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Embedding Ethics and Sustainability in Business and the Differences Between The Two


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A presentation on the differences between business ethics and sustainability, how companies approach the issues, some of the methods of doing so, and possible results and impacts on stakeholders and corporate performance

Published in: Business, Technology

Embedding Ethics and Sustainability in Business and the Differences Between The Two

  1. 1. Embedding  Ethics  and   Sustainability   Prague  College  Conference   June  5th  2014   Tobias  Webb,  founder,  InnovaCon  Forum     www.innovaCon-­‐  
  2. 2. So  what  are  we  talking  about  here?   It’s  important  to   disCnguish  between  ethics   and  sustainability  as  they   are  oLen  understood:     •  Ethics  are  how  your   people  act  every  day   beyond  what's  legally   required.  BUT  -­‐  Ethical   expectaCons  are  not   fixed,  they  evolve  over   Cme  
  3. 3. So  what  are  we  talking  about  here?     •  Sustainability  is  oLen   seen  to  be  more  about   how  your  company  uses   resources  and  affects  the   environment   •  Sustainability  is  evolving.   For  the  leaders  it  now   means  shiLing  towards   an  overall  posi2ve   impact  on  society  &  the   environment  
  4. 4. Interface  pic  here   Interface’s  state  of  the  art  factory  in  Sherpenzeel,  the  Netherlands.       The  company  is  seen  as  a  leader  in  sustainability  thinking  and  pracCces.       But  ‘ethical  leadership’  is  seen  as  slightly  more  problemaCc.  Why  is  this?  Discuss…  
  5. 5. How  does  ethics  relate  to   sustainability?     •  Well,  if  you  want  a  parCcular   agricultural  commodity  to  be   sustainable,  ethics  plays  a   role  in  how  you  treat  your   relaConships  with  farmers  of   that  crop     •  If  you  want  to  secure  supply   you  need  long-­‐term  trust.   That’s  built  on  a  series  of   mutually  beneficial  ac2ons,   not  the  purely  transacConal   nature  of  most  purchasing   relaConships  
  6. 6. Social  Enterprises  such  as  CoonConnect  are  now     being  set  up  to  bring  farmers  and  buyers  closer     together    
  7. 7. Ethical  Trading  means  different  things  to  different  people   Labour  condiCons  for  many  EU  firms   But  also  minimum  prices  for  commodiCes   See:  hp://   See:  hp://www.primark-­‐­‐work-­‐in-­‐summary/  
  8. 8. Sustainability  issues  are  oLen  misunderstood…  
  9. 9. Embedding  sustainability  is  easier  than   embedding  ethics  -­‐  Why?   •  Sustainability  (as  most  companies   interpret  it)  is  more  easily  measured.   i.e.  Carbon  emissions,  chemicals  use,   waste  generated  or  saved     •  Ethics  can  be  ‘measured’  to  a  degree   but  doing  so  is  more  complex     •  Why?  Because  we  are  dealing  with   people.  People  are  highly  complex   beings.  There  are  so  many  variables   with  regard  to  why  people  do  what   they  do.  Ethics  are  highly  subjec1ve:   •  E.g.  Edward  Snowden:  Ethical  or  not?  
  10. 10. Culture  audits:  A  useful  tool  (as  long  as  they  are  done  right!)  
  11. 11. Embedding  ethics  comes  from  both   leadership  and  culture   •  AcCve  Leadership:  with  clear   simple  acCons   •  Clear,  simple  expectaCons   •  Regular  re-­‐enforcement  of   these     •  Accountability  mechanisms   •  Visible  consequences   (reporCng,  firing)   •  Constant  celebraCons  of   success     •  Regular  involvement  of   everyone  in  “living  our  values”   •  But  this  is  not  easy…  
  12. 12. Ethics:  An  approach  or  a  standard?   Fundamental  differences  between  compliance   and  ethics.  Companies  confuse  the  two   and  have  “Ethics  and  Compliance  Officers”.   They  are  almost  always  lawyers,  who  focus  on   rules  rather  than  values.  This  leads  to  problems…   i.e.  Banking:  Heavily  rules  based,  not  values  based   If  ethics  is  a  standard  then  it  simply   becomes  compliance  with  a  set  of     wrien  rules     The  problem  with  a  rules-­‐based   Approach?  People  immediately   look  for  ways  around  the  rules  rather   than  considering  what  meets  their  values  
