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Sustainability in tough economic times: 7 questions to spur your efforts
What’s Going On Here?
How to Move Forward and Embed Sustainability in the Organizational DNA?
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In a recent Calgary Herald article on the challenges facing Alberta’s coal-fired generating stations in a carbon-constrained future, TransAlta President and CEO, Steve Snyder said "we have to solve the carbon dioxide issue, but we can’t bankrupt the province to solve the problem." ("Alberta in CO2 firing line", May 2, 2009.) In doing so, he inadvertently perpetuated an image of environmental protection as the purview of earnest do-gooders who don’t understand business. And so it is that in the face of the worst recession in 80 years there have been calls in some quarters to back off on the accelerator that was inexorably moving sustainability forward and upward on Calgary’s corporate agendas. 

We need to redefine and reframe sustainability, and quickly, to both guard against erosion of the concept and to remind corporate leaders that sustainability and business strategy - and the material and social success that hopefully comes with that - are not mutually exclusive.   

Context
The "economy versus the environment" or "jobs versus the environment" argument is, to my way of thinking, understandable, but also tired. It’s understandable because any system is, by its nature, resistant to change.  Moreover, in the absence of a compelling argument to change the system those with their hands on the levers that could do just that will tend to affirm the status quo. 

The argument is also tired, however, because sustainability is much more than a higher, faster brand of environmentalism with little to contribute to business and societal success. Research and the experience of firms and cities around the world increasingly points out that sustainability can both protect existing assets and value and provide the basis for new wealth creation.

By way of example, in 2000 and 2001, the European Union (EU) committed to an economic growth plan that placed sustainability squarely alongside competitiveness. By the end of 2007 the growth rate in GDP of the 15 core EU members was 20 per cent better than the US. According to the EU Directorate-General for the Environment, the most visible effect of the growth was a shift of "resources from polluting sectors to more environmentally friendly sectors." Conspicuous areas of growth include pollution control, sustainable energy, waste and water treatment, recycling and eco-tourism.

In the context of the current recession, a number of high-profile corporate voices have taken the macro-economic story down to the level of individual firms and their supply chains and reminded us that sustainability, rather than being a drag on economic recovery, can actually speed the recovery. 

Nicholas Stern, head of the Grantham Research Institute on Climate Change at the London School of Economics, and author of the influential 2006 report on the economics of climate change, The Stern Review, argues that "the arrival of the recession actually strengthens the argument" (to invest in technology and make deep cuts in carbon emissions). 

"At times of recession, it’s cheaper to invest, because there’s less pressure on resources." He further notes that any attempt to "rekindle high carbon growth would be a big mistake.  Essentially, it would be trying to invest in something which has a really limited future."

This view is echoed by Jeroen van der Veer, CEO of Royal Dutch Shell and Chairman of the Energy and Climate Change working group of the European Round Table of Industrialists:

The Shell CEO added that "strong incentives to cut greenhouse gas emissions could kick-start private investment and help to fuel an economic recovery." 

Wal-Mart has also sent an interesting and powerful signal to its supply chain partners that the world’s largest retailer isn’t backing away from sustainability in the recession. At a recent assembly of its Chinese suppliers in Beijing to discuss the company’s expectations and standards on environmental and social issues, CEO Lee Scott said that any non-compliant companies would be "banned from making products for Wal-Mart." Scott’s blunt assessment reflects his growing awareness that sustainability and profitability can go hand-in-hand:


What’s Going On Here?
Why are some mainstream business leaders now speaking about the strategic benefits of sustainability in a recession? Put simply, they see sustainability not as a problem to be solved, but as a future to be created — as a pragmatic response to business and organizational realities that are cast into sharp relief by planning and risk management that deliberately looks beyond the horizon of the next quarter or the next year.

What is it going to cost to heat our buildings in 2050? How will we move people and goods around our cities and country at that time? How should we? Smart business and community leaders know that we need to start taking the implications of development and business practice choices over the long term into account now as a form of prudent risk management.

Let’s take energy as an example. As oil recovers and begins its inevitable climb back towards (and beyond?) $100 a barrel, it is important to remember that this cost increase is not the same as a tax at the cash register.  Rather, it affects the supply chain every time anyone in that supply chain starts an ignition key or uses a machine. Energy costs touch products and services many times before they reach the consumer, causing exponential growth in the energy-cost component of a good or service.

Doing business or planning communities without paying attention to energy costs — even in the short term, is turning a blind eye to serious risks to shareholder and societal value.


