Author: Douglas J. Lattner, Chairman and CEO of Deloitte Consulting LLP
It seems that no matter how we get our news these days—be it the newspaper, television, radio or via the Internet—the environment is an inescapable topic of discussion worldwide. Debates on global warming, pollution, energy and waste have spilled over into everyday life—and Corporate America is no exception.
As a business issue, “greening” has moved up the corporate agenda and evolved from a specialty area into a mainstream priority in just a few short years. Companies such as Wal-Mart, General Electric and Nike have kicked-off massive campaigns that have grabbed headlines and consumer attention. Countless other organizations have pledged to become carbon neutral or reduce energy consumption.
But while Corporate America is rapidly going green, it is vital that companies note the changing landscapes of public perception and regulatory influence. Today, business executives seeking to enhance their corporate responsibility agenda will find themselves up against a public that is more knowledgeable, and as a result, more critical of what constitutes a sincere effort. Regulators will also undoubtedly challenge companies with new rules and oversight. And shareholders will continue to raise transparency and disclosure issues through the governance and proxy process.
These factors highlight the harsh realities of just how difficult it can be to effectively incorporate sustainability and corporate responsibility into profitable businesses.It is no longer enough to approach the issues on a project-by project basis, nor is it sufficient to solely create a new executive position, function or department.
To produce the results that a company requires—growth, profitability and value—while improving social impact on communities here and abroad, and helping the environment, executives must approach a business strategy with allowances for social and environmental factors like never before.
Perceived cost and lack of market interest have historically been reasons for not embracing sustainability.But if approached systematically, research suggests that sustainability and corporate responsibility investments actually reduce costs, add value, and have a positive impact on the environment.
What we’ve found at Deloitte Consulting is that many organizations understand the benefits of sustainability and desire them.They are also beginning to understand how the landscape is changing and the importance of transitioning to a sustainable enterprise.Yet, for many of them, their greatest challenge is how to get there.
Wholly Sustainable Enterprise
Transforming a company for sustainability requires executives to reconsider environmental and social factors in everyaspect of their business, from products and services, to the workplace, the workforce, supply chain, marketing and branding, and governance. .In doing so, a company can become what we call a “wholly sustainable enterprise” – one that generates growth, profitability and value by applying principles of sustainability across the entire base of activity.
General Electric was one of the early adopters of a broad approach to sustainability.From its branding of products, to its workforce, GE executives have begun to change how social and environmental factors affect value. And the marketplace has responded, as GE has generated billions of dollars of revenue for products labeled under the ‘Ecomagination’ campaign. The success of GE has, however, highlighted another important issue for companies moving this direction- for all of the positive results, much has been published that is openly skeptical of GE’s motives in going green. Wal-Mart and others face the same issue- while positive strides are being made, there is intense scrutiny on what constitutes ‘enough.’
