In the previous chapter we helped you understand how to set up better ways of sourcing materials from your supply chain. In this chapter it’s time to turn your attention inward to your own company and how sustainably it runs its own operations. In chapters 6 and 7, you’ll notice we’re taking a business flow approach — from the supply chain to the internal business as we discuss corporate citizenship. This order isn’t set in stone. It may make more sense to you to focus on your internal operations before you address your supply chain. There’s no wisdom in the particular order you dig into these areas, just that you think about them both in a strategic way. There are multiple opportunities waiting for you here — you just need to do a bit of digging to find them. In this chapter you’ll learn how to choose the most productive areas to focus on, so you can make your business a model for your suppliers and competitors to follow.
Why should you go to this effort? Because it’s the right thing to do of course, but that’s not actually the main reason. The big incentive for you to take a magnifying glass to your own company is that there’s a direct alignment between making it more sustainable and making it more efficient, profitable, and innovative. You have a golden opportunity to bring value to the bottom line, build competitive advantage in your marketplace, and develop your own business acumen in the process. Colleagues who until now may have been a bit skeptical about your financial or strategic contributions to the business will soon see your work with new eyes once you start delivering these results.
Going through this process systematically will also provide a deeper understanding of your corporation’s internal functions; you’ll discover how to work with key operational areas to become more sustainable and find ways to measure, track, and build upon this progress. Once you start shining a light on the key areas, people will pay more attention to them — which means they’ll also focus on you and your corporate citizenship work. In addition, you can report on your improvements externally, which will in turn create more momentum and rapidly move you toward a sustainable corporate citizenship ideal.
Your company may already have an internal environmental team, and if that’s the case you may be asking yourself why you need to get involved. Here’s the reason: your role is to give your company a faster, fitter, more meaningful, and efficient way of thinking about the future. Even the most sustainably run companies in the world are trying to improve in the areas covered in this chapter. You’ll probably be able to find additional opportunities, more than your environmental team colleagues will have the capacity to address; think of yourself as an internal consultant who helps them do their jobs better, expand their ambition and appreciate what’s possible, as they deliver even better results. Your company has most likely been running its internal operations in a “business as usual” mode for some time, and this is your chance to bring a fresh perspective.
Before you start trying to improve your company’s environmental efficiency, you need to find out how it’s performing right now. How much energy and water does your enterprise use today? How much waste does it generate? How are your corporation’s internal functions performing in the environmental realm as we speak?
In a moment we’ll explain how to find the information you need, but for now just focus on what you’re going to measure. Your corporation will already be tracking data such as sales, earnings per share, and cost of goods sold, so the basic mechanisms exist. The metrics you’re looking for, though, relate to its inner workings.
Let’s start with the big three: energy, water, and waste. You can’t create a sustainability strategy without getting good baseline data on these, at a minimum. How do you do this? You find out who pays the bills and tracks usage (this might be an energy or compliance team) and ask them for the information. It isn’t usually too complicated to get at least some of your data this way, even if it’s only a start.
Once you know what to look for and where to find it, and have set up a measurement system to track it, you’ll start finding opportunities everywhere you go. Through this you’ll be driving a more sustainable business strategy, which over time will build your business’ resilience and sustainability. As you progress, this will get faster and faster like a big flywheel. Think of your data as being the fuel that feeds the forward motion; as you know what to measure and share the results of your strategy, others see the value in what you’re doing, which attracts support, which in turn provides more leverage in the business. Just be sure to give credit where it’s due — to the teams driving and investing in the work.
You’ll probably find delving into energy, water, and waste to be a challenge, but it’s also an amazing exercise to help you understand more about your company’s major environmental footprint today. We’ll take each of these three areas in turn, below.
Energy feeds everything in your business, and with climate change and renewable energy getting so much attention there’s a lot of opportunity to make sustainable changes. The term “energy” can cover elements including electricity, natural gas, fuels, and even steam. What’s more, your company’s energy use isn’t only related to what it needs to run its base operations, it also covers the energy used by your suppliers as well as that related to the transportation of products and employees.
