Sustainability As a Business Operating System

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Sustainability as a Business Operating System W illiam R. Blackburn

Sustainable development is an engaging concept. Who can disagree with the notion that economic and natural resources should be managed wisely and that people and other living things should be re- spected? The problem comes in the practical implementation of the concept within a corporate setting. The key is an enterprise-wide sustainability operating system or SOS. By using an SOS, one can sort through the broad array of options for action, evaluating each against sustainability trends as well as business risks and opportunities, to identify those efforts that will provide the greatest business value. This article describes this process and the elements that will help assure its success within a company. The introduction of the SOS changes the business case for sustainability that many have found so elusive. Now the issue is the business case for a process that finds for each company the most valuable actions that they can take in furtherance of sustainability. © 2005 William R. Blackburn Published by NetLogex, LLC. With permission.

William R. Blackburn is president, W illiam stronger and more competitive. It can Blackburn Consulting, Ltd., and formerly vice strengthen risk management, compliance, president and chief counsel, Corporate Envi- productivity and credibility. It can help the ronment Health and Safety at Baxter Interna- firm avoid many problems of the past and tional Inc. seize new opportunities for the future. In Corresponding Author: William R. Blackburn, William short, it can become part of the lifeblood of Blackburn Consulting, Ltd., Long Grove, IL; phone: 1 847 the company that continues to contribute in 530 4014; e-mail: mailto:[email protected]; good times and bad. W hile the benefit of a website: http://www.blackburnconsulting.com. sustainability operating system — let us call it an “SOS” for the help that it brings — will vary from company to company, all who Introduction make a serious effort to implement one should find the effort well worth the invest- business cannot guarantee its success ment. merely by adopting a sustainability initiative. This is particularly true of The value of an SOS is at the heart of the A business case supporting the drive toward sus- the company that sees sustainability only as a reputation enhancer to be splashed around in tainability. Much has been written about this promotional puffery. Shallow sustainability elusive case, the Holy Grail of social activists. programs of this type don’t last. If used as The problem is that pursuing sustainability is the foundation of a business operating system, not just about going after one thing but many however, sustainability can make a business things, each with a different priority and busi-

William R. Blackburn 1 Corporate Environmental Strategy: International Journal for Sustainable Business Vol. 12, Issue 2 (February 2005) ISSN 1066-7938 © 2005 William R. Blackburn Published by NetLogex, LLC., with permission. Sustainability as a Business Operating System ness justification. For example, reducing shakers of the company and to form a core waste for the purpose of cutting cost — team to move the idea forward. something with visible short- and long-term Once the organization decides to implement financial benefits — is almost always more an SOS, a team leader must be identified who attractive to a business than advancing biodi- can coordinate and facilitate the companywide versity. It is hopeless to search for overarch- efforts. The leader may or may not be the ing arguments supporting an aggressive ad- champion. W hoever is selected must be vancement on all sustainability topics. In- trusted by the group; be process- and goal- stead, one must first define a process like an oriented; possess good communication, col- SOS, which enables a company to comb laboration and organizational skills; and have through the topics, applying evaluation criteria the extra time to lead this initiative. The to determine which deserve attention and leader must assure the right people are on the which do not. In other words, with an SOS, teams, that their roles are clear and that the you have a way of examining the business case teams are making adequate progress. She for sustainability on a topic-by-topic basis must ensure sustainability efforts are geared to from the unique viewpoint of each company. available resources and vice versa, and seek Since the business case is concerned not only help from superiors if necessary to achieve with economic advantage but also with legal this balance. The leader should consider re- compliance and other risks, an SOS should be cruiting an executive sponsor from the CEO’s within every business attorney’s toolbox. staff if needed for this purpose, and for use as An SOS comprises a number of elements, the an occasional sounding board and coach. most important of which can be grouped in The second driver is the approach for selling man- drivers, four