Posts Tagged ‘triple bottom line’
Lesson from Katrina: Social sustainability matters
Five years ago this week, I sat glued to the TV watching the horrific aftermath of Hurricane Katrina. Four years ago this week, I left the business I co-founded and headed down the path of sustainability. The first didn’t cause the second, but it certainly played a role.
Within five months of leaving my business, I visited New Orleans twice. The first time to see for myself what Katrina had wrought and the second to help gut flooded homes with a work crew from here in Portland, Ore.
Today, the images of Katrina and the outrage I felt at our country’s shameful response to the suffering in New Orleans and the Gulf Coast are never far away.
Lower Ninth Ward resident outside her newly gutted home (January 2007)
For me, Katrina presented the human face of an unsustainable future and put the social in sustainability.
Less than a year after the storm, Al Gore raised my consciousness of climate change with his “An Inconvenient Truth.” As powerful as his message was, I knew when I moved my work into sustainability, Katrina wouldn’t let me forget the inconvenient truth of social inequity.
Climate change threatens to make matters worse by hitting those least able to deal with its consequences. But human-caused global warming wasn’t the issue in New Orleans. It was human-enabled neglect, whether it was the levee system, the evacuation plans, the people left behind as the storm struck or the needs of those trying to reclaim their homes and lives months and years later.
Inextricably linked
Environmental and social responsibility are inextricably linked. We can’t be satisfied with an ecologically pristine world where human inequality and injustice are allowed to flourish. Nor a world where justice applies to humans alone.
This is why the triple bottom line in business is so important. Business is a balancing act among financial, social and environmental responsibilities. Even if I believed the purpose of business is to create profits, which I don’t, I wouldn’t be able to ignore “how” those profits were made. Profits are essential to any business, sustainable or not. But if they’re consistently made while harming the environment or stakeholders (such as employees, customers, local residents, suppliers), then the business deserves any public wrath that comes it way.
Social sustainability lags environmental sustainability in business practice. Deloitte says this is due primarily to the absence of “a highly visible, well-established set of metrics for social sustainability” compared to environmental sustainability.
I also frequently hear comments from businesspeople about their struggles to define what social sustainability means for their organizations. And my non-exhaustive web search for a definition turned up little. Lacking a concrete, generally accepted definition, businesses are apt to give social sustainability more lip service than serious attention.
Beyond lip service
Yes, metrics are useful for holding your business accountable and for gauging and celebrating progress. And it helps to align your social responsibility initiatives with your core business objectives, as Harvard’s Michael Porter and others argue, “to produce profits and social benefits rather than profits or social benefits.”
I also think it’s possible to over-think things. More important is to take action now, even if just small steps, to create positive social impact. Because the opportunities for businesses to make a difference mount by the day. The Great Recession has taken a hurricane-like toll across much of the country. As I write this, fears of a double-dip recession are widespread.
Creating jobs sounds like the best social sustainability strategy for any business today. But ultimately that’s not enough. The US economy was humming when Katrina hit. The storm showed that at its heart social sustainability must be about fairness and compassion, hope and optimism, concern and resolve. In good times or bad, those are qualities that can always be in abundant supply.
Tags: Hurricane Katrina, Lower Ninth Ward, New Orleans, social responsibility, social sustainability, triple bottom line
Posted in Climate Change, Hurricane Katrina, Marketing, Sustainability | No Comments »
10 steps to employee engagement in sustainability
Today’s guest post is by Eric Brody, a member of the R.Bruer Sustainable Branding Collaborative. Eric is founder and principal of Shift Advantage, a sustainability consultancy in Portland, Ore. He was previously the sustainability business integration manager for Nike and sustainability manager for Nau, a technical outdoor and urban clothing company recognized for its innovative sustainability practices.
Much has been written about how to involve employees in more environmentally friendly office practices, such as reducing paper consumption, carpooling, turning off computers at night, recycling, and composting food scraps. As important as these and many other behaviors are to greening an office, they only take a business so far down the sustainability path.
If your vision is to build a sustainable business operating from a triple-bottom-line (people, planet, profit) philosophy, then sustainability is core to your business strategy. Your challenge involves more than green office practices. It means creating a business whose success is measured by its social, environmental and financial contributions.