So how do you find out how much energy your company uses in its operations? Some companies may have this information available already (although not necessarily all in one place), and if yours does that’s great for you, but even then you need to understand the context and what the numbers mean.
There are resources for this. If you are operating in the United States, the Environmental Protection Agency has tools to help you translate the information you find internally into greenhouse gas equivalents.1 You can also check out the greenhouse gas protocol developed by the World Resources Institute,2 and the information on energy published by the World Business Council for Sustainable Development.3
Your task at this stage is simply to figure out what you do and don’t know. Try not to get bogged down in the complexity of it all — you’ll never discover everything to do with your company’s energy use. Just establish some principles and baseline measures which you will use. Ask yourself how well you can answer this question: how much energy does my company use, and where does it use it?
Sidebar 4: Microsoft Goes Carbon Neutral
MAKING CARBON NEUTRAL COST-EFFECTIVE
In 2012, Microsoft established an internal “carbon fee.” It began charging its own business divisions for their carbon emissions based on their energy consumption including electricity use and business air travel. This dramatic move helped the company achieve its goal of carbon neutrality and net-zero emissions for its data centers, software development labs, offices, and other functions. “We instituted a carbon fee last year because it had the potential to ignite a culture change, and that’s exactly what’s starting to happen,” says Rob Bernard, Microsoft’s chief environmental strategist. “A carbon price means that we now have a common language for how to drive awareness around and begin to reduce emissions. It’s made environmental sustainability an increasingly important part of how Microsoft does business.” The carbon fee has helped support both energy savings projects at Microsoft and increased purchases of renewable power to make Microsoft the second largest purchaser of green power in the United States, according to the U.S. Environmental Protection Agency. The carbon fee also helped fund a new power purchase agreement Microsoft made to buy the energy from a new 100 MW wind farm in Texas.
Water is usually a simpler area to measure than energy. If your business isn’t large, it might be as easy as pulling out your last few water bills. However, most big corporations derive their water from more than just one municipal source; they might get it from surface water (rivers, lakes, or streams), wells, recycled water systems, and gray water sources. Almost every major manufacturer on the planet has a significant need for water in every aspect of their production process.
Not only do you need to understand how much water you use, but also where it comes from, how it’s used and where it goes once you’ve finished with it — how much goes into making your products, and how much gets recycled or pumped back into the original or alternate sources, or into municipal treatment systems.
Waste is usually the easiest area to get baseline data on. Your business will almost certainly have a contract with a waste vendor or recycling facility, so it shouldn’t be too difficult to measure how much waste is leaving the building, how much is being recycled, how much is going into landfill, and how much is going to a hazardous waste treatment facility.
Depending on what kind of business you work in, you might find there are more waste measures that are specific to your company or sector. For example, some manufacturers emit waste into the air. These substances go by various different acronyms which you’ll have to learn, for instance VOC (volatile organic compounds), and NOx and SOx (oxides of nitrogen and sulfur). Particulates and ozone are key air pollutants and are the main precursors of smog around the world (e.g., think of the air pollution problems in Beijing). Understanding these details can get a little challenging when you’re not a manufacturing expert, but just try to get your head around the top line information.
The great thing is that working out what kinds of waste your company is generating, and how it deals with it, are key measures that go straight to the financial bottom line. No business is in place to manufacture waste, so when you identify ways to reduce it that’s a double win for your company and your community.
No matter what type of company you work in, you could potentially measure tens if not hundreds of inputs and outputs to do with energy, water, and waste. This would be a full-time job, and is of course totally impractical.
Instead, figure out the two to five major areas that are most relevant for your business. For example, if you’re a timber company producing wood, paper, pulp, and corrugate, you might create a separate set of data for each output. One of your key business indicators would be the number of products you can make from a certain number of trees, and your objective would be to increase the volume of output for the resources you use.
So now that you have baseline measures in place it’s time to take action. How will you create goals and performance targets, based on the starting points you’ve identified?
