Two Corporate Giants Execute Sustainability and Reporting Despite Challenges Inherent in Large Organizations
As with many enterprise endeavors, the management and reporting of sustainability efforts present special challenges for large companies. How can sustainable practices be instituted and data collected and reported across diverse business units and functional departments, especially for large, globally dispersed enterprises?
A recent survey of corporate sustainability leaders by strategic communications firm VOX Global found that executives charged with leading large-company sustainability efforts often work against unique challenges. In its report, Making the Pitch: Selling Sustainability From Inside Corporate America, VOX Global said that the very newness of sustainability initiatives in organizations can present obstacles:
Sustainability leaders are expected to implement strategies and programs in workplace environments where there is often no clear or uniform definition of sustainability. Further, compared to their colleagues in the C-suite, chief sustainability officers are often expected to generate results within a context of limited management authority, nominal staffing and razor-thin budgets.
The study’s authors attempted to understand the drivers of success in the work of sustainability leaders. One might expect that subject matter expertise in the environmental field would be important, as well as the business chops to be able to quantify the value of sustainability initiatives. Those abilities, indeed, showed up as important in VOX’s survey, but the most important success factor was a surprise: interpersonal skills. VOX Global reported:
[S]ustainability leaders said they had to first sell the concept of sustainability — and sell themselves — before focusing on the content. To secure buy-in, sustainability leaders, like other senior positions, also had to balance subject matter expertise with business acumen. The ability to communicate the business case for sustainability in a language that resonates up, down and across an organization was viewed as crucial to achieving the ultimate objectives.
Survey respondents made it clear that one-to-one communication and collaboration was what made the most difference in “penetrating corporate silos and building strong internal networks” across large enterprises. The study concluded that sustainability leaders and their direct reports must be “inexhaustibly social” within their organizations and “consciously egalitarian” in their dealings with colleagues at every level in the organization.
Command-and-Control Works Well for Dow
Strong executive sponsorship has been crucial to the success of sustainability efforts at the Dow Chemical Co., according to Neil C. Hawkins, its vice president for sustainability and environment, health and safety. In an interview, Hawkins admits that as a large company with 100 business units, implementation is “always a challenge, but we do have some advantages in how we do these things.”
For Dow Chemical, a top-down approach seems to be achieving results. The company sets very long-term (10-year) goals, pursues those goals and reports publicly on its progress. Right now, the company is in its second set of 10-year sustainability goals.
“We are a very metric- and performance-driven company,” Hawkins tells me. “Every single goal has an executive sponsor and a team of people who are accountable. We have visibility right up to the CEO, and it’s tracked very closely. Our employees, as well as our leaders, know that we’re serious. Once we’re going to do this, people know we’re going to implement it. Our employees don’t have to wonder whether we’re going to try to get out of doing it in five years.”
Dow Chemical’s relentless focus on goals and metrics benefits from a strong reporting regime, as well, Hawkins says. “Since our reporting is public … we all know that the company is going to be judged on how we’re doing versus our goals,” he says. “All business leaders and functions are held accountable for the areas where they have an impact.”
AT&T Opts for Transparency
In The Handbook of Strategic Public Relations and Integrated Marketing Communications, Charlene Lake, chief sustainability officer and senior vice president of public affairs at telecom giant AT&T, wrote about the challenges the company faced in establishing an environmental strategy in 2007.
At that time, AT&T had completed a set of complex mergers that resulted in a company with more than 255,000 employees and revenues of over $100 billion a year. It was a good juncture to consider an organization-wide sustainability initiative, according to Lake, but some key decision-makers “tended to believe that keeping a low profile would pose much less risk than voluntarily raising the stakes — particularly in an area considered by many inside the company to be uncharted territory.”
In the end, though, longer-term thinking won out. Lake recalled that early advocates within the company focused on an idea that would resonate within the company, and that AT&T needed to define its own sustainability image rather than allow others to do so.
Policymakers were increasingly focusing on energy and environmental issues, which exposed a large company such as AT&T to legal and regulatory risks. Investors and shareholders were also beginning to home in on environmental concerns. Lake wrote:
The first shareholder meeting of the new company saw a shareholder resolution asking the company to be transparent in its sustainability commitments … Defining sustainability as a key business approach ensures that it is assigned appropriate significance at all levels of the company. Such high-level commitment also promotes sustainability as a more efficient way to meet bottom line goals and to drive shareholder value.
To achieve operational alignment around sustainable business practices, AT&T started by altering the charter of the Board of Directors’ public policy committee to include overseeing citizenship and sustainability initiatives. The board placed organizational responsibility for sustainability efforts in the corporation’s Public Affairs business unit and formed a steering committed of senior executives and officers from across the corporation that met quarterly to direct sustainability efforts. A network of 25 cross-functional “expert teams” across the organization drove sustainability projects.
Rather than simply impose sustainability initiatives on its business units, AT&T leadership engaged decision-makers in a process of dialogue and consensus-building. Lake admitted in the book that this kind of approach was slower than a top-down, command-and-control process, but it ultimately achieved stronger buy-in and implementation at the business unit level.
One of the first sustainability reporting initiatives at the new AT&T was the publication of the company’s carbon footprint. Again, rather than instilling a top-down mandate, AT&T chose an approach that had proven successful at other companies: Connect the company’s carbon footprint with its measurement and control of energy costs.
Convincing decision-makers to disclose this data was a challenge, but in the end, advocates succeeded in making the business case that carbon disclosure was a good strategy, given its effect on relationships with government entities, investors and other stakeholders, as well as raising reputational value.