stymie short-term progress.
- Profit makes some people uncomfortable. Some non-corporate advocates for sustainability are ultimately uncomfortable with the idea that companies exist to make profits. This might sound too blunt, but why else do companies exist? Rather, I argue, it’s the manner in which companies pursue profits that is becoming increasingly important. Still, sustainability professionals have to battle the notion that it’s wrong to prioritize profits.
What do you think? Are there are structural problems facing the industry? What other hurdles must sustainability overcome in order to become a part of how most companies operate?
posted by JAMES EPSTEIN-REEVES