First, do some easy benchmarking. Look to your peers and competitors if you need a quick level set on the key metrics for your own business. As a minimum you want to be able to assess and communicate the same types of environmental data your competitors use (and ideally you want to do better). All businesses love to compete, so you’ll find your management team more than happy to engage when you share what your competition is doing on key performance indicators. Even businesses outside your sector can be motivational because they demonstrate what’s possible.
Before you go any further into goal setting it’s helpful to understand new ways of thinking called “context-based,” or sometimes “science-based,” goals. Leading companies are evolving their reasoning around environmental goal setting, so instead of stating they’re going to reduce their water use by 3 percent next year, they look at whether or not that makes sense in their business and geography. A corporation with a manufacturing facility based in the Arizona desert might create a more aggressive water reduction strategy than one operating out of Seattle or London, for instance.
This makes a lot of sense, both from a business and risk perspective. You may have read about the global environmental standards produced by agreements such as the Kyoto Protocol, or COP21. These aren’t focused on a single company reducing energy use by 2 percent, rather they demand a reduction of greenhouse gases globally. More and more companies are looking at their goals and attaching them to this global context, rather than simply looking inward to their own performance.
This is much harder to envision than a simple, internal corporate goal. Everybody understands what a 1 or 2 percent reduction means, but signing up for some impact in society that’s different in one place compared to another can be much more challenging. It might lead you to avoid sourcing ingredients from areas that are water scarce, for example. So although it makes sense to think about goals in this way because you’re looking at the bigger picture, it’s a lot harder to communicate in a language that’s understandable to most executives. After all, they didn’t go into business to worry about how their company will keep the climate from increasing in temperature by more than two degrees centigrade, did they? How would you measure the effect your efforts are having on the world? And how much could you claim “credit” for, if you’re a food company compared to an automotive manufacturer?
This is still an emerging area, but over the next few years it’s going to become a huge part of your job so it’s a good idea to become familiar with it now.
Increasingly, potential employees make decisions about where they want to work based on how safe they think their workplace will be, the benefits they will receive, and how good they perceive the culture to be in terms of taking care of their physical and emotional health. So you can see employee health and well-being is a key opportunity area for companies in the 21st century. Often it’s overlooked, or allocated to departments such as operations or human resources, but even there it rarely gets the attention it deserves.
If you feel your company could do more to make itself attractive to employees (and which company couldn’t?) this isn’t something that happens on its own: you need to help drive the agenda. You’re bound to have heard about the cool workplaces being developed in the tech world, which is creating a trickle-down set of expectations for all employees. Nowadays many businesses have fitness centers, in-house nutritionists, relaxing break areas, on-site childcare, parental leave, and other amenities, in order to create an environment in which employees enjoy working and feel safe.
How would you create baseline measures for these benefits or the amount of money your corporation invests in employee well-being, and how would you track it going forward? This is not an easy task, but depending on your industry there are obvious places you could start. If you’re in the oil and gas sector, for instance, does your company have a zero tolerance for unsafe behaviors? If so, you’ll need to set goals around them. That in turn means you’ll need to ensure there’s training around these expectations, and benchmarking to see how your business compares to others in the sector.
Of course you don’t need to become an expert in health and safety, but you do need to help your company set targets and report progress. As you’re no doubt aware by now, you have to know a little about a lot of things when you’re a corporate citizenship professional. The more you assess the competitive landscape, the regulatory frameworks, and the cutting-edge technologies for all the topics in this book, the more you’ll enjoy your job and the more value you’ll bring to your company.
Finally, one of the most strategic things you can do in this area is to help communicate your health and well-being achievements to potential employees, your local community (which is where many of your employees will come from), and internally. Figure out which of these factors is a significant competitive advantage, so that your workplace becomes the place everyone wants to choose.
Believe it or not, your physical place of work is often the easiest and most effective place to start bringing corporate citizenship to life. If you think about it, putting a dedicated effort into improving the sustainability of your workplace not only pays cost-saving dividends, it can also play a key role in strengthening your company culture around your commitment to being environmentally friendly. Whether you work in a single building, a leased space, a network of buildings, or in a huge corporation, you can increase your sustainability in many different ways.