Executives can only achieve their vision of a sustainable business by engaging and involving their work force. They need everyone in their companies on board. The question is how to engage all employees in the practice of strategic sustainability.
Fully engaging employees in strategic sustainability
At the risk of over-simplifying what can be a complex undertaking, I’ll offer a 10-step approach to employee engagement:
- Develop a strategic business plan that clearly articulates your social, environmental and financial objectives and strategies over a period of up to five years. I’ve worked with companies that set very aggressive stretch goals such as zero waste or zero carbon footprint by a certain date to ones that set more pragmatic goals such as reducing waste or the carbon footprint by a certain percentage.
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Share your business plan with each group or department. Ask each group to review their individual plan and goals with the intention of incorporating or expanding the practice of sustainability into their metrics of success. Each unit may be different: Purchasing may adopt social and environmental performance requirements in their procurement contracts with suppliers. Product development and design may adopt design for environment (DfE) techniques into their processes.
This type of thinking leads to innovations such as creating products that are lighter, repairable, utilize rechargeable energy sources, use energy more efficiently, or require low impact cleaning by the user. Accounting may investigate new models for measuring and tracking social and environmental impact, in addition to financial performance such as the greenhouse gases associated with business travel.
- Set department goals, both short term and long term (quarter, annual, three-to-five year). Companies may choose to make their environmental and social goals based on company totals or on a per unit or per dollar basis.
- For each job function and individual, determine responsibilities and expectations related to achieving the department’s and the overall business’ sustainability goals. As much as possible, make this an exercise of co-creation between a manager and an employee. You want every employee feeling enthused and empowered to make a difference. You also want to let employees know their contributions to sustainability will be a factor in their annual performance reviews (see Step 7). Set goals that are SMART: specific, measurable, attainable, realistic, timely.
- Provide training for each employee to grow competency and skills related to improving their individual contributions to your triple bottom line. Where possible, develop or seek sustainability training that is domain-specific, e.g., marketing, product development, manufacturing, customer service, human resources. This can include sending your employees to conferences or workshops or participating in industry or cross-industry collaborative working groups that are addressing specific issues such as water, logistics, fair labor and energy efficiency.
- Check-in regularly (weekly, monthly, quarterly) to monitor progress on the sustainability front, such as in manager/employee one-on-ones or staff meetings. This enables mid-course corrections and prevents year-end disappointments in group or individual performance.
- During annual reviews, evaluate each employee’s performance related to his or her individual and group sustainability goals. This reinforces the importance of achieving these to the company.
- After their performance reviews, ask employees to produce new or revised 12-month SMART goals to help their departments and the company achieve sustainability objectives. Be sure to share with employees any changes to business or department plans so they can align their individual efforts accordingly.
- Throughout the year, acknowledge and celebrate individual and group sustainability achievements across the company. Consider contests that motivate individuals and groups to out-perform each other and help make the sustainability journey about having fun and making a difference.
- Work with each department to engage their stakeholders and report publicly the achievements and challenges. This may include summits with your supply chain, reporting achievements and challenges to the public through corporate responsibility reports or websites or engaging customers through customer surveys and communications. The Global Reporting Initiative (GRI) provides a thorough framework for corporate responsibility reporting.
We have seen great success with companies that take these steps to fully engage their employees. This strategic approach moves sustainability from theory to practice within a company. The more engaged employees are, the more they will help your business innovate, achieve industry leadership, reduce costs and increase market share.
Tags: employee engagement, Eric Brody, Global Reporting Initiative, Shift Advantage, strategic sustainability, Sustainability, sustainable business, triple bottom line
Posted in Business & Economics, Sustainability | 4 Comments »
Imagining the ‘Sustainable Communicator’
Based on the scale of green marketing we see across all media today, you’d think the practice of sustainability is spreading like wildfire throughout business. And you’d be wrong.
I was reminded of the green vs. sustainability disparity as I was preparing a talk I gave last week to the Communicators Conference in Portland, Ore. In the talk I outlined a vision for what I called the “Sustainable Communicator.” 
If this vision came to pass today, I believe we’d see an immediate ratcheting back on the practice of green marketing and a spike in the practice of sustainability.
Let me explain.
