Chief Sustainability Officer Role in Corporations
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Chief Sustainability Officer Role in Corporations

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Study of 1200 organization investigating what you need to know before your hire a Chief Sustainability Officer for your company.

Study of 1200 organization investigating what you need to know before your hire a Chief Sustainability Officer for your company.

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  • Sustainability is a major focus of larger and medium sized corporations. It makes business sense for EH&S departments to be full engaged in corporate sustainability best practice measures. Companies are looking for ways to reduce the cost of compliance, improve the safety of people, products, and processes, and surpass corporate goals around Sustainability. Some good research on the topic is provided in Aberdeen Research's Compliance Management in Environment, Health & Safety (download here: http://bit.ly/JsO7Kv ) will provide a roadmap for success, based on the best practices adopted by over 175 executives to effectively manage the above challenges. I think we will continue to see this as a growing trend.
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Chief Sustainability Officer Role in Corporations Chief Sustainability Officer Role in Corporations Presentation Transcript

  • OCTOBER 15, 2008 Going Green? DON’T HIRE A SUSTAINABILITY CHIEF UNTIL YOU READ THIS STUDY! Hudson Gain Studies The Chief Sustainability Officer Role In Corporations
  • Healthy organizationshave always looked for ways to reduce costs in the near term, appeal to customers and employees, and ensure the long term viability of the organization. The current trend toward sustainability in organizations is exciting because it supports all of these business objectives. Hudson Gain Corporation, the leadership solutions firm, has conducted a comprehensive study on sustainability and leadership. Specifically we reviewed the role of the head of sustainability in organi- zations. The study includes research on over 1200 companies, and leverages interviews with over 60 sustainability executives. This document provides insight on the key responsibilities and challenges of the sustainability boss, as well as guidance for creating and filling the role. We hope this study will prove useful to any organization seeking to fill the role of chief sustainability officer, whether creating the role for the first time or upgrading the function, or whether filling the role with an internal candi- date or conducting an external search for the right sustainability leader.
  • Table of Contents Introduction ...................................................................................................................................................................... 4 Scope And Methodology .................................................................................................................................................. 7 Conclusions ...................................................................................................................................................................... 9 Case Study........................................................................................................................................................................ 11 Requirements For The Corporate Head Of Sustainability Job .................................................................................... 13 Challenges Of Sitting CSOs............................................................................................................................................ 23 Top Sustainability Leadership – Companies And People ............................................................................................25 Looking Ahead To Sustainability 1.0 And 2.0 ................................................................................................................28 Best Quotes From Our Interviews ..................................................................................................................................31 Credits ..............................................................................................................................................................................33 3
  • In this study we provide a definition of sustainability, Introduction “must have” criteria for the top sustainability job in The coming decades will prove to be a trying and excit- organizations who are selecting someone to lead the ing journey where organizations and their leaders will sustainability function, a list of the top three sustainabil- find solutions to capture elusive energy sources, find ity bosses, and other great findings and quotes from our enough water for growing popu- research of over 1200 organiza- lations without polluting too Now is the time for boards, CEOs, tions, and our interviews with much of it, slow global climate CFOs and HR executives to ask, over 60 sustainability execu- “Does my organization have the change, and preserve the tives. right sustainability role to win this ecosystem that supports all challenge?” For the purposes of this study, forms of life, including cus- we sometimes refer to an orga- tomers and companies. Now is nization’s top role in sustainability as the “Chief the time for boards, CEOs, CFOs and HR executives to Sustainability Officer” or as the “CSO.” In practice, the ask, “Does my organization have the right sustainabili- actual job titles vary greatly and include terms such as ty role to win this challenge? Do we have the right Green, Sustainability, Environment, Community and person in this critical role?” Social Responsibility. In other cases the role was a sub- 4
