photo credit: LordFerguson

I’m reading Saving The World at Work by Tim Sanders. (Well, when I say I’m “reading” it, I mean I have it out from the library and it’s sitting on my desk. Along with the six other intriguing library books I have out. But I do flip through it once a day or so and I will likely give it quite a thorough skim when I get the final due date reminder email from the library and have to return it in a rush that day. Welcome to my hectic life.)

Anyway, from what I’ve seen so far, the book looks promising, and I’ll be sure to report back when I’ve finished reading (or skimming) it. In the meantime, though, I happened to notice an article at the Canadian publication FP Posted called Sustainability: The Second Business Bottom Line that references the book. Ray B. Williams quotes the book as saying:

“the responsibility revolution has arrived. It demands that companies make a difference to society,” and the ones what don’t participate risk becoming obsolete.

A bold statement, to be sure, and one that should make all but the most cynical of corporate fat cats lean in and at least feign attention. This is a difficult adjustment, after all. In most pockets of corporate culture, we’re just not used to being held accountable for anything but profit to anyone but shareholders. But as Williams wrote in the introduction to that same article:

Business can no longer operate from the perspective of short-term financial gain only. The world has become too complex, and social and environmental concerns now make financial profits at the expense of everything not only short sighted but dangerous. And we need only see the leadership debacles of an Enron, Webcom and the recent Wall Street fiascos to see what selfish financial gain reaps on everyone. There is increasing support for the notion of a business triple bottom line: financial profits, social responsibility and sustainability.

The triple bottom line concept is not new, and indeed we’ve referenced it before. It’s gaining traction… at least in the abstract.

What makes it a tricky sell, though, is the difficulty in accounting for sustainability. It’s all well and good to say businesses should make it a priority to reduce their environmental impact and so forth, but there’s no denying that when it comes to making accountable business decisions, the path of least resistance for the time being is still going to be to use a monetary basis. Cash is the capital everyone is used to measuring business by, and so far it’s just not that easy to account for a business’ use of other types of capital, like water and energy use, or to account for measurable contributions to human development, etc.

As a small business owner, I know this myself: the time I’ve spent with spreadsheets has been concerned with making sure my business has the cash flow it needs to survive. So far I haven’t invested much time at all on developing other non-monetary measures for my business. As the author of this blog, I suppose you’d expect I’d be naturally inclined to do so. It’s not for lack of interest or alignment with the idea of sustainability; it’s just that roughly 99.9% of our societal knowledge about starting and running a business focuses on cash flow and profitability. There’s precious little guidance to be found, for example, about developing a business that supports social growth as well as economic growth. What does exist is largely academic and not distilled for practical application.

So here’s what we need: we need organizations that support new and small businesses, like local chambers of commerce, SCORE, SBA, and others, to start the training early; to educate entrepreneurs about the triple bottom line and how to account for it. Educate mid-level CEOs about other measures besides profit. Help get the business community talking about why we haven’t done more with this before now and how to get started. We won’t have perfect metrics to begin with, but we’ll have a start towards adjusting our collective mindset. And you can’t improve on what you don’t attempt.

photo credit: Jasmic

Looks like Apple is the latest company that has chosen to end its affiliation with the U.S. Chamber of Commerce over the Chamber’s stance opposing legislation aimed at controlling greenhouse gas emissions and other factors in climate change. On the one hand, the Chamber’s position makes a certain kind of sense: as an organization whose primary mission is to serve its member businesses, working to prevent oppose legislation that would be difficult and/or costly for members to effect seems as if it would be the default position. And yet, according to a post at Forbes.com:

That stance isn’t sitting well with some members of the chamber, one of the most powerful lobbying forces in Washington. In the last week of September, three major energy companies left the organization: PG&E (PCG), PNM Resources (PNMPRA) and Exelon (EXC). Two days later, Nike (NKE) resigned from its board. Other members, like Johnson & Johnson (JNJ) and General Electric (GE), have complained about the chamber’s positions on the issue.

It’s an interesting day for ecology when large, influential companies are taking bold actions in support of it. Granted, a lot of the incentive for change still probably boils down to money, no matter which side you’re on, but it’s encouraging to see green issues winding up with some allies in their corner, whatever the reasons.

Updated to add: more on this story at Mother Jones.

In partnership with smart grid company SmartSynch, Ole Miss has created online feeds (also via RSS) detailing several of its main buildings’ energy use, ostensibly to “alter behavior to reduce electricity consumption and carbon emissions.” The UMiss project will study consumption from lighting, temperature controls, and appliances. The organizations have created an online application to monitor and report the energy draw so that building operators can learn where energy is being wasted and implement new conservation strategies.