categories: (1) the which assure agement on sustainability. The champion will the organization is continually motivated to need this to be successful. The leader will efficient en- drive toward sustainability; (2) the need it to maintain support for the SOS. Sev- ablers , which enable the organization to under- eral things should go into this sales pitch. take its sustainability efforts in a logical, coor- dinated, and efficient way; (3) the pathway ele- First, the sales approach must offer a vision ments, which map the path toward sustain- for moving the company toward sustainabil- ability; and (4) the evaluators needed to gauge ity. To make that jump most engaging, the the organization’s progress toward sustainabil- salesperson should try to link sustainability to ity and permit it to make appropriate adjust- any vision and values the company may have ments along the way. Let us examine each in already proclaimed. Unfortunately, the con- some detail. cept of sustainability is not easy to grasp. Companies that try to use the term internally The Drivers often shift to other terms, like global corporate citizenship, corporate responsibility or A key driver is the champion/leader. The cham- corporate social responsibility which seem pion is the person within the organization easier to grasp. The problem, though, is that who brings forward the idea of a sustainability sustainability and sustainable development business agenda and starts things moving. continue to be the words used by govern- Champions can come from nearly anywhere ments, investors, activists and other stake- in the organization. They are the inspired true holders. So while other terms may be used believers, the people with the insight that sus- with employees, the concept of sustainability tainability is vital to the company’s and soci- should not be ignored. For this purpose, sus- ety’s long-term success. Their main task is to tainability can be defined using one of the gain other converts among the movers and common definitions which in one way or an-

2 William R. Blackburn Corporate Environmental Strategy: International Journal for Sustainable Business Vol. 12, Issue 2 (February 2005) ISSN 1066-7938 © 2005 William R. Blackburn Published by NetLogex, LLC, with permission Sustainability as a Business Operating System other refer to the wise use of natural and fi- enlightening if they show how sustainability nancial resources and respect for people and helped secure a business advantage or how other living things, all for the purpose of the lack of attention to sustainability led to achieving global long-term well being. Ulti- failure. To boost credibility, the salesperson mately, sustainability must be presented using must acknowledge that many successful com- a definition that is more meaningful to the panies do not openly embrace sustainability. company. That practical definition can take Fourth, the sales pitch should discuss the the form of a sustainability policy. Ideas for challenges and opportunities that current sus- such a policy can be obtained from the ap- tainability trends may pose for the organiza- SD Planner pendix of the ™ published by the tion. Trends on population, pollution, re- Global Environmental Management Initiative 1 source depletion, biodiversity, globalization, (GEMI) or by reviewing the model sustain- socially responsible investing, extended pro- ability policy found in my forthcoming book, ducer responsibility, poverty, health, educa- The Sustainability Handbook for Business , to be tion, governance, human rights and other sus- published by the Environmental Law Insti- 2 tainability topics may be obtained from a tute. number of books, including: W hich W orld: Second, the sustainability salesperson must Scenarios for the 21st Century;7 Tomorrow’s Mar- introduce the idea of achieving sustainability kets;8 Vital Signs;9 and my Sustainability Hand- through an SOS. She must discuss its ele- book. Legal experts can contribute regulatory ments, talk about the time and money the ef- and enforcement trends concerning many of fort may take. For companies where re- these topics. If the company has already en- sources are tight, the plan should initially be gaged in some sustainability reporting, these modest, relying on existing resources as much reports may be a good starting point for this as possible. Resource needs can be reassessed discussion since they show how sustainability later as progress is made and the value of the already applies to the company. effort becomes more apparent. Finally, the advocates should use the language Third, sales effort should articulate the busi- of business. They should talk of conducting ness case for pursuing an SOS. Information an enterprise-wide risk and opportunity as- on how to do that can be obtained from sev- sessment, protecting assets and investments, eral web sites, such as those of GEMI, the responding to the growing interest of inves- W orld Business Council for Sustainable De- tors, strengthening brands, and building velopment (W BCSD),3 Business for Social credibility with key constituents. They might Responsibility,4 SustainAbility,5 and the Social discuss the need to anticipate future trends in Investment Forum,6 and from a number of business planning, develop products that bet- books, including my Sustainability Handbook. ter address future needs of customers, defuse The business case should draw from practical potential issues with the public and activists, examples — especially those that may come and bullet-proof management on compliance from the company itself, its competitors or risk. In addition, they can speak of seizing others in business. Examples can be most

