How does a corporate culture of sustainability come to exist?

May 4, 2015

 

In the mid-noughties when sustainability was just emerging into corporate parlance, apart from a few ‘hero’ companies such as Patagonia there was no corporate culture of sustainability.  Instead there was a small but passionate band of mostly senior managers or directors often supported by a future thinking CEO.  As one of this band myself within Walmart I know from experience that its a tough call being tasked to go around the business and say to people who have been doing their jobs a certain way for years that they are doing it all wrong!

 

Fast forward to 2015 and every University in the UK runs multiple sustainability courses, especially at MSc level, corporates love to include pages and pages in their CSR reports or websites espousing their activity and progress and every worker is now challenged to be sustainable in their day to day jobs.  Such an amazing amount of progress in 10 years!

 

Having left Walmart in 2014 to set up my own consultancy, ETANTE, and now working across retail and also major FMCG and government, this picture is true across all these sectors.

 

Going back to those new graduates with their shiny new sustainability degrees, its insightful to ask their lecturers what motivated their students to sit these courses?  The answer consistently is that there are two types of students and they stand out clearly into which group they belong during their education.  The first group are passionate about impending climate change and wanting to help deliver the solution through business and the second, you could call then cynics, who believe that the need for sustainability experts will only increase and so its a great way to earn a bunch of cash with solid career prospects for the future.

 

If we had to pick a year when sustainability became mainstream then 2005 would be it.  This was the year that Walmart, one of the largest companies on the globe, publically pronounced their ‘Sustainability 360’ strategy to become a better business through reducing environmental impacts, supporting communities and helping people to lead better lives.  In the UK the supermarkets were swift to respond in turn as well as the now world-renowned Marks & Spencer’s ‘Plan A (because there is no Plan B).  For Walmart 2005 was certainly not the year where they built a corporate culture of sustainability, far from it.  The passionate drive of the CEO, Lee Scott, and their first ever Chief Sustainability Officer, Andy Ruben and his team, were the ones who got the strategy off the ground.  For Walmart the drive to embed it into culture was a direct response to the hard core business benefits that Andy’s team demonstrated.  They showed to cynics that using the ‘lens of sustainability’ to question and re-evaluate ways of working saves cash as well as helping the environment.  They then ensured that this was widely communicated across the business and externally through ‘Sustainability Milestone’ events, and an embryonic corporate culture of sustainability was built.

 

Moving to more recent times and Kingfisher’s strategy, ‘Net Positive’ stands out as revolutionary when it was launched in 2013 with its approach to not only ‘do less bad’ but to actually ‘make a positive impact’ and so overall to be net positive.  With 50 targets across the core areas of timber, energy, innovation and communities to be delivered by 2020 it’s certainly stretching.  In order to build a corporate culture of sustainability it’s crucial to know where the business is heading and to motivate staff to get behind delivery.  For Kingfisher this is enshrined in ‘Net Positive’, Walmart in ‘Sustainability 360’, M&S in ‘Plan A’ or others such as J Sainsbury’s in ‘20x20’ and Heineken in ‘Brewing a Better World’ but they all have in common a simple to understand purpose behind them and a defined direction of travel.  Not all the steps may yet be defined or known but the business knows where and by when it wants to achieve its sustainable purpose.

 

It’s crucial to embed the strategy into corporate culture and in doing so you usually find three kinds of people you need to influence.  The first cohort will care about doing the right thing and instantly align behind a well defined strategy, the second will be floaters who on a personal level will not be motivated but on a career level see the writing o the wall and to all intents and purposes get behind the strategy.  All of these motivations will embed the culture though how well it is delivered during tough economic times may differ.  The final group is those who ‘know’ the best way to do their jobs and will not be swerved off course by the small matter of a sustainability strategy.  In the early days of embedding sustainability into corporate culture this audience is the most disruptive and often the most vocal.

 

It’s important to take the time to engage this group though, as otherwise they could be working behind the scenes to unravel progress made.  The most effective solution is to ensure that the strategy is aligned to corporate core purpose and mission statement and so business growth and success.  By doing so they undermine both the function of the company and their own position by attacking it.

 

I’m sure that for many of you I’m teaching you to suck eggs, whilst for other readers you will be wondering how a corporate culture of sustainability can truly be created and embedded without offering incentives.  Going back to Walmart this was indeed the case for their Buyers, or Merchants.  This audience lives and breathes profit, loss, availability and margins and is incentivised to do so and any sustainability strategy that doesn’t take this into account is doomed to fail.  After all if you are focusing on more sustainable commodities or packaging fibre or similar, there is usually an incremental cost until the market catches up and normalises the sustainable behaviour.  This cost is likely to be a tough swallow for an audience motivated by the behaviours above, though not impossible.  In Walmart’s case they took the decision in 2013 to embed delivery of the strategy into the bonus structure.  The result of which was a increase in attention from this audience.

 

This discussion would not be complete without going full circle and looking at Patagonia as a model company for all the arguments above.  I haven’t focussed on them, as many would argue the progress made by a non-core ethical company like the ones above represents better case studies than those of an ethical company (making expensive products) but both have their place I believe.  If you haven’t read it yet then a must-read is ‘Let My People Go Surfing’ by Yvon Chouinard, its founder.  Whilst working inside major corporates I often reminded myself of Yvon’s strategy and philosophy when it was my role to embed sustainability and had the privilege whilst at Walmart to spend some time with Patagonia’s policy and communications people.

 

Patagonia was founded to make tools for climbers and developed into the company we know today selling outdoor equipment and clothing for a range of sports but always with an environmental edge.  Their mission statement reads ‘To build the best product, cause no unnecessary harm and use business to inspire and implement solutions to the environmental crisis’.  So then, taking the arguments above, a staff member at Patagonia whether in a shop, Home Office in California or worker in one of their production facilities is left in no doubt, especially as they furthermore train these workers and anyone responsible for delivery of policy on this, that the culture of the company they work for is to care about these issues.  It’s one and the same as their corporate core purpose and mission.

 

If asked whether sustainability is firmly embedded in all the major food and FMCG companies today, then the answer has to be ‘not yet’ but compared to 2005 its come a long way.  Let me give one final example of Unilever.  They launched in 2010 their ‘Sustainable Living Plan’ with its aim to decouple business growth from environmental damage.  As you would expect it carries specific 2020 goals and they regularly update on progress.  The real power behind this strategy, apart from their sheer size and scale, was that the CEO, Paul Polman, integrated CSR into business success.  In fact he stated at its launch that business success would be hampered without delivery of its goals and changed the way they report to allow longer term financial planning and thinking.  To Unilever sustainability is integral to their success and from this has been driven into their culture.  Its hard to find an Unilever colleague who is not affected by delivery of the strategy, in fact I’m yet to do so.

 

So in answering how a corporate culture of sustainability comes to exist it is not by accident.  It is by taking the time to understand the effect your business is having on the environment, on communities and how this will accelerate in the future.  Its then key to internalise these externalities, by that to build resilience and a different way of doing business to ensure the ability to succeed and grow profits in a resource scarce future and one where poverty is increasing not decreasing.  Once this has been defined the senior decision makers must take the time to review in the light of the core business strategy as its only by making the two align that real progress and a corporate culture of sustainability can be created.

 

Build it and they will come!  And if they don’t I’ll leave you with thoughts back to an internal session I once sat in with Lee Scott.  “Walmart is a train, and it’s a sustainable train!  We want you on board but make no mistake that unless you are going in the same direction as this train you will not be given a ticket...!”

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