  • set of a leadership role in another function such as through sustainable business practices. The philoso- Operations or Communications. phies behind many of the current organizational sustainability practices can be traced back to the Sustainability: What Is It? Brundtland Commission (World Commission on Environment and Development, 1987), which defines When companies and decision makers start to look sustainability as “meeting the needs of the present at sustainability as an issue, they are bombarded without compromising the ability of future genera- with reams of data about green, alternative energy, tions to meet their own needs.” recycling, carbon footprint, responsibility, and the seemingly endless variations on the definition of Our study focused on the voice of the executives who “sustainability.” You might find many debates about are leading sustainability efforts on behalf of major the motives of big corporations that publicize their corporations and non-profits, and in this elite circle sustainability programs, versus the argument that of sustainability executives, there is a tendency the largest organizations are the ones who stand to toward a consistent definition of “sustainability” that make the biggest impact for the planet. If you find all is often referred to as the “triple bottom line.” The of this daunting, we have encouraging news for you. three Ps of the triple bottom line are Profit, People There are simple long-standing principles that organ- and Planet. izations use to measure and improve their business 5
  • PROFIT – from reducing waste and costs today, to ensuring that resources will be available for sustainable profitable operations long term. PEOPLE – from compliance in HR, OSHA and cus- tomer safety today, to social responsibility and ensuring the sustainable well-being of future genera- tions of customers and employees. PLANET – from environmental compliance today, to long term global environmental viability to sustain the ecosystem that human life and commerce depend on. While each organization’s definition might vary, the “triple bottom line” definition at least influences sus- tainability practices in most companies with a commitment to sustainability. 6
  • We focused our study primarily on larger global public Scope And Methodology: Leading and private organizations, and we also included several Companies In Sustainability mid sized specialty companies, universities and other Of 1241 companies that are on one or more of the organizations with advanced sustainability practices. In Fortune 500, FT Global 500 or the Forbes Largest total we reviewed the credentials of 214 executives with Private Companies lists, fewer than half of the compa- key responsibility for sustainability, and we engaged 61 nies list in their public documents an executive with at of them in a structured individual interview. least partial responsibility for sustainability and the To maximize the degree to which participants could environment. Most surprising is that of the 1241 com- be open and transparent with us, we agreed to make panies researched, there were only a total of 191 their participation and their employers anonymous executives listed with responsibility for sustainability and their comments unattributed. As we conducted (and/or the environment) explicitly indicated in their our research and interviews, the spirit of the sustain- job title. As it turned out, many other companies had ability executive community was remarkable. The someone performing sustainability duties and provid- executives we interviewed had a clear spirit of shar- ing cross functional leadership to green activities that ing, and a true mission of preserving the environment were bubbling up in various functions throughout the and its resources for future generations, and they organization. were equally committed to their fiduciary responsi- 7
  • bility to the employers, shareholders, customers and communities they impact. Companies Represented in the Interviews: For this study, Hudson Gain conducted original research and interviews with sustainability leaders from leading companies in a range of sectors including: Automobile Pharmaceuticals Manufacturers Retailers Chemical Companies Financial Services Consumer Products Business Services Energy Producers Technology and Computer Media & Publishing Products Food and Beverage Universities Healthcare Services including Hospital Systems 8