First, consider these two studies from 2009:
- In its study entitled “The Road Not Yet Taken,” the Sustainable Enterprise Institute reviewed the public information disclosed by companies in the Russell 1000 Index and concluded: “evidence of any broad spectrum adoption of sustainable business practices is not to be found.”
- The Boston Consulting Group and MIT Sloan Management Review surveyed 2,000 business leaders worldwide as part of their study called “The Business of Sustainability.” The authors reported “a material gap between intent and action at most companies” they examined.
Which begs the question, if business is so slow to embrace sustainability, how can there be so much green marketing? I believe the explanation is this: Sustainability and green are two different concepts. They are not interchangeable. As The Natural Step Network tells us in their workshops, green is focused on details, tactics, environment and “less bad.” Sustainability is focused on whole systems, strategy, triple bottom line (not just the environment) and aligning with nature’s cyclical processes.
Retire green marketing
If I had my way, I’d retire green marketing, as I argued in a previous post. Green marketing in business is first and foremost product marketing. And as we know, you don’t have to be a sustainable business to produce a “green” product.
As the studies above indicate, businesses that adhere to the principles of sustainability and operate from a triple-bottom-line (people, planet, profit) philosophy are uncommon. That means the majority of “green” products are produced, marketed and/or sold by companies that fall far short of the sustainability ideal.
I’m not opposed to green products. We need more of them. But relying on otherwise brown companies to produce green products is at best a “less bad” situation (and clearly the primary reason for greenwashing). If we are to solve the pressing social and environmental issues of our time — clean water, peak oil, over-consumption, income inequity, population growth, climate change — we need businesses fully on board with sustainability.
Fusing brand, culture, sustainability
And here’s where the Sustainable Communicator comes in. This mythical professional fuses the practices of branding, culture change and sustainability into something completely new.
The Sustainable Communicator is a result of a fundamental shift in focus and responsibility:
- from marketing green products to building sustainable businesses
- from creating brand image to living your brand
- from specialist in communications to leader in sustainability, organizational development and branding
Yes, the Sustainable Communicator remains an expert in communications. That goes without saying. She is also a leader in sustainability, triple-bottom-line management, culture change and collaboration.
I admit this is a tall order and unrealistic in the short term. But if business is going to be truly sustainable, it needs new leaders to emerge in all disciplines, including communications. Because we know there’s a significant gap between what business intends to do and what it’s actually doing in the areas of social and environmental responsibility.
The need to close this gap is the impetus behind my firm’s recent formation of the Sustainable Branding Collaborative and 4D Branding process.
Closing the intent vs. action gap
Communications professionals have a major role to play here. We can’t continue green marketing and pretend the gap doesn’t exist. The buck stops with us, as storytellers, to only share what we know to be true and to accurately reflect where our companies are along the path of sustainability.
But storytelling alone is too passive, too removed from the ultimate need of businesses to move farther and faster toward become truly sustainable. The Sustainable Communicator is more than a storyteller. She’s a hands-on leader in transforming business. And it’s in that experience she recognizes green marketing is a thing of the past.
Tags: brand, CSR, culture change, going green, green marketing, greenwashing, Sustainability, sustainability principles, sustainable branding, sustainable business, sustainable communicator, The Natural Step, triple bottom line
Posted in Branding, Business & Economics, Communications, Marketing, Sustainability, Uncategorized | No Comments »
Don’t wait on triple-bottom-line accounting standard
Brian Setzler is a staunch advocate of triple-bottom-line (TBL) business practices. He’s also a realistic CPA in Portland, Ore. who knows we’re years away from internationally recognized and adopted rules for TBL accounting.
Brian and I have been each other’s client: I helped him define the brand of his new firm TriLibrium and his firm did my taxes. I figured he’d be the perfect person to give me a read on where TBL stands in the accounting profession. Not surprisingly, there’s much work to be done, starting with general awareness.
“Half or more of accountants today don’t even know what ‘triple bottom line’ means,” Brian says. Having recently completed an MBA in sustainability, Brian sees business schools increasingly doing their parts to introduce and teach the concept. But a good understanding of TBL principles among professional accountants is uncommon. Even more rare are accountants such as Brian who make TBL practices the cornerstone of their business.