Good idea? Too much? What say you?

photo credit: Dennis Wright

If you had to choose between an idea that would generate money right now today and an idea that could generate considerably more money later, which would you choose?

It’s not a quiz, it’s an everyday decision. Some would say there’s no right answer for every business at every moment; that it depends on the circumstances; that a business hurting for cash flow probably shouldn’t pass up the short-term money. Some would say it’s a false dichotomy.

Every day we face the same choices in our personal lives when it comes to health and lifestyle decisions, and we understand the tradeoff: fun now vs. wellness later. Or when we make personal decisions about finance, and its our long-term financial well-being at stake. We know the value of compound interest, and we know that making healthy dietary decisions now can make all the difference in our health later in life.

But it seems that some businesses don’t even weigh their options; they automatically choose the short-term gains of immediate sales over creating something of lasting value. A company I used to work with struggled with this dilemma, even though they had solid earnings and money in the bank. It should have been easy to invest in their future by making decisions that would tend to make customers more loyal and return more often rather than drive customers to spend a little more in the short term.

Truly great businesses usually don’t make decisions that are based in short-term rewards; they seek outcomes that will prolong their health and enhance their longevity. We need more examples of that around us.

What’s an example you’ve seen recently of a company placing long-term health over short-term gains?

photo credit: juanpol

Making its way through the business blogs this week is a discussion of an article Umair Haque wrote for HarvardBusiness.org blog musing about how Apple could produce its devices in the USA under fair labor conditions and how much more it would cost them and cost the consumer:

how much would it cost to produce a “Good iPod”? One not produced in a sweatshop, but under decent labour conditions. Like, for example, one produced in the USA — hardly a paragon of labour standards, but a starting point.

That’s what I calculated. The Sloan Foundation data estimate just $4 of an iPod’s cost is the final assembly in China. Using average Chinese hourly compensation costs, that’s about 2.7 hours of labour. I then used American hourly compensation costs to adjust for what that final assembly might cost in the States.

The results are surprising. An American made iPod Classic costs just 23% more than a Chinese made iPod Classic: $58 more, to be precise.

A 23% increase in price would almost certainly deter a subset of consumers, but one has to assume that the fair labor practices would attract a different subset, and one that would potentially exhibit loyalty to Apple as it demonstrates the values these consumers espouse. In the end, would it even out? Who knows. It’s a meaningful thought exercise, though, and moreover, it’s the kind of question American businesses should be asking in order to aid the recovery our own economy and workforce.

Hague goes on to say:

If goods cost what they should, we would consume what we could authentically afford, instead of overconsuming what we couldn’t. If their prices reflected real human costs, perhaps yesterday’s unsustainably large macro imbalances wouldn’t have built up in the first place. And that, from an economic point of view, would be good for everyone.

I couldn’t agree more.

But how about you? Does this seem like an unnecessary step, or is it a change Apple should be exploring immediately? What is your take?

photo credit: Nick J Webb

Ordinarily, Wal-Mart would be a company this writer personally would have some trouble profiling on this site. But an article at ecofrenzy about metrics-driven sustainable business deals with the topic of sustainability and measurement, and Wal-Mart’s example in the post is a good one:

Rand Waddoups, senior director of business strategy and sustainability at Wal-Mart described Wal-Mart’s four part journey to sustainability, beginning with consensus building around need for sustainability, moving into an evangelist phase, and then to a clear recognition of the business case of sustainability. The fourth step, where they are headed today, is the ability to measure and track progress with sustainability metrics. They’ve found that suppliers that provide poor products are often also mistreating their employees, and cheating when it comes to factory compliance. So holding suppliers to a higher standard is good for business.

Those stages outlined in the post look a great deal like the phases Schopenhauer described that all truth must pass through:

All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.

Let’s look at the stages Waddoups described again.

First, there was “consensus building.” If you’ve ever been through this stage in a typical work environment, you’ll recognize that it is in many cases the same as Schopenhauer’s first stage, ridicule. No doubt overcoming the skeptics will be part of the process of building consensus. How do you do this? Your best bet is thorough and careful preparation of the business case.