How do you go about this? Several resources exist to help make your workplace greener. These range from user-friendly technology to formal research. For information about building standards take a look at the U.S. Green Building Council’s LEED standards; these focus on improving design and sustainability in the building itself. For technology there are smart systems you can investigate: sensors that turn lights on and off depending on whether people are around, temperature systems that know when people are in the building, and water-use devices that take gray water and recycle it, to name but a few. Even low-tech initiatives such as having different bins for recycling and regular waste are a step forward.
In terms of your actual offices, there are all kinds of opportunities for improving sustainability in furnishing and furniture, building materials, seating, desks, and technology. Each one of these has a sustainability story behind it. Remember, your company’s employees are its best ambassadors, so if you want it to have an environmentally friendly image on the outside, you need to reflect that from the inside by walking the talk.
You have multiple chances to create an internal culture of sustainability using company signage and notices. How about highlighting your community activities and corporate citizenship achievements visually, in the entry lobby and hallways? Actually, it’s often employees themselves who have the best ideas about how to make their workplace more environmentally friendly. You could crowd-source suggestions from them. This could be as simple as having a suggestion box, or as technical as creating an online platform which allows people to rate ideas. Experience shows an effective way to achieve improvement is to give employees accountability for implementing their own suggestions; if they have the assignment to figure out what they want in a cost-effective way, they’ll own the idea as well as need to sell it, which means they’ll feel motivated to make it come to life.
Unlike buildings, travel isn’t something you can “see” which is why most people overlook it. However, it’s actually a part of your workplace facilities and impact.
Take commuting for instance — there are many things you can do to promote greener options. This could range from company parking spaces dedicated to shared pool cars, or providing incentives for people to bike to work. Charging stations for electric cars have become expected, and many electric utilities will install these for zero or low cost. When you multiply the incremental environmental benefits for one employee by thousands, you can see how this can be an area of high impact.
You can also build recognition systems for community involvement around sustainability. Almost every local municipality in the developed world has some kind of local partnership in which they’re working with companies to share best practices — yours is bound to have one. Consider other local businesses, or merchants where your employees may shop, as potential partners for your employee-focused programs. For instance, a local car retailer could offer your employees discounts on electric or hybrid cars, or the local utility may have discounts on roof-mounted solar panels. Don’t forget to find a way to highlight employees who take advantage of these benefits.
Stepping back from individuals, let’s look at business travel and fleet management. Most travel agents have efficiency programs you can implement. Each time they book a flight for an employee they can show the greenhouse gas impact of it in the itinerary; at that point either the employee or their company can choose to offset the impact by paying a small premium, or planting trees, or some other parallel offset activity. At the end of the year the agent can report how many miles your company has flown and even what the CO2 emissions were. It’s a great piece of information to communicate the fact you’re monitoring it, and also to prove you’re making positive changes.
Even rental car operators can help you identify greener options in your company fleet; there’s a lot of innovation out there to help you, and it’s usually free — just ask. Courier contracts are another place to look for improvements. The big firms have amazing schemes that can help you build sustainable practices that save costs and energy, such as grouping collections into certain days of the week. Even large office supply companies have environmental sustainability strategies to help corporations, and they’re just waiting for your call. On the broader logistical front, there are many other tools. For instance, there’s an external framework for the U.S. Environmental Protection Agency called SmartWay, which is a certification for road trucks covering a range of areas from fuel efficiency to aerodynamics; you can ask your suppliers to ensure their trucks are SmartWay certified.
So you can see how much free help is out there for you to access. The beauty of it is that it’s incredibly measurable and cost efficient, a win-win for both you and your corporation.
If you work for a consumer goods company, or any business manufacturing a physical product, the packaging you use is a key opportunity for environmental advantage.