  • ensures enough clean water, soil, air and energy to sup- Conclusions port growing populations, it will make it very hard for The authors of this study conclude that it will continue any business to be in business. to be a competitive advantage for a company to have a Further, it is clear that there is a very limited talent pool sustainability function. The reason is that many initia- of experienced sustainability executives. As noted ear- tives yield meaningful near term cost savings. lier just over 200 sustainability bosses could be Increasingly, sustainability leaders are identifying and identified from over 1200 companies. For the typical making progress toward initiatives that promise long newly created position, the Board, CEO, CFO and/or HR term efficiencies. Experienced sustainability leaders would determine the required skills and qualifications, are also keen to strike a balance, and can point to just interview candidates (internal and external) and as many initiatives that present extreme long term ROI appoint someone to the role. Because of the newness challenges. One head of sustainability said, “We can be of sustainability as a dedicated business function, and the greenest company on the planet but if we are losing because of the shortage of talent, instead of appointing money, we won’t be in business any longer.” He and someone to set a strategy, marshal resources and others also talked about the importance of the long engage the organization, many CEOs are simply handing view, reinforcing that sustainability is a function that off the sustainability responsibilities to an existing looks well beyond the near term costs and savings. employee whose main credentials are an interest in sus- After all, if businesses do not operate in a way that 9
  • tainability and strong reputation in the company. While cial to the successful hiring and development of sus- many sustainability chiefs have flourished in this sce- tainability talent. nario, this hiring strategy runs the risk of mixed results. The authors of this study believe that Wall Street will Because of the newness of a formalized sustainability ultimately reward sustainable practices. Sustainable function, there simply are very few people with more business practices can impact the following metrics, than just a few years of experience. and when they do, they will be posi- Boards, CEOs, CFOs and HR need to tively factored into the valuation of Wall Street will take a more systematic approach to companies: designing the role, and selecting ultimately reward from available talent internally and • cost savings achieved through sustainable practices externally, and developing and sup- reduction of waste porting that talent (see more under • reduced liability derived from more responsible han- “Requirements for the Chief of Sustainability Job”). dling of materials and pollutants During our interviews, innovation had a high coinci- • performance of a business based on their ability to dence with sustainability leaders who were finding attract and retain the most qualified employees solutions to the long term challenges. Screening for • long term viability of a business due to its access to innovation ability, and supporting innovation will be cru- sustainable resources and customer bases 10
  • The challenge for companies today is to select, appoint positive ROIs in the last few years. “Given that wasted and empower sustainability leaders who understand carbon usually equates to wasted dollars, it’s no sur- and act on this connection between sustainability, com- prise that many of these have been reduction or pany performance, and company valuation. efficiency projects” says Andrew Van Der Laan, lead for sustainability initiatives at Random House. “And it’s While there is a debate about become increasingly clear that our whether or not long term core business strategy and our “This was a project that prospects for Return on sustainability strategy are inextri- made good business sense, Investment (ROI) are realistic, we cably linked because of these even before we considered found at least one case study in efficiency opportunities.” the environmental benefits.” which ROI from long term sustain- ability activities was both realistic, A perfect example is Random and reflected in net present value (NPV) in the short House’s recent overhaul of their warehouse lighting. term. They replaced metal halide lights with fluorescent lights that used 40% less energy with no noticeable dif- ference in light output. Additionally, they installed Case Study motion detectors and timers to ensure that lights were Random House, Inc. is one company that has imple- always turned off in unoccupied portions of the facility, mented a number of environmental initiatives with 11
  • which increased the energy savings. This upgrade cost However, he points out that green was definitely part of Random House just over $800,000, but the investment the pitch, saying “We highlighted the fact that the has been well worth it. The initial analysis suggested regional grid supplying our warehouse facility derives that the upgrade would reduce annual energy con- much of its energy from coal, and therefore produced sumption by about 3.4 million kWhs, generating nearly 50% greater emissions than the electricity we were $400,000 in annual savings, and that’s been borne out using at other facilities. That let us talk about the addi- by the actual results in the first nine months after the tional benefit of reducing more emissions per dollar project was completed. That’s a payback period of just invested than would have been possible at any other over two years even at current electricity prices, which facility.” Van Der Laan notes have been increasing by double digit percentages for the last several years. “This was a project that made good business sense, even before we considered the environmental benefits,” he says. 12
