The Battle for Sustainability

Well, here we are again, another week and another instalment from Sustainability Inc. But first an interesting bit of news; Google spends $200m on another wind farm, now that is another step in the right direction. Despite, I am sure some people thinking this is just a cynical PR stunt. Particularly in light of the bad press Google have received about not paying their fair share of tax and Green Peace’s report on energy use by their servers being the same as San Diego’s, when operating at full strength.  But so what, this is another step in the right direction and sets a good example for big business and consumers. If you want to operate a large energy consuming business, then build a sustainable way of generating that energy. While at the same time developing more energy efficient ways of producing your goods and services.

Here is a link to the full article http://money.cnn.com/2013/01/09/technology/google-wind-farm/index.html

Now back to the usual, if you remember last week we looked at the importance of politics and policy in the sustainability arena. This week it is the turn of economics. There is of importance of in sustainability and that is as one of the three pillars of the triple bottom line that make up a sustainable business. But, in this article I intend to get under the skin of why it is important, looking at how sustainability and economics are at logger heads with each other and why an understanding of the progress being made in the economics/sustainability will aid a sustainability professional in their role.

Firstly, a basic definition of economics courtesy of Investepedia: -

‘A social science that studies how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants. Economics can generally be broken down into: macroeconomics, which concentrates on the behaviour of the aggregate economy; and microeconomics, which focuses on individual consumers.’

Read more: http://www.investopedia.com/terms/e/economics.asp#ixzz2Itd3lWAf

And now a definition of Sustainability: -

‘Sustainable development is development that meets the needs of the present without compromising the needs of future generations to meet their own needs’. (Brundtland, 1987)

Economics looks at the way scares resources are turned into goods that are consumed by the market, it does not look at how these stocks, either natural or human can be replenished which would support the consumption for future generations. Also, by economic definition it is only when something becomes scares that it becomes valuable. Meaning that sustainability works against economics, because it looks to make resources renewable.

The fundamentals of economics have not been rethought since the time of Adam Smith and ‘The Invisible Hand’ some 200 years ago, taking regulations, human culture, interaction and quality of life as given. Economic theory needs to be updated to take into account these new factors and this is where ‘sustainable economics’ comes in. 

Sustainable Economics is trying to be more inclusive, by including these factors, human, social, quality of life, see diagram above. Through doing this it also provides a good framework, which can be used to help business to become more sustainable, by meeting Government regulation, and abiding by new initiatives, improving the lives of its workers, which can boost productivity and create saving for the business. The framework can also be used as a tool to assess both sustainable socio- economic impacts the company would have on a State if it chooses to invest there. Which can give business leverage in securing favourable terms to invest in one state over another. Thus freeing up funds to be used to for investing in sustainable technology and practices at that plant, site etc.

Interesting Reading:

The Big Idea: The Sustainable Economy, (2011)

http://hbr.org/2011/10/the-sustainable-economy/ar/1

Harvard Business Review

Toward an Economics of Sustainability, (1997)

http://web.missouri.edu/ikerdj/papers/econ-sus.htm

World Watch Institute

http://www.worldwatch.org

The Institute of New Economic Thinking

http://ineteconomics.org

Politics of Sustainability!

Last week in Sustainability Inc., we listed the skills sets and areas of knowledge needed for sustainability professional, with a brief explanation of why the skills sets were important. This week I am going to start looking into the areas of knowledge and why they are important. The first to be unpacked will be politics and policy, which in my view are very important areas for sustainability professionals to have an understanding of. In this blog I will attempt to explain not only why it has become important, but I will also highlight some relevant areas of policy.

But first a quote that saliently illustrates the political link between Corporations, Society and Government: -  

“The important thing for business and society at large to understand is the limit to voluntary action, which is the point where government need to intervene. If we are to live within the earth’s capacity and share its resources equitably, economies must be transformed. That cannot be done by business alone”  (Cowe R and Porritt J, 2002)

Since this was written the politics have sharpened, with the global economy boom and spectacular crash in 2008, which has created mistrust with the financial sector and big business. Companies have also started to move into markets in the developing world, to create new revenue streams and increase their profits, which brings with it a new political dimension. The growing global populations and the industrialisation of developing countries is adding to pressures on natural resources which is increasing the cost to consumers, as the search for new reserves goes to new parts of the globe, creating more political tension and corporate disasters. Lastly, and by no means least is the increase in natural disasters and extreme weather incidences, which fuels the environment and climate change debate.

The effect this is having on society is dramatic, people are more aware of the environmental impact they are having on the world and want to do something about it, they are concerned about human rights and how people are treated across the globe.  It has created much cynicism about the corporate world and in the information age it is possible to find information on a company’s environmental record and working practices and if these are deemed unacceptable a company’s reputation can be damaged through the use of social media. The knock on effect has been that consumers want to buy products from companies that operate in a responsible way and shun those that do not.

This has lead to business and politics becoming ever more interconnected and because society is more engaged, so have politician. Which in turn brings new white papers, policy ideas and ultimately Government to intervene and facilitate the necessary shifts in behaviour to start answering the big questions around use of natural resources, the environment, energy generation and ethics.