7 See 1 See http://www.gemi.org/. http://www.earthscan.co.uk/asp/bookdetails.asp?key= 2 See http://www.eli.org/. 1964. 3 See 8 Don S. Doering, Amy Cassara, Christian Layke, http://www.wbcsd.ch/templates/TemplateW BCSD5/l Janet Ranganathan, Carmen Revenga, Dan Tunstall, ayout.asp?MenuID=1. W endy Vanasselt, W orld Resources Institute, the 4 See http://www.bsr.org/index.cfm. United Nations Environment Programme, and 5 See http://www.sustainability.com/. W BCSD, 2002. 6 See http://www.socialinvest.org/. 9 William R. Blackburn 3 Corporate Environmental Strategy: International Journal for Sustainable Business Vol. 12, Issue 2 (February 2005) ISSN 1066-7938 © 2005 William R. Blackburn Published by NetLogex, LLC, with permission Sustainability as a Business Operating System opportunities for business growth and achiev- ternal and external peers. Lists of the top 10 ing good returns on investment. Business and bottom 10 performers can help motivate people may want to see the projected financial laggards, but sometimes those reports don’t implications of these benefits. That informa- tell the full story. Lists of those that have im- tion should be furnished if available, provided proved the most and slipped the most can the projections are conservative. Exaggerated complete the picture and also provide an early claims can seriously undermine a speaker’s warning of program turn-around or erosion. credibility and the whole sales pitch. Given their sensitive nature, however, these comparative lists should be tightly controlled The final driver consists of the reward and ac- and protected. countability mechanisms. These are the carrots and sticks that keep the organization focused The Efficient Enablers and motivated to achieve sustainability objectives. They show everyone the company is Efficient enablers are the SOS elements that serious about this effort, so serious it will dole enable the organization to move toward sus- out or withhold rewards based on how well tainability in an efficient way. Key among that effort is executed. Reward and account- them is an organizational structure. The founda- ability mechanisms should be applied to tion for that structure is the multi-disciplinary groups and individuals alike to recognize per- core team and deployment team. formance, creativity and personal initiative. The core team should encompass functions The most important mechanisms are, of such as: environment, health and safety; hu- course, adjustments to pay, bonuses and op- man resources; purchasing; supply chain; gov- portunities for advancement. Other rewards ernance; community relations; communica- for exceptional performance may include spe- tions; philanthropy; law; business planning; cial awards, recognition luncheons, articles in finance; and ethics/business practices. One the company newsletter, opportunities to or more representatives from major business showcase their efforts in key forums, or other units can round out the team. Members acknowledgements. Superior performers may should be experienced leaders within groups also be nominated for external awards. Re- who know the company well and who have wards need not be expensive, though; more the authority to speak for their organizations. often than not, it’s the thought that counts. The job of the core team is to help establish Both group and individual award and recogni- and promote the SOS, craft the strategy and tion programs can present a wealth of tactics for its implementation, oversee and benchmarking opportunities. Since peers will periodically collect feedback on its operation, want to know how they can achieve similar and communicate to others about the com- attention, the best-practice achievement pany’s sustainability efforts. should be publicized broadly and in some de- After the core team establishes the infrastruc- tail. ture for pursuing sustainability, various groups Group accountability mechanisms include must evaluate the business risks and opportu- internal audit reports and other reviews of the nities concerning sustainability, set their own sustainability performance of a function — sustainability objectives and measures, and such as environment, health and safety; busi- report progress against them. This is the job ness practices; human resources; corporate of the deployment team members. This team governance; or quality — or of a division, re- includes the core team plus representatives of gion, facility or other business unit. Particu- other functions and business units that will larly effective are periodic reports showing participate in these tasks. Depending on what how a unit’s performance compares with in- is to be reported, the added functions may