  • sustainability has on finances and reporting.” Many of Requirements For The Corporate the CSOs also warned against making communications Head Of Sustainability Job the cornerstone of the strategy – if it is all talk and no We asked sustainability leaders what the requirements science, or no action, the initiatives become hollow and of the job are, and specifically, we asked what qualities tend to fail. are “universal” regardless of size of company or indus- TECHNOLOGY – A good CSO candidate needs to be try, for-profit or non-profit. As a control we also asked generally familiar with the technology of the organiza- what they felt was specific to their industry or sector. tion he or she serves as well as the technology of Below are the top “universal” qualities, criteria and sustainability (energy, waste, carbon emissions, etc.) characteristics of effective sustainability executives: and how their company creates footprint in these COMMUNICATION – Virtually everyone we inter- areas. One CSO said, “The technology aspects of ener- viewed placed a high importance on communications gy sustainability are universal.” The same can be skills. CSOs need to educate and persuade, and they argued for the science of waste, carbon emissions and need to mobilize resources and inspire people to many other technological components of sustainability action. Communication is also seen as a lever for driv- strategy. ing action by creating awareness of financial aspects. FINANCIAL RESPONSIBILITY – While most of the One leader encouraged, “sensitize people to the effect CSOs agreed there are long term benefits that compa- 13
  • nies often strive for, the great majority cited short term suing these with transparency and for the right rea- opportunities to save money with sustainability prac- sons. tices. One executive told us that it is much easier to SUPPLY CHAIN – CSOs need to understand the entire build support for sustainability, “if it saves money, and supply chain in order to reduce footprint at each stage if it improves your standing on Wall Street.” of design, sourcing, producing and delivering the goods MEASUREMENT – Gather data, establish your base- and services of their organization. The most advanced line, benchmark to your peers, set goals, and sustainability programs are making changes in their continuously improve, measure, and start the cycle all own operations, throughout their supply chain, and in over again. their suppliers’ and customers’ behavior. They’re driv- ing customer behavior by both educating their INNOVATION – Most of the CSOs were very modest customers, and by leading R&D to change products in a about what is happening in the field today, and stressed way that is conducive to lower energy use, greater recy- the urgency to find new drivers of sustainability. To clability and reduced end of use impact. paraphrase the comments of many of our interviewees - what is going on now is not enough. OPERATIONS, STRUCTURE AND CULTURE – CSOs need an understanding of how structure and culture ETHICS – Keeping balance among the three Ps of the works in order to have the type of impact required to triple bottom line - profits, people and planet - and pur- make sustainability a priority for every department and 14
  • division in the organization, and have to be empowered • Operational expertise such as understanding of cool- by Boards, CEOs, CFOs and HR with the right authority ing systems and facilities. and resources to get the job done. As one person put it, • Deep technical expertise in the underlying science “Sustainability is a direction that every department must and engineering that will ultimately drive change. take. It’s a matrix organization; I have to partner with all • Ability to foster complete change in a business, or as the functions. Sustainability is about alignment.” one CSO put it, “we’ve been a natural gas company The above requirements were voiced consistently during [for many decades]; there won’t be any gas compa- our interviews with CSOs. A number of other worthy nies in the next century.” requirements were suggested as well, and they include: • Ability to marshal support. • Support from the CEO, the C-suite and the board. Yet • Commitment to the 3 P’s of sustainability. one sustainability leader added, “what the C-suite is • Ability to change culture, and make sustainability looking for is a little shy of what is needed.” part of every job. • Ability to influence all levels and functions. • Quantitative approach, measurement, ability to quan- • Ability to generate cost savings, and ability to per- tify carbon footprint and other parameters. suade others about importance of long term benefits • Financial approach to showing ROI. that may incur higher costs today. 15
  • This is a breed of executive with multifaceted motiva- • Partner with the communications function. tions. What will lure them is the opportunity to have • Combination of business and environmental back- the biggest, most enduring impact on the largest num- grounds. ber of constituents. If your company is ready to • Measurable prior success in sustainability. support such challenges and benefit from conquering • Understand your specific industry, and understand such challenges, then you will be in position to attract the best CSO talent. most of what gets done in sustainability is transfer- able across industries. Even if your company already has a sustainability func- • Ability to map the company’s impact. tion, expect it will continuously change in the coming • Strong auditing skills. years, as new, more impactful best practices emerge. Organizations should place in the role someone who • Strong vendor selection and management skills. leads, innovates and builds, rather than someone who • Strong project management skills. operates or manages. Advice to companies looking to hire their first CSO and advice to new CSOs This is not your father’s career. Stock and cash alone will not lure a sustainability boss away from a top post. 16