Like all the changes we’ve talked about in this chapter, packaging doesn’t become sustainable on its own; you need an overt strategy, and it’s not an easy area. Although there are cost benefits for companies in, for instance, making their packaging lighter in weight, the consumer is looking for convenience. We’ve grown to love individually packaged products especially when they’re shipped from online retailers; everything comes in its own little box with its own bubble wrap. So unlike transportation or even energy, where moving to a more sustainable system is always win-win, packaging can be more challenging to improve. That’s why you need to be very deliberate in how you tackle it.
The key to this is to partner up with your packaging suppliers and vendors. Agree to a set of goals and ask them to incorporate, for example, recycled materials wherever possible. Another option is to reduce secondary packaging (that’s packaging which goes around the original to keep the product safe during shipping or distribution), or to send the packaging back to your supplier for recycling once you’ve received the goods. There are lots of ideas you can implement, and it can be a great opportunity to be imaginative. Just don’t forget to keep track of the data and measure your progress. You don’t want to eliminate a million pounds of packaging and miss the chance to communicate your environmental and bottom line savings.
One way to make this simpler but also generate tremendous value is to create objectives during packaging redesign or at critical packaging decision points. This means every time a product is being reviewed and its packaging redesigned, someone takes the time to determine if it can be made lighter in weight, more renewable, or recyclable. Just asking these questions can go a long way toward transforming your business’s packaging footprint. They won’t get asked on their own, though — you need baseline measures, a strategy, and longer term goals in place before product managers implement it.
There are plenty of resources to learn about different types of packaging materials. Most of the fiber, plastics, glass, and metal trading associations have life-cycle assessments for their packaging, along with advice on how to move to more sustainable options. In the United States, the Sustainable Packaging Coalition is one of several groups that highlights and promotes environmentally friendly packaging opportunities, as do trade groups for every type of material.
Although consumers value convenience, they also love the message recycled packaging sends to them; it’s a clear indicator the company is serious about sustainability. As a result, it’s one of the most straightforward ways to send a credible environmental message without spending money on advertising. You’re demonstrating to consumers on an individual basis; you’re not just saying the right things, you’re actually doing them. One of the most notable examples of this happened when Dell began developing packing from 100 percent compostable mushrooms and straw. The package was so benign to the environment, it was literally edible and company founder Michael Dell demonstrated it as such when he ate a bit of it dipped in soy sauce in front of a sustainable business audience in 2015.
You are aware by now that tackling your company’s internal environmental footprint is an innovative process, where you work alongside diverse external and internal functions to change processes that may have been in place for decades. Tapping into the innovation cycle is absolutely critical if you want your work to embed itself in the overall innovation process. If you don’t do this, you’ll forever try to keep up with people who have agendas that aren’t necessarily aligned with yours.
Somewhere in your company is a person or group responsible for innovation and creating new ideas. These teams can be hard to find and may come under names that don’t obviously link to innovation; they’re usually related to corporate strategy, research and development, or possibly product development or marketing. If you’re in a huge organization working across various sectors, innovation and strategic processes can be spread across different parts of your business. Developing a consistent, enterprise-wide approach to tapping into how innovation is done is probably not in your job description, but determining how to integrate your ideas into the process can provide additional benefits. While it’s difficult to initially insert yourself into the innovation process, it will save time and energy later, and means you won’t have to be there to “force” it, each time. It will simply happen, and the impact will multiply as the years go by.
For instance, why does your company use one transportation or packaging supplier instead of another which offers more environmentally friendly products or services? If you can find out when this kind of decision is made, who makes it, and how it’s measured, you’re able to influence a process that can deliver a larger and longer lasting impact.
Now you’re starting to embed corporate citizenship into the innovative cycle of your corporation. In time, you can go from simply reducing energy and water use, to influencing what gets funded for a capital project and even the characteristics of companies considered for mergers and acquisitions. For instance, when a new building is being planned, employee well-being and sustainable design criteria can be considered as part of the process, rather than an afterthought.
If you put these leadership and management strategies in place within your corporate citizenship strategy, you’ll start to create real value and position your company for the next century, while building competitive advantage for your company. It’s a long-term effort and one of the toughest areas of your job, but it’s essential. It’s an achievement that will remain in place long after you’ve been promoted to your next role.