4 William R. Blackburn Corporate Environmental Strategy: International Journal for Sustainable Business Vol. 12, Issue 2 (February 2005) ISSN 1066-7938 © 2005 William R. Blackburn Published by NetLogex, LLC, with permission Sustainability as a Business Operating System include such groups as quality, research and tives that may be competing for recipients’ development, sales and marketing, security, attention. The team overseeing the deploy- manufacturing, engineering, and distribution. ment may also want to draft articles on the policy for the company magazine and web site Although the core and deployment teams are and prepare some remarks on it for a CEO broad, they still may not cover all internal speech. If the tool or policy is one to be cov- groups that distribute the company’s sustain- ered in audits, self-assessments or other fol- ability reports — or data from them — to key low-up evaluations, then tools must be pre- stakeholders. To assure the reports meet the pared for those purposes, too. Deployment needs of these groups, the leader should es- may also include communicating the names tablish a team or network of them to collect and phone numbers of experts on call to an- input on report content. This team may in- swer questions. clude not only the company communications department, but government affairs (which Once the training package is ready, field im- may provide the information to legislators), plementation begins. The leader of the de- investor relations (investors), sales and mar- ployment effort must identify who will per- keting (customers), human resources (new form the training and coaching in the field to recruits), and business development (buyers assure all targeted groups are covered. In and sellers of parts of the business, join ven- each case, the “field” or boundaries of de- ture partners, and government officials). ployment must be determined. In some cases it may encompass people at all levels and loca- Besides the organizational structure for the tions of the organization. Field implementa- SOS, the other efficient enabler is deployment tion doesn’t end after the first round of train- and integration. A sustainability initiative won’t ing. An arrangement must be made for re- be successful unless it becomes part of the fresher training, if needed, and for communi- culture of the organization. People in all cor- cating the information to employees who join ners of the company must understand, accept the organization later. and support the concept. This ownership doesn’t happen unless there is some conscious Integration involves incorporating the de- effort to deploy the idea into the ranks of the ployed initiative in existing standards, proce- company and integrate it into the company’s dures, and tools. Integration is preferable to existing tools, processes, procedures, pro- adding an entirely new program, especially to grams and values. employees who may already be facing more new programs than they can absorb. If a There are typically two stages to deployment company is emphasizing a special cost- of a new sustainability program, policy or tool: trimming program like “Lean Manufacturing” first, development of communication and in its factories and desires to stress pollution training aids needed to roll-out the item; sec- prevention, it should integrate the latter into ond, field implementation of the item. So, for the former. New programs on climate change example, if we are to deploy a new sustainabil- should be linked with existing energy cost- ity policy, we will need to develop training savings efforts. Likewise, sustainability prin- materials, prepare tools for testing training ciples should be included in any companywide effectiveness, identify field trainers, develop multifunctional programs on strategic plan- and conduct train-the-trainer sessions, per- ning, acquisitions and divestitures, emergency haps pilot the training at a few sites and adjust response/crisis management, change man- the training based on the feedback received. agement, recruiting, and compliance assur- Those developing the tools must consider the ance. language and education of the intended recipients and the timing of other major initia-

William R. Blackburn 5 Corporate Environmental Strategy: International Journal for Sustainable Business Vol. 12, Issue 2 (February 2005) ISSN 1066-7938 © 2005 William R. Blackburn Published by NetLogex, LLC, with permission Sustainability as a Business Operating System