  • Some additional advice from the panel of • Find a way to tie sustainability to values that already CSOs we interviewed exist in and drive your company. • Look for the right talent internally and externally to • “The better educated graduates want their personal lead the charge. values to align with the work. They want to work for • Use outside experts to get a fresh look at your com- someone they feel proud of, so the company policy pany and scope out the charter of your sustainability on sustainability and [corporate social responsibility] initiatives and role of the CSO. is a plus for recruitment.” • Like any business function, there needs to be a boss, • Communications is important to build support, but but like great HR makes everyone a better people avoid a communication-only strategy. manager, great CSOs will make sustainability part of • “Don’t over staff this thing. Building a big sustain- everyone’s job. ability shop signals this is an operation.” Rather, • Partner with government, Non-Governmental imbed sustainability in the culture, function as an Organizations (NGOs), academia. internal consultant, and “facilitate the process.” • Find the most supportive employees, and engage and • “Your board members should be from companies support them first. that are implementing sustainability.” 17
  • Other CSOs suggested alternatives to hiring a Hiring a Sustainability Boss from the Outside, CSO or Promoting from Within? • Board member with sustainability responsibility, to We asked our interviewees, when an organization is creat- act as a thought leader and catalyst on forward-look- ing a Sustainability role for the first time, whether they ing sustainability opportunities, and a watchdog on should hire from the outside, or develop from within. The norms and compliance. results are as follows: • “If someone has a passion for improving the business [and a passion for improving the business’s impact on 16.4% 26.3% the world], then I would go with the internal person Outside Outside if you don’t have and support them with consultants.” someone inside Making a commitment to hire a CSO is significant for any organization, and sustainability heads are in short supply. 36% 21.3% Depends* So the competition to find and identify qualified CSOs will Inside create a fair amount of churn in the marketplace. The best sustainability executives insist on support from the top. One sitting sustainability head said, if he was approached about a * depends on company size, culture, need for company knowledge versus sustain- new role, “I would want to interview with the top person. If ability knowledge, potential need for a new perspective and/or change management ability, etc. there is no connection or synergy, it is not going to work.” 18
  • Where CSOs Come From • Public Relations and Communications During the interviews, CSOs reflected on their back- • Strategy Consulting grounds more as springboards than as prerequisites. • Supply Chain In practice, CSOs come from a wide range of educa- The above functional experience in and of itself does tional backgrounds, business function experience and not make someone qualified for the top sustainability industries. The following functions represent the areas job. The CSOs most recognized by their peers were from which many sitting sustainability executives built perceived to have strong people skills and an ability to their credentials: turn vision into action. As a broader talent pool, the • Change Management CSOs we interviewed demonstrated a passion about • Engineering and R&D the issues, and a motivation for continuous learning. • Environment and Safety Setting Standards • Finance and Audit Throughout the study and during the interviews it • Human Resources and Organizational Development became very clear that there is a short list of organiza- • Law and Compliance tions, councils and standard setting bodies that are • Operations shaping generally accepted practices in sustainability. 19
  • Before you hire or promote anyone to lead sustainabili- • World Business Council for Sustainable Development ty in your organization, ask them what they can teach www.wbcsd.org you about: • World Resources Institute www.wri.org • CERES Reporting www.ceres.org Additionally, sustainability leaders actively partner with specific organizations in their communities or in their • Dow Jones Sustainability Index www.sustainability- sector. A strong candidate for the top sustainability index.com post at your organization should be able to talk about • Environmental Protection Agency www.epa.gov their connections to and strategy for partnering with: • GRI Guidelines www.globalreporting.org • Universities, various • ISO 14001 www.iso.org • NGOs, various • Millennium Ecosystem Assessment www.maweb.org • Energy Utilities, various • National Resources Defense Council www.nrdc.org • US Green Building Council (and LEED certification) www.usgbc.org 20
