Should sustainability have a seat in the C-Suite?

Some of you may recall the case study published on-line by the Harvard Business Review back in October, which posed the question of whether or not fictional company Narinex should hire a Chief Sustainability Officer.  The full Case Study is now available in the December 2010 edition of HBR (subscription required; text pages 133-137) (or try this version at Scribd, e-pages 135-139).

If you’re not familiar with the HBR Case Study feature, it generally involves a fictional scenario depicting some current business challenge and features the advice of two business leaders with subject-matter experience.  A few readers’ comments, distilled from the on-line commentary compiled previously, are included to illustrate additional perspectives.

Well, golly; the editors at HBR thought my comment “offers a valuable perspective,” and included an edited version of it in the December issue (text page 137 or Scribd e-page 139).

A few of my contacts have asked to see my comments, so I reproduce my full comments below (with the HBR-selected paragraph highlighted).  My comments will make more sense if you read the Case Study first!  Thanks for your interest!

HBR asked: Should Sustainability have a seat in the C-Suite?

It is clear, from the examples given, that Narinex lacks a clearly articulated sustainability vision or strategy to achieve it. Indeed, it is evident that sustainability is not a core value or principle guiding Narinex’s business. Their strategic focus has been primarily on low cost; other sustainability criteria, such as environmental and human health, are not, apparently, given substantive weight in practice, judging by this example:

“Where regulations are looser and customer specifications permit, we produce goods with lower-cost substances that would not be acceptable in all regions.”

Chief Sustainability Officer or not, in the absence of a relevant vision, goal, or target, or even any guiding values or principles, Narinex’s sustainability initiatives will be uneven, true sustainability will remain elusive, and Narinex will either increase its exposure to risk or miss business opportunities (or both).

I concur with the recommendation of Elaine Cohen, in her eloquent earlier remarks, about the urgent need for Narinex to map its sustainability landscape. Narinex must develop a more fulsome understanding of its current and future business drivers pertinent to sustainability, including evolving regulatory frameworks, changing stakeholder expectations (including, but by no means limited to customers), emerging standards and best practice, pressing risks and opportunities, and the company’s own competitive positioning.

The term “sustainability” is at once well-defined (I reckon most of the readers here can recite the Brundtland Commission’s definition) and poorly understood. Narinex must determine what sustainability means for itself. The results of the mapping exercise will inform this determination.

But beyond this, there is a significant difference between recognizing sustainability as an issue and internalizing it as a core business value. Moreover, there is a spectrum of strategic options available for realizing a stated goal. Therefore, Narinex must also engage its employees and shareholders to explore what place sustainability has in the corporate vision and culture. To what degree will Narinex value environmental, social, and governance performance, compared to more traditional financial measures? Will Narinex adopt a compliance strategy, emphasizing defensible adherence to and reliance on regulatory frameworks, or a stewardship strategy, working to reduce environmental and social impacts of the business and establishing company-wide minimum standards of performance, or perhaps a leadership strategy, seeking to leverage opportunities afforded by a proactive and intentional engagement on sustainability issues, or even a transformative strategy, striving to redefine the business itself? The CEO, with the engagement of the Board of Directors, should lead this review, and perhaps revision, of the corporate vision and culture.

Guided by a clear articulation of vision and an intentional selection of a strategic position, Ms. Brown will then be in a position to assess whether her existing team is able – in terms of organization, skills, knowledge, and resources – to implement the strategy to realize the vision, or whether a new position of Chief Sustainability Officer is warranted, and, if the latter, whether an internal or external hire is most appropriate. (But let me be clear: Ms. Brown’s existing team should be fully engaged in the sustainability mapping and visioning exercise and eventual implementation of strategy.)

The sustainability mapping and visioning can begin immediately, and in itself makes a strong story to tell key stakeholders: we’re taking this seriously, we’re looking at it carefully, and we will move forward thoughtfully and strategically.

At risk of being verbose, let me make one additional comment on the use of consultants. Narinex realized significant value in the outsourcing of R&D, by establishing relationships and collaborating with “a great network of global designers.” As Don Tapscott and Anthony Williams suggested in their book, Wikinomics, “there are always more smart people outside your enterprise boundaries than there are inside.” This is true as much for sustainability matters as for R&D. There is outstanding expertise available worldwide in sustainability mapping, visioning, strategy development, and implementation. Narinex would be well-advised to tap into this wisdom and experience to complement its own in-house expertise. Moreover, you needn’t look too hard to find consultants in this field who get invested for the long term; most sustainability practitioners I know are passionate and committed to a degree unmatched in many other disciplines, perhaps driven as they are by core values and beliefs. [By way of disclosure, yes, I am a consultant.]

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