The 4 Things Everyone Needs to Know about Sustainable Business

Salterbaxter MSLGROUP
5 min readApr 6, 2017

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Claus Stig Pedersen, Head of Corporate Sustainability, Novozymes, speaking at the Salterbaxter Sustainable Business Forum in New York

By Luna Atamian, Consultant, Salterbaxter North America

(This article was first published on TriplePundit — http://www.triplepundit.com/2017/04/4-things-everyone-needs-know-sustainable-business/)

While significant progress has been made on the sustainability front, the work done to date has been mainly focused on making sure corporations do less harm, protecting reputation and managing risk. In other words, the work has been focused on ‘minding the gap’ between society and corporations. However, given the disconnect and fragility of the relationship between society, business and institutions, minding the gap is simply not enough. Business needs to tread carefully and thoughtfully as it works out how to start mending the gaps and reconnecting with society more effectively. So Salterbaxter decided to bring great minds together on March 9th, during the US Sustainable Business Forum, to discuss the changing role of business in society, the need for business to radically reconnect with stakeholders — and how to do this. If you missed the discussion with speakers including McKinsey, BNY Mellon, DSM and Novozymes, do not panic. We got you! We’ve compiled some of the highlights for your viewing pleasure so sit back, relax and enjoy this reading.

1) Adopt the “Connected Leadership” model

Lack of trust in the business community is not a new trend. In fact, it extends back over 2,000 years. However, there is no doubt that anti-business feeling has increased since the global financial crisis of 2008. Corporate social responsibility (CSR) has failed both companies and society because the initiatives are almost always detached from the core commercial activities.

Breaking this anti-business sentiment is possible, but it requires reconnecting corporate social responsibility with real commercial activities and rethinking what leadership means. The ability to effectively connect with society — and its real needs — and to integrate societal and environmental issues deeply into the business model is crucial and can boost profitability and competitiveness for corporations.

According to Robin Nuttall, Partner at McKinsey & Company and Co-Author of “Connect”, the shares of companies that connect outperform those of competitors by 2 percent every year, amounting to a performance boost of 20 percent over a decade. The book also identifies four tenets of “connected leadership” that companies –and leadership- can adopt to improve profitability and relationship with society.

1. Map your world — start by quantifying the economic impact of external issues on your company and stakeholders as businesses perform better when they have a good understanding of the world around them.

2. Define your contribution — ask yourself the following questions: what do I want my contribution to the world to be as a corporation? What’s my long-term purpose?

3. Apply world-class management-integrate these considerations into your business strategy.

4. Engage radically — proactively and regularly engage and communicate, regardless of immediate need and interest.

2) CSR reporting and partnerships are effective ways to involve your stakeholders

That’s right. Engaging and reconnecting with your stakeholders is key to business success. But what are effective ways to do so? Partnership building and CSR reporting are powerful options to explore.

Let’s start with partnerships. BNY Mellon for instance just released a new study in partnership with the UN Foundation, one of its stakeholders, entitled Return on Equality. According to Heidi DuBois, Global Head, Corporate Social Responsibility and Social Investing at BNY Mellon, “this is a great story of stakeholder engagement and partnership at its best. We have had a partnership with the UN Foundation for several years now and together, we decided to focus on Goal 5, which focuses on achieving gender equality and empower all women and girls.” Another interesting example is Novozymes. Claus Stig Pedersen, Head of Corporate Sustainability, Novozymes, spoke about how partnerships and the UN Sustainable Development Goals (SDGs) have guided Novozymes’ long-term targets for fulfilling the company’s stated purpose of finding biological answers for better lives in a growing world. The SDGs have helped prioritize the companies’ activities and helped attract the right partners. Similarly, working with the right partners has helped develop better, more sustainable products.

Finally, we all know that CSR reporting is important for transparency and communications purposes but it’s also a great way to engage with stakeholders. It can be both the culmination and kickoff of a year-long engagement process with experts, managers and employees and external stakeholders, with different stages that bring the company and its different stakeholders together, from the materiality analysis through to engagement around the results.

3) Set sustainability goals — and incorporate them into compensation structures

If corporations have serious sustainability ambitions, then they must incorporate sustainability goals (whether environmental or social) into their senior executive compensation structure, otherwise, these targets will never be prioritized. Indeed, linking executive bonuses exclusively to short-term financial targets will incentivize executives to deliver short-term results — results that are not sustainable. Hugh Welsh, President of DSM North America spoke about how in 2010 they started to link all managers’ compensation to sustainability, with targets related to greenhouse gas emissions, energy and water usage, eco-friendly product development and employee engagement, besides traditional revenue targets. The result has been real, measurable progress.

4) Gain greater understanding of consumers to change behaviors

Sometimes even sustainability-driven businesses aren’t successful at providing consumers with the right environments in which to meet their sustainability aspirations. Sille Krukow, Founder and Chief Behavioral Designer at Krukow, thinks behavioral economics is one of the answers.

Behavioral economics analyzes how choices are presented to consumers and the environments in which choices are made. Supermarkets for instance are usually focused on incentivizing consumer decisions that will maximize revenue. In other words, products that bring the greatest profits are those that are in the “hotspots”, where purchases are most likely to occur. With behavioral economics, stores and supermarkets have the power to influence consumer choice architecture to focus on sustainability. By placing sustainable products in these “hotspots” or incorporating specific labels to recognize these products, supermarkets can make it easier for consumers to select and buy sustainable products. Thus, by better understanding consumer behaviors, we can incentivize the sale of sustainable products.

Whether it’s through a connected leadership model, effective partnership with stakeholders or better understanding incentives and behaviors, one thing remains certain: the business community needs to Step Up and reconnect with society. And there are some great examples of companies out there who are taking the lead and doing just that.

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Salterbaxter helps companies and brands step up to the challenge of the changing relationship between business and society. We combine smart strategy, savvy insights and sharp creativity to help businesses do different things, not just say different things.

We work with our clients across the whole spectrum of strategy and communications — from strategy insight and development, to stakeholder engagement, influencer campaigns and reporting programs.

Everything we do helps businesses make a more positive impact on the world.

Please contact Salterbaxter to attend our next event on April 27th on the subject of materiality or core issues assessment. The event is free. Our guest speaker will be Ken Gustavsen, Executive Director, Corporate Responsibility, Merck & Co., Inc.

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Salterbaxter MSLGROUP

Leading sustainability strategy and communications agency in Europe and USA