  • Guide to Building CSO Talent from the Inside position, and be sure that the objectives of the role versus Buying Experience from the Outside align with the organization’s business objectives. If your organization has never had a sustainability head • Working with a talent acquisition expert (such as before, or if you are faced with replacing, expanding or your internal talent/staffing group or an outside upgrading the role, these seven steps will be vital to expert in sustainability leadership and executive your success. search), map out a search process that considers • Leadership team and Board meet to determine the both internal and external CSO talent. business objective for creating the sustainability role. • In the event the best candidate is internal, prepare (in Collectively envision and define what success should advance) a development plan for the newly appoint- look like one to three years in the future. Understand ed sustainability boss. Be prepared to invest in that adding this role may require a new level of col- training and/or coaching in soft skills such as com- laboration at the senior leadership team level. munication, influencing, leading, managing change, • Partner with an outside expert in sustainability lead- etc. Be prepared to invest in hard skills and certifica- tions in technology, audit, etc. ership to clarify role and responsibilities, build requirements and objectives for the sustainability 21
  • • In the event the best CSO candidate is external, pre- pare (in advance) an on-boarding plan that gets the outside hire up to speed on your culture. The best on-boarding programs involve multiple stakeholders, maximize engagement across the business, generate early wins and make the outside hire an insider more quickly. • Conduct the search including targeted candidate research, interviews, assessments and references. Ensure “apples to apples” comparison of sustainabili- ty talent by applying the same discipline for internal candidates as for external candidates. Make the hire. • Follow through on training, development and on- boarding. 22
  • targets in energy usage, pollution, recyclability of Challenges Of Sitting CSOs products, etc. Sustainability is not a zero-sum proposition. It can be • Showing the numbers to people, getting them to go implemented in ever increasing stages of profitability green. and employee engagement. As you create or fill the CSO role, be prepared to support and empower your • Reducing our footprint sustainability boss through a number of typical obsta- cles. Below are some of the specific challenges that • Helping customers reduce their footprint. CSOs voiced: • Transcending the organizational structure and cul- • Getting the organization engaged, pushing people ture, “from working with a housekeeper fishing beyond their comfort zone medical waste out of the garbage in a hospital to get- ting the CEO to issue a press release [or a new • Changing processes policy].” • Getting companies to act on their plans. • Leveraging those already engaged while educating • Getting the data you need to set a baseline, compare those who are not. to benchmarks, set a target, and measure against 23
  • • Getting the right mix of marketing/communications • Data collection: what are our usages, footprint, and and operational change and HR to make things happen. where. • Educating people in a way that makes them knowl- • Complexities of a post-off-shoring world: “electricity edgeable, confident and ultimately engaged in is more [expensive] in India than in North Carolina, making an impact. and the Indian facility emits more carbon than its North Carolina counterpart.” • Bring together all the disparate activities and resources in a manageable, understandable single process. 24
  • Their criteria for being a “Top CSO” were: Top Sustainability Leadership – • Creative, innovative and breaking new ground. Companies And People • Delivering results in sustainability across the 3 P’s of Skeptics are quick to question the motives or genuine- the Triple Bottom Line. ness of sustainability at companies like Wal-Mart or BP. • Great communicators. The fact is other companies nearly as large are doing nothing. If shareholders come to expect that compa- • Someone who sets a vision, gets the ball rolling, and nies continuously improve sustainability, which benefits measures success – typical in any function, but diffi- everyone, then we’ll ultimately have the Wal-Marts and cult in the new and sometimes elusive area of BPs to thank for getting the competition started, even if sustainability. they are not always seen as the perfect examples of • Freely sharing what they do with other companies. everything that can possibly be done. During the interviews the 61 participants in the study recommended 95 individuals and named over 120 companies as being noteworthy examples of top lead- ers in the creation and development of sustainability functions. 25
  • The Making of a Sustainability Success – COMPANIES MOST NOMINATED BY THEIR Featured Executive PEERS AS DOING THE MOST IN SUSTAINABILITY Dawn Rittenhouse joined DuPont in 1980 and has held Wal-Mart (10 mentions) positions in Technical Service, Sales, Marketing, and DuPont (8 mentions) Product Management within the Packaging and Industrial Polymers business and Crop Protection busi- Coke, Interface, Nike, and Starbucks (6 mentions each) nesses. In late 1997, she began working in the INDIVIDUALS RECOGNIZED BY THEIR PEERS corporate organization to assist DuPont businesses in AS TOP SUSTAINABILITY PROFESSIONALS integrating sustainability strategies into their strategy Ben Packard and business management processes. She leads VP Global Responsibility DuPont’s efforts at the World Business Council for Starbucks Sustainable Development (WBCSD) and the United Dawn Rittenhouse Nations Global Compact. She also manages the cor- Director, Sustainable Development DuPont porate recognition program for Sustainable Growth Excellence. In 2007 she also picked up responsibility Matt Kistler SVP Sustainability for DuPont’s efforts on climate change. She is current- Wal-Mart ly on the Board of ERTHNXT, the Advisory Committee of Bridges to Sustainability and the Education 26