Governments and International organisations have set to work creating a raft of policies and codes of practice for companies to follow. So of which are actions such as health and safety and others being the disclosure of information, creating a carrot and stick.  

Policy makes are aware of the power the consumer has over companies now, so they rely on public opinion as a stick and an increase in revenue as the carrot. An example of this type of policy is in the UK, where a new regulation came in in 2012 to help with carbon emission targets as set out in the Kyoto Protocol. Companies must publish their carbon emissions on an annual basis, not reduce them. Politicians are then able to say that they are not overly legislating business, with the aim being that companies reduce their carbon footprints voluntarily. The last, two voluntary codes of practice I shall highlight is the UN’s Global Compact, (2000) and Guiding Principles on Business and Human Rights (2011); these are voluntary guidelines for companies to follow with some of the largest Corporations already registered.

There are also policies in the development stage in renewable energy field, which when implemented could offer could encourage business down a more renewable path through the use of incentives and grants and more aggressive fines if targets are not met.

This is a brief outline of the politic to sustainability and a description of the types of policies and codes of practices, which are currently being drafted. The amount of legislation that will follow on sustainability will only increase. It will be up to the Sustainability Professional to not only interpret these rather opaque documents for the company they serve, but then be able to implement an action plan to ensure the company is compliant. With a view to saving the business revenue, ensuring all potential grants and incentives are gained and working within the supply chain to ensure reduction in energy.

I hope that this goes some way to explain the complexities of sustainability and why it is important for the professional to have a grasp of politics and policy if they are going to add value to a business.  

Some interesting areas of policy for Sustainability:

UN Global Compaq: -             

http://www.unglobalcompact.org/

Guiding Principles on Business and Human Rights: -      

http://www.business-humanrights.org

IFC Sustainability Framework: -

http://www1.ifc.org/wps/wcm/connect/Topics_Ext_Content/IFC_External_Corporate_Site/IFC+Sustainability/Sustainability+Framework/Sustainability+Framework+-+2012/

The Voluntary Principles on Security and Human Rights: -

http://www.ipieca.org/publication/voluntary-principles-security-and-human-rights-implementation-guidance-tools

Skill Sets and Knowledge

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Happy New Year and welcome to the first post from Sustainability Inc. for 2013.

In my last post at the end of 2012, I started to talk about the different skills and areas of knowledge that a practitioner working in Sustainability, or as I like to call it sustainable business, would need. I have listed the disciplines here, as a reminder and for reference purposes: -

Skills required:

1. Project Management:

2. Communications

3. Strategic Management
4. Risk Management

Areas of Knowledge:

1.    Politics/ Policy: Frameworks/ Environment/ Human Rights/ Communications

2.   Economics: - more specifically macro- economics

3.   Operations Management

4.   Finance: - Corporate Finance/ Strategic finance,

5.    Technology: - Non technical understanding/ Strategic Management

6.   Innovation: - Consulting methods

In this blog I shall briefly outline why the three skills are important for a Sustainability Professional and then over the next few post I shall take topics from the ‘Areas of Knowledge’ and explain why they are important for someone working in Sustainability and how

Skills

The three skills are not the only ones required, but they are in my view to of the most important to enable someone to function correctly in a sustainability role.

1.    Project Management is very important because a Sustainability Professional would have to be able to roam across all departments of a company putting together projects and successfully managing them to conclusion. 

2.   Communication is important, the Sustainability agenda and the subsequent recommendations it generates are new concepts for businesses, which have to be explained clearly to all stakeholders of a company. For a sustainable project to be implemented successfully it is important that stakeholders have a clear understanding of the proposals in the project for a number of reasons: -

·      Stakeholders would be able to make recommendations to improve the proposals.

·      Good communication increases the chances that the project will be talked about across the company, creating better buy in and increasing its chances of success.

·      Good communication is also more likely to influence stakeholders to adopt the proposals and see the project implemented. Especially the Executive Management Group who need to understand how the project will enhance the strategic direction of the company, improve productivity and increase sales and importantly approving the project.

·      Communicating the sustainability message to the company’s customers and the press is important. As consumers over the last 15 years have become more selective about which companies they purchase from. There is evidence that companies that engage in sustainable practices have seen an increase in their profits and they are less likely to receive negative press.

·      Communication is also an important aspect of project management, areas such as, influencing and communicating the successes of a project. This is not an area I intend to cover in any depth, as it is part of the discipline of project management. 

3.   Strategic Management is an important skill required because Sustainability is a strategy that must be implemented into a company from the Board to all areas of the business. Firstly, the strategy has to be developed, ensuring it meets the required goals of the organization, both internally and externally and then it must be implemented across the business. 

This is a brief explanation as to why these skills are important for a Sustainability Professional. There are others skills, which are needed, but they are also required in any roles, as such I shall not dive into them.

Over the next few post I shall take topics from the ‘Areas of Knowledge’ and explain why they are relevant for someone working in Sustainability