The Pathway • European Eco-Management and Audit 12 Because an SOS is the roadmap for moving Scheme; toward sustainability over the long term, it • Responsible Care program of the Ameri- should be documented and communicated to can Chemistry Council;13 all who will be involved. This is best done in a set of sustainability operating system standards. • SIGMA Management Framework (The Sustainability-Integrated Guidelines for Today, operating or “management” system Management project of the British Stan- standards abound. Most are based on the dards Institution, the Institute for Social “plan-do-check-act” process loop that became and Ethical Accountability (AccountAbil- popular in quality circles several decades ago ity) and the Forum for the Future);14 and more recently in environment and health and safety (EHS). In essence, these standards • Baldridge Award Criteria (Baldridge Na- require that some prioritization process be tional Quality Program: Criteria for Perform- followed in developing a policy and plan for ance Excellence;15 action (“plan”); that action be taken to im- • Social Accountability (SA) 8000 (Social plement the plan and operate under it (“do”); 16 Accountability International; that progress be measured, reported and ana- lyzed to identify gaps (“check”); that correc- • The Natural Step Framework;17 tive and preventive actions be taken and ap- • The compliance program elements of the propriate adjustments made in the policy and 18 program (“act”); and that the whole process U.S. Sentencing Guidelines; and be periodically repeated. Systems standards • The U.S. Department of Justice, United should work just as well for sustainability as States Attorneys’ Manual, title 9 (Criminal they do for quality and EHS. Resource Manual), sect. 163.19 Each company should develop its own sus- Model SOS standards and a flow chart and tainability operating system standards that schedule for implementing them can be found take advantage of the structure, tools and sys- in my Sustainability Handbook. tems that have already proven successful. If the organization believes ISO 9001 or 14001 has served them well, then their SOS stan- 12 See http://www.emas.org.uk/. dards may be combined with those standards. 13 See Other standards that can be considered in- http://www.rctoolkit.com/pdfs/RCMSTech_012504.p df. clude: 14 See • Occupational Health and Safety Assess- http://www.projectsigma.com/Guidelines/Framework 10 /Default.asp. ment Series (OHSAS) 18001 standard; 15 See http://www.quality.nist.gov/PDF_files/2004_Business • International Labour Organization’s _Criteria.pdf. Guidelines on Occupational Safety and 16 See http://www.sa- Health Management Systems;11 intl.org/SA8000/SA8000.htm. 17 See http://www.naturalstep.org and http://www.naturalstep.ca/framework.html. 18 See http://www.ussc.gov/2003guid/2003guid.pdf as 10 See http://www.ohsas-18001-occupational- amended Nov. 1, 2004 at health-and-safety.com/. http://www.ussc.gov/2004guid/2004cong.pdf. 11 See 19 See http://www.ilo.org/public/english/protection/safewo http://www.usdoj.gov/usao/eousa/foia_reading_roo rk/managmnt/guide.htm. m/usam/title9/crm00162.htm. 6 William R. Blackburn Corporate Environmental Strategy: International Journal for Sustainable Business Vol. 12, Issue 2 (February 2005) ISSN 1066-7938 © 2005 William R. Blackburn Published by NetLogex, LLC, with permission Sustainability as a Business Operating System

An essential part of the operating system and ity policy. The top ranking should go to those another pathway element is strategic planning for issues that: aligned priorities. This is the process needed to prioritize among the many possible actions • Are important to business success (pro- toward sustainability. Strategic planning per- ductivity, employee relations, reputation, mits a company to focus its limited resources risk control, sales growth, innovation, new on those things that will provide the greatest markets, and license to operate); value. Alignment on these priorities across • Are of greatest concern to management; the organization is necessary to produce the most pronounced change in the shortest time • Are consistent with the company culture and to effect the cultural transformation (as reflected in the company’s business vi- needed to continue the process. sion, policy and goals, stated values and communications from management); Every two or three years, each group represented on the deployment team should iden- • Are of public concern (such as govern- tify the issues or topics under the company’s ance issues after Enron and W orldCom, sustainability policy that are within the re- emergency preparedness after 9/11, en- sponsibility of the group and that members of ergy conservation after a big regional the group believe are most important to their blackout or surge in energy prices); organization. A good reference for identify- • Make strategic sense in light of the sus- ing topics is the 2002 Sustainability Reporting tainability trends (such as a beverage Guidelines published by the Global Reporting 20 company examining the sustainability of Initiative (GRI), a worldwide coalition of fresh water supplies, or a department social activists, investors, and businesses. store chain looking to changing demo- Once each group has completed its prioritiza- graphics in setting hiring and marketing tion, the deployment team should examine the strategies); results and identify those sustainability issues of highest priority across the company. Al- • Provide the biggest, longest-lasting bene- though