  • Committee of the Delaware Nature Society. Dawn has puts science to work by creating sustainable solutions a double major in Chemistry and Economics from Duke essential to a better, safer, healthier life for people University. everywhere. Operating in more than 70 countries, DuPont offers a wide range of innovative products and services for markets including agriculture and food; A Note About DuPont building and construction; communications; and trans- DuPont is one of the first companies to publicly estab- portation. lish environmental goals which it started doing 18 years ago. It has broadened its sustainability commitments beyond internal footprint reduction to include market- driven targets for both revenue and research and development investment. The goals are tied directly to business growth, specifically to the development of safer and environmentally improved new products for key global markets. DuPont is a science-based prod- ucts and services company. Founded in 1802, DuPont 27
  • rigid material. We evaluated materials. The one we Looking Ahead To Sustainability went with was recycled bottles. It was the best kept 1.0 And 2.0 secret at [luxury car maker].” This CSO explained fur- Regardless of what industry you look at, there are basic ther that the company couldn’t tell customers that “1.0” sustainability practices that may seem like com- recycled bottles were in a [luxury car brand]. But it petitive advantages now, but will soon become eclipsed sparked an interest in other recycled materials, which by “2.0” level sustainability innovations. That said, led to “recycled compact discs in switches.” there are other industries or organizations, where tak- Sustainability goes back farther than that. You might ing a 2.0 approach now may be too disruptive, and recall returnable reusable soda bottles, or the diaper initiatives may not generate enough support to be service that picked up dirty diapers, and dropped off effective. The art of success will be gauging the right clean diapers. Perhaps reusable products will make a strategy for your business. come back. But sustainability goes back even farther Sustainability may have a long way to go, but it is noth- than these. A popular maker of environmentally ing new. One CSO told us that a U.S. based luxury car responsible consumer products, Seventh Generation, maker, during in 1980s “developed a new headliner, takes its name from the Great Law of the Iroquois [the covering on the interior roof]. It was a new prod- which states, “In our every deliberation, we must con- uct. We wanted to make the headliner out of a fairly sider the impact of our decisions on the next seven 28
  • Sustainability Version 1.0 generations.” Revitalizing timeless truths to drive a futuristic approach to business is working for Seventh • The sustainability boss is a C-level position, empow- Generation. Let’s take a look at where large organiza- ered to make sustainability integrated in the business tions are today, and where they are taking and part of everyone’s job. sustainability. We’re confident the future of your busi- • Educating your customer about the company’s cur- ness will benefit from this collective insight. rent sustainable practices. • Packaging made from recycled materials. Reactive Sustainability Practices (pre-1.0) • Eliminating secondary packaging. • Communications or legal or regulatory affairs related • Reducing energy usage in plants, offices and via cor- activities only. porate policies such as reducing executive air travel. • Traditional ‘environmental’ function steeped in safety • Retooling and reorganizing plants for more sustain- and compliance. able operations. • Biggest reason for activity is to save money. • Enabling the sustainable behavior of your employees, • Recycling programs. customers and of your suppliers. • Labeling products and packaging for recyclability. • Lighter paper that takes less energy to ship and less energy to cart away to recycle. 29
  • • Conducting sustainability audits, and managing peo- • Networked power supplies in computer networks: ple and resources to improve key sustainability when users turn off computers, the network detects metrics. One CSO cited, “It is not a top down process . what peripherals, servers and cooling systems won’t . . some of our most exciting savings with energy use be needed, and switches them off too. came from challenging the employees on the floor” • Regenerate energy from the heat from computers, battery chargers, power supplies and servers to con- Sustainability Version 2.0 tribute to the generation of electricity. • Agenda of “zero footprint”. • Designing for the sustainability at each phase of the • Normal business operating at a negative carbon foot- product’s creation, production, use and disposal. For print (and possibly selling carbon offsets as a example, one CSO suggested, “in electronics, reducing by-product) rather than buying carbon offsets to energy use in the products, and reducing the toxins make normal operations carbon neutral. that are released from the products at disposal.” • Outside verification of the sustainability audit, “a lot • Popularizing the consumption of foods and bever- of people are suggesting Carbon Offsetting should ages at room temperature for foods and beverages fall under Sarbanes Oxley”. that don’t require refrigeration such as soft drinks. • Redesigning products for sustainable manufactura- • Influence and measure the rate at which your prod- bility. ucts are recycled after use. 30
