Five Stages On The Sustainability Journey
Companies that are wondering about how to take their sustainability efforts to the next level may benefit from knowing that most leading sustainability companies -- particularly the larger ones -- progressed in several stages, and over a multi-year period.
Based on our work and research with dozens of companies, I believe there are five major stages on the sustainability journey. They overlap to some extent, and not all companies started at Stage 1 (particularly those targeting the premium-price or environmentally conscious consumer), but for most, these stages do apply.
This article describes the five stages, and what characterizes each one.
1. Grassroots. Typically, the first stage is what I call the grassroots stage, in which sustainability initiatives start with a few employees taking the initiative to recycle, replace paper cups, or enable double-sided printing. Many of the highly ranked sustainability companies, particularly in the B2B space, have told us they started this way.
While individually these steps, to recycle etc., are small, they are still significant because the process of engaging employees on sustainability, and making it part of their consciousness has begun -- and as leading companies point out, employee engagement is one of the most critical factors in becoming more sustainable.
Brown bag lunches draw the volunteers to come up with ideas and help in the implementation. Green teams are formed and responsibilities are assigned, which typically falls outside of their "day job," but because these employees are so impassioned about what they are doing, they sometimes even do it on their own time.
These efforts may or may not even be visible to senior management, and eventually when they do become aware, they are often surprised at how quickly the grassroots effort has spread, and how many employees are involved.
2. Functional. At the next stage of a company's path to sustainability, one or two divisions or functional units -- typically Facilities, Operations, or IT -- gets involved in a much bigger way. At this stage, a divisional leader is setting goals and establishing accountability in his or her organization. Now these initiatives have some upper management visibility, and as a result, they get more resources to expand their sustainability efforts. Energy-efficient lighting, consolidation of data centers, and reduced packaging are examples of initiatives that reside within functional units, but generally with little visibility outside of these units.
So engagement on these initiatives is still limited to a minority of employees, and these efforts are still a minor blip on the executive radar.
3. Strategic. As more functional units are engaged, companies reach a tipping point when it dawns upon the executive team that the functional, usually silo'd efforts, need to be better aligned strategically for greater impact and efficiency.
This is exactly what happened at Dell, according to Mark Newton, Director of Sustainable Business. "It was around 2006," he said, "when executives realized that a lot of Dell's success in operations efficiency, recycling, and Design for Environment were already in place to address customers' and other stakeholders' climate change concerns." So CEO Michael Dell blessed making sustainability a key element of the company's strategy, declaring a bold goal to make Dell the "greenest technology company." Dell's sustainability efforts kicked into high gear at that time, and the company now stands proudly as a sustainability leader according to some rankings.
As the Dell example illustrates, when the CEO steps in, sustainability becomes a priority for the company. Now there is a multitude of initiatives that bubble up to the executives, who soon realize that they need a Program Office to manage them. A senior, usually sustainability-impassioned leader is appointed, and a small staff recruited to serve as champions and coordinators for the functional units. Governance roles are established, and often the Board of Directors is overseeing, and creating executive accountability, for the initiatives.
And finally, a cultural shift starts to be felt throughout the company as employees realize that sustainability is not about a few "greenies" trying to save the planet, but it's a company priority, and they all have a role to play.
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4. Ecosystem. The ecosystem stage, which for purposes of this article I am defining as engaging with external stakeholders, overlaps to some extent with the strategic stage, although there is more of an emphasis on execution now, and the ecosystem gets much larger. While suppliers are typically the first external group that companies invites into its sustainability ecosystem, which often occurs during the strategic stage, companies now become much more selective and even demanding from those they do business with. HP and Walmart are good examples of this phenomenon, but to their credit, they also work collaboratively with many of their suppliers to find environmentally friendly solutions.
Beyond suppliers, the stakeholder group with which companies actively work at this stage now includes NGOs, investors, and customers. With each of these groups, there is much greater cooperation on goals, and a focus on accountability. NGOs in particular are often shining the light on global resource issues, and helping to prioritize initiatives for the company.
5. DNA. The fifth and final stage is when sustainability is so embedded in the company's mission, strategy and business that it can be considered part of their DNA. They not only inject it into their eco-system but also go beyond it to encompass individuals, communities and other businesses with whom they would normally not have any relationship. Helping the environment becomes part and parcel of their values and business model. All employees believe in it, act on it, and in one way or another, are judged on it.
But from my observation, few companies have evolved to this final stage because, as in life, it is very difficult to change DNA.
One such exception is Timberland, the footwear and apparel maker. This company, while always a big contributor to social responsibility, has dramatically increased its focus on environmental sustainability under the stewardship of its CEO Jeff Swartz.
Every employee is encouraged to participate in 40 hours of paid community service., and the participation rate approaches 90 percent, with most of the activity related to the environment; a passion for driving social and environmental change is an important screen in the hiring process; the company provides an Eco-label on its products identifying the environmental impact; sustainability is a key driver in product design; the company is very transparent about its goals, successes, and also areas where it fell short; and last but not least, the CEO talks constantly about his company through the lens of sustainability.
Companies such as Patagonia, 7th Generation and Numi Tea do all these things and more, but they fall into the DNA-from-the-beginning camp. This is a tribute to their founders, but there are too few examples of companies such as these. The rest will need to progress to this stage over time.
Final Note
Companies that are "stuck" in their sustainability efforts can learn some useful lessons from companies identified in this article as they progressed through the various stages. And smaller companies can compress the stages and time dramatically, as long as they have a committed CEO supporting these efforts.
But the ultimate stage is when we as a society don't have a discussion about sustainability at all because it is so ingrained in everything we do.