discussions may bounce between ficial impact; and strategies and tactical issues in an iterative process, the proposed strategic objectives that • Are easiest to implement. result should be restricted to what needs to Initiatives selected using these criteria are happen rather than how it is to happen. The most likely to be winners in the eyes of com- “how” should be covered later in group tacti- pany leaders. Success on them can bring early cal plans developed by deployment team management support for the SOS process and members. Proposals typically exceed what help make the organization receptive to fur- reasonably can be accomplished so aggressive ther progress later. culling often is warranted. To be meaningful, the prioritization should be Prioritization may be done in many different conducted by people familiar with the busi- ways. A process similar to an aspects analysis ness and the sustainability trends. Company under ISO 14001 or the risk/hazards analysis business managers should help judge financial under OHSAS 18001 may be used for this and sales issues and consider the business op- purpose, for example. In selecting the priori- portunities and risks associated with sustain- ties for action, topics should be dropped that ability trends. Company environmental ex- are obviously irrelevant and others added as perts should participate in the review of the they come to mind in light of the sustainabil- environmental subjects and trends. Represen- tatives of key functions and business units can 20 See http://www.globalreporting.org/. do the evaluation alone or together, as most William R. Blackburn 7 Corporate Environmental Strategy: International Journal for Sustainable Business Vol. 12, Issue 2 (February 2005) ISSN 1066-7938 © 2005 William R. Blackburn Published by NetLogex, LLC, with permission Sustainability as a Business Operating System convenient. Relying only on internal experts quantitative units of measure, such as injuries is most expedient; however, more valuable per 100 employees per year or tons of waste judgment can be made with input from key per million dollars of sales. Metric-type goals stakeholders, especially employees and cus- are the targeted levels of performance under tomers. It also may be helpful to solicit views those metrics that the organization aspires to from investors, government representatives, reach, such as a 20 percent reduction in inju- neighbors, suppliers, community groups or ries per 100 employees per year, a five per- activists, depending upon the nature of the centage point improvement in customer satis- issues facing the company. Periodic written faction survey results, or implementation of surveys are useful if some documentation of 100 percent of the ISO 9001 quality manage- progress is desired. But it’s simpler and some- ment systems standards. Goals based on the times more effective to solicit feedback live as right metrics can provide a yardstick for part of a conference, meeting or phone call measuring progress and enable a company to already scheduled for other business purposes. make midcourse corrections in resources or tactics if progress drags. Progress versus goals The evaluation of trends and priorities is an can serve as the basis for doling out employee indispensable part of the pre-planning review. rewards, the essence of accountability. Used This review should also cover an evaluation of correctly, metric-type goals can instill the fo- business performance and goals, benchmark- cus and motivation essential for moving an ing information and significant changes in le- organization toward sustainability. gal and company requirements. Once the pre- planning review is completed, each group rep- Goals should be SMART: simple, measur- resented on the core team should evaluate its able, achievable, relevant and time-based. own performance, including how well it met Ideally, an employee down in the ranks should its sustainability objectives. New strategic ob- be asked to work on no more than five goals jectives and goals can then be identified and — three would be better — but given the incorporated into function and companywide number of hats that most employees wear strategic plans. these days, it is not unusual to see them faced with eight or more. If an employee is asked After that, each group represented on the de- to take on more than five goals, her supervi- ployment team should develop a tactical plan sor should prioritize them. identifying the projects and other planned actions for implementing the company’s sus- W hen considering sustainability goals, a good tainability strategy. The plan should identify place to start is by reviewing the GRI Report- the scope of each intended action, the plan ing Guidelines. Other useful references in- for development and deployment, the parties clude the ISO 14031 Environmental Perform- responsible for field implementation, and the ance Evaluation Guidelines and the compan- schedule. Progress against the plan should be ion ISO 14032 case studies. They provide reported quarterly. The GEMI SD Planner™ good examples of environmental metrics in provides good software for developing and addition to well considered discussions of the tracking sustainability tactics. goal-setting process. The W orld Business Council for Sustainable Development pub- The Evaluators lishes a guide entitled Measuring Eco-efficiency, Three evaluator elements help an organization which is also worth reviewing. The same is track its progress toward sustainability. The true for the Manual for the Preparers and Users of first of these is goals and metrics. Goals are the Eco-efficiency Indicators issued by the United Na- qualitative or quantitative results the organizations Conference on Trade and Development tion is committed to achieve. Metrics are