Next, there was the “evangelist phase.” In other words, someone or a small group of committed people seek every opportunity to advocate for the program being introduced. Why do they need to do this? Because of Schopenhauer’s second stage: it is violently opposed. An easy mistake to make at this stage is to assume that if the executive leadership is on board, the employees will eventually come around. That may happen in time, but there will be loss of morale, loss of trust in the leadership, and the opportunity cost will be the momentum the program could have gained from top-to-bottom support. Instead, it makes sense to use this phase to educate the whole company in ways that relate to their perspectives.

Third, “clear recognition of the business case.” In other words, it is accepted as self-evident. Schopenhauer nails it again.

The bonus step mentioned in the Wal-Mart article is the one you should be hoping to get to: being able to measure and track progress. If it can’t be measured, it can’t be held up for accountability, and accountability is necessary for the transparency and full-circle consensus-building that will come with settling into the new program.

But what to measure? Well, there is a whole emerging body of knowledge on metrics for sustainability, if that’s the program you’re introducing, but in general, bear in mind that analytics tends to go through its own phases on the way to useful measurement, including an almost inevitable phase of information overload. Once you’re reached that point, you’ll want to  cut the clutter and get right to the useful stuff. Over at HarvardBusiness.org, Emma Stewart covers a wealth of information on the history and viability of sustainability analysis, and discusses the need to reduce the noise in metrics:

First, in streamlining metrics, practicality should reign supreme. New indicators, like all other management techniques, must pass the test of cost-effectiveness. This means that a certain level of inaccuracy may be optimal and only issues material to the company should be covered. This will also save you from unwieldy amounts of data collection and drawn out consensus building processes.

Introducing a new program is not usually an easy process, but if you have reason to believe that it matters for the business, for the community, and/or for the world at large, you can find a great number of resources to help you make the case and guide it through the phases it must pass through. And when it launches and you’ve been able to measure its success, come back and tell us about it, OK?

The analysis found that in 16 of the 18 industries studied, companies committed to sustainability outperformed industry averages by 15% over the six months from May through November 2008.

The study is called Green Winners: The Performance of Sustainability-focused Companies in the Financial Crisis.

But perhaps the most interesting aspect of the study results isn’t the fact that the companies were green: it’s that they were sustainable in a larger sense of the word. According to the study, there were characteristics shared by the leading companies which included, among others (boldface emphasis mine):

• A focus on long-term strategy, not just short-term gains
• Strong corporate governance
• A history of investment in green innovations

Sounds like the types of companies we can get excited about around here.

photo credit: pfala

A quick glance at the business-oriented coverage of Earth Day would suggest that the theme of Earth Day 2009 is that a single day for this concept makes no sense anymore.

Grist, the sponsor of a “Screw Earth Day” campaign, asks if Earth Day still matters, and the answer is a resounding yes, but with a clarification:

I also would challenge that if done strategically, all the “green” stuff we do throughout the rest of the year should be good not just for the environment, but also for business and partnerships. And that right here, at this intersection—where environmental issues and business needs meet—is where green can establish real roots and begin to grow.

Newsweek, in part referencing the Grist campaign, asks if it’s time to retire Earth day:

What was originally intended as a sounding alarm has been reproduced each year in the exact same way. The problem is, it’s hard to be motivated by a screeching alarm when you’ve been hitting the snooze button for the last four decades.

Forbes, in asking how you make Earth Day good for your company, observes familiar sentiments:

It’s like dieting. We see friends, neighbors and celebrities go on crash diets all the time, and after the crash period is over, the weight always comes back. When it comes to our planet’s carbon diet, we can’t take the crash approach. We need to make the Earth Day sensibility part of our employees’ everyday lives by making it fun. After all, who ever stuck with a diet that made them miserable?

Clearly the environment would benefit from a widespread adoption of this “every day should be Earth Day” philosophy, but the real motivation for lasting change will usually come from the bottom line. What we could really use are good case studies where making environmentally sound investments resulted in a positive impact to profit, such as the Wal-Mart example in this FT.com piece on signs that corporate responsibility is surviving the recession:

Wal-Mart also has commercial reasons for its stance. The company has been encouraging companies to cut down on packaging. This enables it to fit more goods into each delivery truck, not only reducing its emissions, but also cutting the amount it spends on petrol. Its insistence that manufacturers produce concentrated laundry detergent has allowed it to save on both packaging and shelf space. Cost-cutting is vital to beating the downturn and if companies can boost their green credentials at the same time, why not?

What are some of the best examples you know of where integrated environmental practices leading to profit?

They not only perform better during expansions but recover faster when growth rebounds from an economic slump.

Source: HarvardBusiness.org – The Daily Stat: Which Companies Bounce Back, Post-Recession?.

How are you adding value to your business today?