Brian believes it could be 15-20 years or more before governing bodies in accounting expand rules to include environmental and social performance reporting, in addition to financial. He points to the years it took the U.S. Financial Accounting Services Board (FASB) and SEC to agree on moving from Generally Accepted Accounting Practices (GAAP) to International Financial Reporting Standards (IFRS). The official move to IFRS in the U.S. is still five years off. The point being, the wheels of accounting governance move slowly. Getting to a TBL version of IFRS is years down the road.
Taking matters into your own hands
That doesn’t mean individual businesses shouldn’t take matters into their own hands when it comes to accounting for their environmental footprint and social impact. There are plenty of sustainability consultants and tools that can help.
Brian and his firm aren’t waiting for the world to converge on international TBL standards. “We hold a very high bar for ourselves.” Despite being a small business, TriLibrium is making a significant investment in producing a sustainability report based on the Global Reporting Initiative guidelines. “It’s one of the things that separates the real deal from the wannabes in sustainability,” he says.
For Brian, adopting the triple bottom line is akin to the move to PC-based business systems 25 years ago. “It’s just the way business is going. It’s the future of business.” And as more companies such as Wal-Mart push their sustainability standards down into their supply chain, it will no longer be enough to say you’re green. “In the future it will be, ‘Prove it. Show me, don’t just tell me.’ If you’re not doing this today, you’re missing the boat.”
Tags: accounting, Brian Setzler, CPA, Global Reporting Initiative, Sustainability, TriLibrium, triple bottom line
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Where being tough meets doing good
Alysa Rose, president of Rejuvenation, could feel the culture of her company drifting a couple years ago. She could see it in the lost sense of urgency, and she could hear it in the voices of her employees.
“The most heartbreaking quote I heard from an employee, a relatively new employee, was: ‘When I got offered a job at Rejuvenation, a friend said, Well that’s great. Once you’re hired at Rejuvenation, you’re never fired.’ And I thought, wow, that’s not what a healthy culture is about. It’s about people contributing and making the business stronger and being accountable for that.”
I spoke with Alysa a couple times earlier this month as part of a series of interviews I’m planning with leaders of sustainable, privately owned businesses to gather and share an inside look into operating a triple-bottom-line business. It’s important to understand that Rejuvenation has a well-deserved reputation for its socially responsible business practices, built painstakingly since its founding in 1977. Based in Portland, Ore., the privately held company is America’s largest manufacturer and leading direct marketer of authentic reproduction lighting and house parts. It goes to great lengths to minimize its impact on the environment and support the causes that contribute to livable communities.
In the circles of corporate social responsibility, “doing well by doing good” is practically a business mantra. And under the leadership of Alysa and founder/owner Jim Kelly, Rejuvenation knows what it means to do good and to do well. But as Alysa’s experience in her business demonstrates: Doing good socially and environmentally does not guarantee financial success.
“It’s important to be very clear-headed about it all. You can’t do good unless you’re making money. You’ve got to make money. That’s where you have to start. You have to have an exceptional business plan that drives profitability. Because if you want to give back you have to have a base to give back from. It’s hard enough to run a good business; complicate it by being mission-driven or values-driven and you’ve got to have a damn good business model. I think that’s why Rejuvenation is successful.”
Ass on the line
Alysa and Jim know the importance of profitability; unfortunately, as became evident in 2007, too few managers and employees in their company were as clear-headed on the financial front.
“People really wanted to work at Rejuvenation, not because they were excited about contributing to our growth and profitability, but because we had a reputation for treating everybody so well and they wanted to come along for that ride. It was out of balance. Our performance started suffering.”
That’s when Jim and Alysa added a seventh core value, sans sugar coating. They called it “ass on the line.” They considered calling it accountability but decided that sounded too “corporate” and easy to dismiss. To drive home their message, Jim and Alysa met with every 
employee in small groups and made it abundantly clear what would be expected of them going forward.
“We asked them to make a commitment. I said, ‘Don’t take this lightly. Take this in. Go home. Think about it, talk about it with your loved ones and make a commitment whether you want to be here or not.'”
As it turns out, some employees and managers were uncomfortable with the much higher expectations of accountability and decided to quit. In hindsight, Alysa says, she and Jim could have presented the information in a less threatening way, “but we are in a much better place now.”