How to Move Forward and Embed Sustainability in the Organizational DNA?
Robert Altman’s wonderfully cynical film about the movie business, The Player, contains an essential truth about stories that may be instructive in framing the sustainability proposition for tough economic times. In the film, the central character, a movie producer, is asked why a particular screenplay wasn’t filmed. He says it lacked certain qualities necessary to make a commercially successful movie. There is a pause. He expands on his answer. He says up, as opposed to down; happy as opposed to sad; hopeful as opposed to desperate; and a happy ending:especially a happy ending. His point is that while all people like stories; most people like stories that offer hope — and a happy ending. Stories in which good triumphs over evil; stories propelled by an engaging and entertaining narrative — the route to the happy ending matters.

Now consider the way in which the sustainability "story" has been told - both to external stakeholders and to our colleagues down the hall. Is it any wonder the majority of people have tuned out? We need to forge a story about sustainability that hasn’t been told yet (or told well). We need to shape a compelling vision of the future, and sell that vision with the kind of passion, money and marketing savvy that Hollywood sells movies. We need to convince people through the art of storytelling that this vision is worth fighting for.

To begin telling this story, we should take advantage of the breathing space the recession creates for reflection and innovation and define a vision of our organization, project, or community as sustainable. In particular, we should ask what we would do to be truly sustainable that is different from what we do now. This vision should be a manifesto for change that catalyzes critical and creative thinking. 

On the one hand, this means getting the foundational things right - the environment, health, safety and social management systems that are sometimes neglected when we’re sprinting to keep up with the market. The (forced) slowdown caused by the recession creates room to put these essential systems into place.  But of course, sustainability means going beyond the basics - especially in tough economic times. It is about finding efficiencies by leveraging R&D to reduce the environmental footprint of business processes; rethinking the nature of the business processes themselves; and working with government to direct stimulus funding in service of sustainability outcomes - speeding a "green" recovery and the creation of a new generation of goods and economic opportunity. I typically ask 7 questions to spur the thinking and deep conversation that can guide in moving toward these kinds of outcomes:

1. Why does my firm or organization exist? What am I producing or creating that is truly of value to the community of which I am a part?
2. What are my assumptions about resource constraints and commodity prices in the medium and long run?
3. Am I changing or even challenging the mainstream profession and its dogma, or am I content to do the occasional boutique project?
4. What does sustainability mean to me and my colleagues? Where is it on the strategic radar of my organization?
5. How do (or should) we engage our customers and partners in a meaningful discussion of sustainability?
6. How should we think about and measure success?
7. What are we doing to protect (and grow) critical local economy assets that are needed to ensure success - assets such as: (1) an environment for entrepreneurialism; (2) an infrastructure for scientific research; (3) great universities; (4) a strong commitment to real competition and free markets; and (5) efficient capital markets.

In thinking about these questions, it is instructive to remember that In 1908, the Ford Model-T got better mileage - 25 miles per gallon - than many Ford, GM and Chrysler models made in 2008. While the complexities of the U.S. auto industry are real, and different in many respects from other industries, we can’t help but wonder why a century of innovation in managerial thought and science and technology didn’t deliver greater gains in vehicle fuel efficiency. Thomas Friedman, the influential Op-Ed columnist for The New York Times, commented on this very issue when he observed that while the Big Three auto makers were looking for bailout money to sustain a fundamentally 20th century business model, new entrepreneurs were breaking the auto mold such as Shai Agassi’s electric car network company, Better Place:
   
Under the Better Place model, consumers buy or lease an electric car and then buy miles on their electric car batteries from Better Place the way consumers now buy an Apple cell phone and the minutes from AT&T. In this way, Better Place benefits from each mile driven. GM once sold cars; Better Place sells mobility miles. This is a strategic leap forward from the 20th century model popularized by the Detroit automakers - it is a re-start of the industrial economy. And it raises a fundamental question for all companies — what is the Better Place story for your organization, and who is working on it?

Our willingness to ask searching questions about what we do and why we do it; our willingness to engage our colleagues in a different kind of learning; and our willingness to accept that there are many ways of knowing should shape our ability to meet the challenge of keeping sustainability central to the task of management in tough economic times. Put another way, it will determine if we can, as Proust would have us, "see with new eyes" and frame our response to the recession to accord with the principles of sustainability. After all, even the narrowest definition of sustainability - using environmental innovation to create new ways to design, manufacture, and provide goods and services that use dramatically less resources - is a sound strategy for generating value.

Rob Abbott is the Director of Sustainability for Stratos Inc., Canada’s leading strategic consultancy focused on sustainability. You can reach him at rabbott@stratos-sts.com.

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