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(UNCTAD).21 Finally, perhaps the best place may be so easy to achieve that some operators to identify practical metric goals is in company reach their long-term targets early then sit on sustainability reports available on their web their hands not pursuing additional improve- sites. An extensive list of these sites is pro- ments. The long-term “Collective Directional vided on the GRI web site. Goal” solves these concerns. It is collective in Before a metric goal is approved, it should be that it depends on each part of the organiza- clear where the measurement data will be ob- tion to contribute its share of the improve- tained, who will provide it, who will supply ment according to their unique opportunities. directional instructions to these data providers and an- It is because it is not absolute: If it swer their questions, who will review and is accomplished early, the target will be ex- compile the data submitted from the field, tended. On the other hand, if the goal later and how the raw data will be converted and seems out of reach, then it will be modified presented in the company report. Addressing downward provided all units have given their these issues in advance will avoid headaches best efforts but still can’t achieve the goal and later on. If the data will be reported publicly, there has been a significant unanticipated much of this administrative information change in circumstances. Communicating should be documented and retained for sev- these expectations at the outset can help as- eral years. sure employees stay motivated and progress is optimized. A key step in establishing a companywide sus- meas- tainability goal is to clearly establish what por- Goals are of little use unless someone is uring and reporting progress, tion of the goal each division, region, facility our next evaluator. or other business unit must deliver. Once W hile the method of measurement should that share is identified, it should be listed with have been determined when the goal was de- the other performance measures for which veloped, the actual measurement can still the unit is accountable. prove challenging. Data integrity can be particularly troubling. Instructions to the field Since many sustainability objectives cannot be may be weak or non-exist. Reporters may be fully accomplished within a single year, multi- new to the process or untrained. Bugs can year goals are recommended. A set of five- or invade computer-based reporting systems. 10-year goals tells employees that this is an Liters and gallons or other units of measure extended strategic effort requiring sustained may be inadvertently mixed, especially if the focus and cultural change. Long-term goals data is being collected on a global basis. Ma- also have the advantage of avoiding the full jor problems can arise simply because those sales effort that must be made to sell an en- who designed the data-request form didn’t tirely new goal each year. Still, some annual understand how the data is collected in the sales work is needed in establishing annual field. Even worse, problems with bad, in- targets and business unit allocations under complete or delayed data can languish unre- them. solved for years if there is no tracking of the There are some disadvantages to long-term problems or feedback on them to the field. goals, however. If the business changes dra- An investment of time to address these prob- matically, the opportunities for improvement lems proactively can pay big dividends in the could be significantly reduced, making the long run. goal futile and de-motivating. Or the goal Some customer web-based systems have “guard rails” that flag data that is suspicious and compile reports on late filers. This can 21 See http://www.unctad.org/Templates/StartPage.asp?intIt significantly improve data quality and timeli- emID=2068. ness. These systems are expensive, though, William R. Blackburn 9 Corporate Environmental Strategy: International Journal for Sustainable Business Vol. 12, Issue 2 (February 2005) ISSN 1066-7938 © 2005 William R. Blackburn Published by NetLogex, LLC, with permission Sustainability as a Business Operating System and usually restricted to large companies. the resulting report. It provides third-party Other organizations may rely on off-the-shelf assurance that the data is reasonably accurate, systems