Having halted the cultural drift before the recession took root proved fortuitous. “I can say we are leaner, and we are tougher and quicker,” Alysa says. That has left the company far better equipped to ride out these tough times.
When values collide
While “ass on the line” has had its desired effect in building financial accountability, it doesn’t mean social and environmental responsibilities are any less important at Rejuvenation. When values collide, as they frequently do, Alysa’s team takes the challenge head on.
“The point is we have those discussions. Does it add complexity? Yes. Does it add a degree of difficulty? Yes. Does it add time in most situations? Yes. And that’s just how it is. And I think it’s a struggle for some. I think it’s a struggle for business managers who come from a more straightforward environment. And it might be a little more complex for employees. But it’s also much more rich.”
While the company has worked hard to integrate “ass on the line” into its culture, Alysa says it’s not the company value she holds closest.
“Of all our values, ‘goodness’ is the shortest one. That’s the one that gets me up in the morning. If you’re going to dedicate your life to something or even a few years to something, you want to believe that doing it is going to leave the world a better place. So the goodness is that the world is a better place because Rejuvenation is here. We employ people. We provide great products. We preserve old buildings. We give back to our community financially. We educate our employees.”
And they teach the rest of us in business: Sometimes you have to be tough to do good.
Tags: alysa rose, company values, mission-driven, Rejuvenation, socially responsible, Sustainability, triple bottom line
Posted in Business & Economics, Marketing, Oregon, Sustainability | No Comments »
Imperfect triple bottom line far better than alternative
Sustainable Industries magazine asks the question: “Is triple-bottom-line accounting really possible?” From their reporting, the answer appears to be not yet. The article quotes a San Francisco attorney:
“The notion of triple-bottom-line accounting assumes or incorporates the idea in the nomenclature that there’s a standard…The reality is, there isn’t.”
He is referring to the absence of a unit of measure that works across each of the three dimensions of economic, social and environmental accountability. Right now, environmental or social investments or decisions tend to be evaluated by the one measurement businesspeople best understand: financial ROI. In other words, the one bottom line that has always been with us. As a result, decisions that would appear to benefit the environment or community, but hurt profitability, are too easily dismissed. As in, we can’t afford to do the right thing.
I believe we are making the notion of the triple bottom line (TBL) too complex. And that’s preventing businesses from embracing its simple principle, which is to strike a balance among the sometimes competing interests of making money, protecting the environment and supporting our communities.
As Sustainable Industries observes, financial accounting over the course of many years has “established standardized, legal frameworks for what to measure, how to measure it, how to report it and how to interpret it.” The environmental and social components of the TBL are far from reaching that status. And yet, businesses can’t let that stop them from at least trying to find balance in their decision making, even when social or environmental outcomes may be difficult to measure and value.
Consider today’s financial crisis. Fingers are pointing in every direction, and there is indeed plenty of blame to go around: greedy investors, lenders and home buyers, lax regulators, gutless politicians, to name a few. But I can’t imagine we’d be in this mess if business was guided by the triple bottom line, even as it’s loosely understood today:
- Would mortgage lenders concerned for their customers and communities ever have offered $400,000 loans to people with no proof of income or assets?
- Would Wall St. investors ever have purchased these so-called subprime loans and packaged them for sale as low-risk securities if they were thinking of more than just maximizing profit?
- Would government ever have let investors acquire and trade trillions of dollars of these securities without public scrutiny if they actually felt obligated to protect the individual taxpayer?
We’re seeing now, in the prospect of a $700 billion taxpayer bailout, what this country’s obsession with making money has cost us. The financial bottom line alone is like the presidency without Congress and the Supreme Court: There are no checks and balances. The only brakes on economic excesses are wrenching recessions, if not depressions, after which we’re back to business as usual. How quickly did we move from the dotcom bubble to the housing bubble?
To return to the question the magazine asked: Maybe triple-bottom-line accounting isn’t possible. But there’s no excuse any longer for pretending our unfettered pursuit of profit is the answer.
Tags: accounting, bailout, financial crisis, mortgage lenders, Sustainable Industries, triple bottom line, Wall St.
Posted in Business & Economics, Current Affairs, Sustainability | No Comments »