Harvard Business Review – Increased Focus on Corporate Sustainability, Convening CEOs for Critical Conversations on the Theme

G&A's Sustainability Highlights (14.12.2017)
Dec 18, 2017 12:15 PM ET
Newsletter

Harvard Business Review is one of the most powerful of external influences for the corporate C-suite.  Ideas, concepts and themes appearing in the pages (digital and print) of HBR create important initiatives in American companies. HBR editors are focusing these days on corporate sustainability in various dimensions.

Remember the debut of the “Shared Value” by Professor Michael Porter? Many first saw that concept introduced in the HBR pages.  A current project of HBR is the “Future Economy Project,” looking at business sustainability agendas and engaging CEOs for discussion on the theme.

A “virtual” roundtable with CEO’s was conducted to identify major themes of interest or concern to the business leaders.  Participants in the dialogue included Andrew Liveris, Dow Chemical Company; Paul Polman, CEO of Unilever; Doug McMillon, CEO, Wal-Mart; Henry Paulson, former Secretary of the Treasury and Chair, Paulson Institute; Marne Levine, COO, Instagram/Facebook; Dominic Barton, Global Managing Partner, McKinsey & Co.

The discussion was led by three leading academics and an industry expert; highlights are presented for you in the Top Story in this issue.  Here are a few top lines for you:

Paul Polman/Unilever saw the challenge of corporate sustainability as more clearly defining the “tactical” and “systemic” issues. And defining the terminology.  On tactics: labeling claims need to be clear about what standards to develop, and disclosure and materiality.  Systemic: system change, moving from short-term focus in politics and finance, and changing consumer preferences & habits.  These need to change at the systems level; the first step is identifying the problem.

Several of the CEOs said that companies are “becoming gradually more sustainable,” not at the speed needed, or the scale needed in the view of the session conveners. 

Climate change is seen by CEOs in the context of minimizing risk; when more CEOs see this as an opportunity to drive innovations that are both financially and socially beneficial, “that will be interesting”.  CEO Andrew Liveris of Dow talked about his firm’s design of new and more sustainable product lines.

A shared observation:  Looking through the risk lens, if more companies did that, more product innovation and investment in more-resilient operations and supply chains would result. This can happen in different ways, such as value added by mitigation of 10% of carbon footprint.

An interesting part of the discussion was around the “ah-hah” moment that often occurs.  The transformation begins when there is a “spark” and things are seen in different ways.  The former CEO of Rainforest Alliance described that when corporate managers went into the field to see sustainability forestry, or sustainable farming, they are no longer “far removed” from it.  They see sustainability can be life-changing.

The Millennial generation has a different view of business in society; more senior managers have to take their views into consideration.  Along these lines, getting “others’” point of view is important. There has been a “sea change” in company-NGO engagement.  Company and NGO goals, expectations and parameters can be better aligned. A common language can evolve.

And investors’ points-of-view are important to the CEOs.  Unilever’s Polman and McKinsey CEO Dominic Barton talked about shifting their investor base to attract more investors who really care about long-term value creation.  But, the current emphasis on short-term in the investor universe is a challenge to address.

On long-term value:  One-in-five dollars in the USA is in ESG investments. Investors are interested in sustainability.  This creates an opportunity for companies. One of the focal points for companies could be the Sustainable Development Goals as roadmap for companies – leveraging the SDGs could help to create more systemic change.

A theme of the HBR: “We believe in climate change and we’re taking action.”  This was in part stimulated by the U.S. government’s withdrawal from the Paris Climate Agreement.  “The upside of the sustainability agenda is clear,” the project managers say. The pursuit of sustainable processes up and down the supply chain can translate into immediate savings (one example).  So, too, reducing energy use and embracing renewable energy.  There’s more information for you at: https://hbr.org/2017/08/future-economy

The academics convening the discussion above were:  Michael Toffel and Rebecca Henderson at Harvard Business School; Tensie Whelan, NYU Stern School of Business; and, Andrew Winston of Winston Eco-Strategies.

This is just the introduction of G&A's Sustainability Highlights newsletter this week. Click here to view the full issue.