We are at least 10 years into the corporate sustainability journey now, so what really significant changes have we achieved?
Perhaps the business world has focused on the wrong tasks? Could it be that, despite all the carbon neutrality claims, hundreds of Global Reporting Initiative [GRI] A+ reports and sustainability teams of ten or more people, companies have still not radically redesigned their core products and business models?
I believe that there has been far too much focus on companies wanting to look good, and not nearly enough attention paid to actually performing well.
The Corporate Sustainability Beauty Contest
It’s in the blood of companies to compete, to strive to be better than their peers. That has been the reason for the success of corporate sustainability, because businesses like to vie with each other to be the best in this area. But the end result of all the competition has been to encourage companies to give the impression of looking good while barely changing their ‘business as usual’ model. It’s hard to change the direction of a business, especially in the short term, but a disappointingly low level of achievement has nonetheless characterized the corporate sustainability beauty contest.
An entire industry has been created around this beauty contest, including thousands of labels, corporate responsibility (CR) report design agencies, boutique assurance providers, hundreds of awards with infinite categories, materiality matrix mavericks, investor questionnaires consultants, professional stakeholders looking to ‘engage’ with companies and all manner of membership organizations offering support networks for a hefty fee.
Service-provider directories in the field typically feature more than 500 such organizations offering to help businesses look more virtuous than their peers – what the marketing guys call ‘differentiation’.
Virtue vs. Sustainability
The problem with all this activity is that looking more virtuous doesn’t have anything to do with being more sustainable. We in the sustainability movement need to ask ourselves honestly whether we are pushing for actual change or whether we are merely helping companies to gloss over big issues by making them compete in irrelevant contests?
We offer companies the prospect of being able to make ‘100 percent natural’ products or to be the first company in their sector to become ‘carbon neutral.’ In short, we have been tremendously innovative in coming up with fairly meaningless stuff that is easy and quick to implement, or that can deliver nice stories and marketing claims, but frighteningly ineffective at producing anything that will affect actual performance.
Fully Embedded Sustainability
A 2010 Accenture survey of global CEOs found that 81 percent thought sustainability issues were ‘fully embedded’ into the strategy and operations of their company. They really think that having a CSR team reporting to public affairs with a nicely designed 150k report with some cherry-picked case studies and a set of qualitative targets plus a few quantitative targets on quick wins is ‘fully embedded’!
Fully embedded means sustainability is fully taken account of in all the products of the company. You are redesigning your products, your business models, and your entire value chain.
Somebody needs to speak out if we are to move towards something more meaningful. We need a proper comparative benchmark, so that companies can compete on what really matters products instead of companies.
A Starting Point
The next phase in sustainability has to be truly embedded by being focused on the product. We need to understand clearly the total footprint of a product throughout its lifecycle – that must be the starting point.
1. Consumer Impact
The first reason is that the main impacts of companies are outside their boundaries. The impact of a car is 80 percent in the consumer use phase, whether you look at carbon emissions or safety. For a consumer goods company such as Unilever, around 95 percent of a product’s impacts typically come from outside the company’s own operations. Traditional corporate reporting does not take this product life cycle into account.
2. Product Design
The second reason is that the key to sustainability lies in product design. If the impact of a product is in the raw materials, then redesign products using fewer raw materials, or use alternatives to them. If a product is a machine that consumes energy such as a car or a vacuum cleaner, then design a product that is more energy efficient.
3. Benchmark Products, not Companies
The third is that people don’t buy companies; people buy products. Companies spend a huge amount of time preparing corporate reports and filling SRI questionnaires that try to benchmark companies. But people do not buy companies, they want to know the impact of the TV or a tomato, not whether the producer ticks some artificial boxes or the company signs up to the Global Compact.
Full product transparency is having and providing a complete picture of the total impact of a product throughout its life. For the environmental impact this is much easier because it is standardized and can be measured in molecules equivalents. And with the arrival of EPDs (Environmental Product Declarations) and PCRs (Product Category Rules) full environmental transparency is relatively easy to achieve.
It is the next step in sustainability.
This article was originally published on CSRwire
Ramon Arratia has been named by The Guardian as one of the world’s top sustainable business tweeters (@RamonArratia). He is Sustainability Director at Interface EMEAI and author of Full Product Transparency, the latest title in a new series of concise sustainable business ebooks written by leading experts.