or on simple Lotus Notes or Excel complete, relevant, material, fairly presented spread sheets or other more elementary ap- and responsive to the major concerns of key proaches. All can be effective if used with stakeholders. If properly done, verification proper guidance and support. can add credibility to the report. The problem Once the data is compiled, it should be re- for most companies is the expense. Few ported inside and outside the organization. companies have sustainability budgets to pay Internal reports are needed to drive change, the six- or seven-figure costs typically incurred external reports to build credibility with the for the verification of some financial reports. public and other critical stakeholders. Exter- To keep verification costs low, some compa- nal reports also raise the visibility on internal nies have asked their financial auditors or performance and therefore the motivation for those doing ISO 14001 or 9001 audits to tack excellence. In both reports, the content on the review of sustainability information to should depend on the intended audience and their regular assessments. Standards for veri- their needs. fying sustainability reports can be found in AA 1000 issued by the UK-based Institute for External reports should show performance Social and Ethical Responsibility (also called versus key goals and speak to any public con- AccountAbility), in the Generally Accepted troversies involving the company, its products EHS Reporting Principles published on the or services. Objective educational informa- EHS web site of Baxter International Inc., tion concerning relevant hot topics can also and in the verification guidance included in be helpful. External reports should be engag- the GRI Guidelines. ing; long dry tomes can’t affect opinion or stimulate change if no one reads them. That Establishing metrics and goals and measuring doesn’t mean the report must be expensive. and reporting progress are essential for evalu- For small companies, a simple PC-generated ating sustainability performance. But these brochure or set of bullet points may suffice. efforts can be of limited value if they are Data can also be posted on the company’s planned and undertaken in a vacuum, isolated web site. Some larger companies have chosen from key constituents for whom the data was to incorporate their sustainability results in intended and from others who may have a stake- their annual financial report, a better inte- strong influence on them. This is why holder engagement and feedback, grated approach that showcases sustainability the last evaluator, as an important part of the business. is important. It enables a company to cali- brate its views of itself with those of outsiders Ideas about report content, format and design who care. This dose of reality can help create can be gleaned from many of the same refer- constructive change within a company and, at ence sources used for metrics. The GRI the same time, build credibility with key Guidelines and other company reports are stakeholders. among the best of these. W BCSD’s report, Sustainable Development Reporting — Striking the These stakeholders may include customers, investors, suppliers, community groups, activ- Balance, is also a must-read. ist organizations, government officials and One question answered long ago with regard employees. Feedback can be obtained from to financial reporting but unresolved among them through surveys, or, even better, by hav- voluntary sustainability reporters is whether ing open discussions about what sustainability the reported information should be independ- involves and how well the company is doing ently verified. Verification involves a review in addressing it. Before soliciting this input, of data collection and analysis processes and the company should provide a report on its 10 William R. Blackburn Corporate Environmental Strategy: International Journal for Sustainable Business Vol. 12, Issue 2 (February 2005) ISSN 1066-7938 © 2005 William R. Blackburn Published by NetLogex, LLC, with permission Sustainability as a Business Operating System latest sustainability performance to those to be surveyed. Comments can then be re- quested on the company’s past performance and new goals as well as on the means and content of the report itself. This input can then be used during planning.

Conclusion nce the drivers, efficient enablers, the pathway and evaluators are es- O tablished and the SOS process worked into in a rational repeating plan-do- check-act cycle, a company should notice a significant difference. It should see an improvement in business efficiency, alignment and productivity; an improvement in finding opportunities and addressing risks; and an improvement in the respect it commands from employees and others who can bring it success. In light of all this, can a company afford to ignore an SOS?

William R. Blackburn 11 Corporate Environmental Strategy: International Journal for Sustainable Business Vol. 12, Issue 2 (February 2005) ISSN 1066-7938 © 2005 William R. Blackburn Published by NetLogex, LLC, with permission