  • Examine “. . . the environmental fate of chemicals, Best Quotes from Our Interviews where do they go after use, what are the substitutes, “More and more the board is discussing [corporate are they worse . . .” social responsibility] and considering [it] when making “Europe is head and shoulders ahead of [the U.S.]” decisions.” “China has no environmental regulations; everything is “I can make buildings 100% [green], but then we won’t going to the air, the rivers. We [consumers] are pollut- be in business.” ing the planet so we can have cheap goods.” “Some employees are pushing for us to change faster “We have to end our ‘dependence on foreign oil’, that than we are. Younger employees tend to be more green. phrase has one too many words, we have to end our I think [buying into sustainability] is a generational dependence on oil period.” issue as much as an industry issue.” “We have an OD [organizational development] group “Lead customers rather than follow their lead. We that we lean on to move these issues forward.” research chemicals, and pull them before the govern- ment issues a warnings or a ban.” “Recycling isn’t true sustainability”, but another person added, “recycling is not saving the world, but it gets 31
  • people where they live. It is a visible, noticeable, inter- On behalf of a leading beverage company it was said, active program that is understood by everyone.” the perception is that bottles and water are its big sus- tainability issues. “The reality is [beverage company’s] “The chief consideration is a broad and strategic mind- biggest impact on the environment is its refrigeration.” set because sustainability is not about a single function. It’s really about the fact that the earth is about to dou- ble in population in the next couple of decades and the people in those areas that are about to double are in developing areas. They are becoming more affluent and will be vying for the same resources as we do. Sustainability affects all inputs.” 32
  • is founder of Green Your Culture and is a senior con- Credits sultant in the extended team at Hudson Gain About the Authors of this study: Corporation. James Celentano founded Hudson Gain Corporation in Hudson Gain would like to thank the many organiza- 2003, has 14 years of human resources, executive tions, sustainability professionals, consultants and search and leadership development experience and is members of academia who participated in this study. an adjunct professor at New York University. Sharing your insight and comments on an unattributed basis maximized the frankness of this study. Without Roger Thorne has over 25 years of experience in orga- your contributions this study would not have been pos- nizational development, process improvement, and sible. Additionally, we thank Andrew Van Der Laan and human resources leadership, and is a Managing Partner Random House for sharing their case study; we thank at Hudson Gain. Dawn Rittenhouse and DuPont for sharing their details Victoria Zelin has over 20 years of change management, for publication; and we thank Jonathan Cloud, the organizational development and executive search experi- entrepreneur-in-residence at the Sustainable Business ence, and is a Senior Vice President at Hudson Gain. Incubator at Fairleigh Dickinson University for his insight and feedback as we conceived of and conduct- Patricia Samperi has over 10 years of experience in ed this study. corporate communications and management consulting, 33
  • About Hudson Gain Contact Incorporated in New York in 2003 to deliver talent To discuss sustainability, leadership or any need your acquisition and talent development services, Hudson organization may have in executive search, human capital Gain Corporation is a boutique leadership solutions development or change management, feel free to firm serving the needs of client companies throughout directly contact Roger Thorne and Victoria Zelin. the world. Hudson Gain works with client organizations Roger Thorne to acquire leadership talent, accelerate the development Managing Partner of management and leadership skills among high poten- Hudson Gain Corporation roger.thorne@hudsongain.com tial managers and leaders, and provide guidance, 212 835 1601 support and solutions for companies in transition. Our service offerings include Executive Search, On-Boarding, Victoria Zelin Executive Assessment, Recruitment Process Design, Senior Vice President Hudson Gain Corporation Leadership Development, Talent Management, Sales victoria.zelin@hudsongain.com Effectiveness, Management and Communications Skills 212 835 1602 Training, Organizational Design, Employee Engagement for Leaders, Human Capital Aspects of Merger Integration, and Change Management for Sustainability. ©2008 Hudson Gain Corporation 34
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