  13. 13. Yvon  Chouinard:  Patagonia  founder.   Author:  “Let  My  People  Go  Surfing”      
  14. 14. Embedding  sustainability  is  more   process  driven     A  six  stage  management  process:   (there  are  others)     Step  1:  Insight,  Research,   Benchmarking   Step  2:  Headline  goals:  Carbon,   safety   Step  3:  Establish  Baseline  for  Future   Progress   Step  4:  Allocate  Responsibility  for   AcCon   Step  5:  Public  ReporCng  of  Progress   Step  6:  Revisit  and  Challenge  Original   goals  
  15. 15. Lots  of  companies  now  have  headline  plans  to   help  them  mainstream  sustainability   •  Unilever:  “Sustainable  Living   Plan”   •  Nestle:  “CreaCng  Shared   Value”   •  Coca-­‐Cola:  “Deliver  for  Today,   Inspire  for  Tomorrow”   •  Marks  &  Spencer:  “Plan  A”   •  Sainsbury’s  “Twenty  by   Twenty”   •  Interface:  “Mission  Zero”   •  Asia  Pulp  &  Paper  /  Wilmar  /   Cargill…  
  16. 16. And  here  is  a  typical  set  of  headline  targets  to  embed  corporate  sustainability    
  17. 17. Industrial  companies  find  it  harder  to  come  up  with   ‘catchy’  names  for  their  sustainability  work.  Why?     •  Their  direct  footprint  is  much   higher  i.e.  carbon,  safety   •  Tackling  these  challenges  oLen   involves  serious  money     •  Their  names  are  less  known  to  the   public  /  consumers   •  However,  many  are  at  the   forefront  of  embedding   innovaCon:  Siemens,  GE,  Interface,   SKF,  Skanska,  BMW,  Dow,  DuPont,   Anglo  American  etc…   •  Even  large  B2B  Asian  firms  (APP)   ‘get’  sustainability  
  18. 18. Sustainability  requires  vision  and  strategy,  Ethics  are   oLen  more  tacCcal  (but  not  always)   •  Ethics  CAN  be:  “This  is  the  way  we   do  things  around  here,  every  day”   •  But  only  if  those  things  are  ethical   •  TradiConal  sustainability   paradigm:  “We  must  reduce  our   energy  use,  minimise  waste,   recycle,  and  help  our  employees/ suppliers  be  greener   •  Modern  sustainability  paradigm:   “Our  Vision  is  to  be  the  world's   most  sustainable  company  in  our   sector”     •  But  few  would  say  “we  will  be  the   most  ethical  company  in  the   world”  –  Why  is  this?  Discuss…  
  19. 19. Plan  A  pic  Marks  &  Spencer:  Simple  name  for  180  commitments  on  sustainable  business  
  20. 20. In  conclusion  (1)   •  Ethics  and  sustainability  ARE  different   •  Ethics  is  an  approach,  not  a  standard  set  of  behaviours   •  But  they  work  together  very  well  in  some  cases   •  You  can  be  a  company  that  works  on  sustainability  without   being  believed  to  be  ethical  (every  big  firm  has  a  plan)   •  But  you  can’t  be  ethical  in  the  long  term  without  being   much  more  sustainable  in  the  modern  sense   •  The  two  together  create  both  significant  opportuniCes  and   a  decision  making  framework  to  get  there,  and  stay  there   •  Large  companies  have  a  significant  challenges  given  ethics   are  subjecCve:  RelaCve  (local)  vs.  Universal  (global)  
  21. 21. In  conclusion  (2)   •  But:  It  is  not  easy.  The  bigger  a  company  is  the   harder  it  becomes  for  them  to  innovate,   embed  new  pracCces  and  be  consistently   ethical  in  their  day  to  day  work  –  and  to  keep   up  with  changing  expectaCons…   •  Some  sectors  have  very  serious/complex   sustainability  and  ethical  challenges:  Banking   and  Finance,  Mining,  Fossil  Fuels  
  22. 22. In  conclusion  (3)     •  The  BIG  challenge  is  scaling  smaller  company   pracCces  (Interface/Patagonia)  to  the  size  of   Unilever,  Nike  or  GE  etc  etc     •  Technology  is  speeding  up  change.  But   improved  incenCves  for  investors,  boards,   managers,  consumers  are  the  key   •  We’re  sCll  a  long  way  away  from  being   sustainable,  but  some  companies  have  made   great  progress  in  recent  years…  
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