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Slide 1: OCTOBER 15, 2008 Going Green? DON’T HIRE A SUSTAINABILITY CHIEF UNTIL YOU READ THIS STUDY! Hudson Gain Studies The Chief Sustainability Officer Role In Corporations
Slide 2: Healthy organizationshave always looked for ways to reduce costs in the near term, appeal to customers and employees, and ensure the long term viability of the organization. The current trend toward sustainability in organizations is exciting because it supports all of these business objectives. Hudson Gain Corporation, the leadership solutions firm, has conducted a comprehensive study on sustainability and leadership. Specifically we reviewed the role of the head of sustainability in organizations. The study includes research on over 1200 companies, and leverages interviews with over 60 sustainability executives. This document provides insight on the key responsibilities and challenges of the sustainability boss, as well as guidance for creating and filling the role. We hope this study will prove useful to any organization seeking to fill the role of chief sustainability officer, whether creating the role for the first time or upgrading the function, or whether filling the role with an internal candidate or conducting an external search for the right sustainability leader.
Slide 3: Table of Contents Introduction ...................................................................................................................................................................... 4 Scope And Methodology .................................................................................................................................................. 7 Conclusions ...................................................................................................................................................................... 9 Case Study........................................................................................................................................................................ 11 Requirements For The Corporate Head Of Sustainability Job .................................................................................... 13 Challenges Of Sitting CSOs............................................................................................................................................ 23 Top Sustainability Leadership – Companies And People ............................................................................................25 Looking Ahead To Sustainability 1.0 And 2.0 ................................................................................................................28 Best Quotes From Our Interviews ..................................................................................................................................31 Credits ..............................................................................................................................................................................33 3
Slide 4: Introduction The coming decades will prove to be a trying and exciting journey where organizations and their leaders will find solutions to capture elusive energy sources, find enough water for growing populations without polluting too much of it, slow global climate change, and preserve the ecosystem that supports all forms of life, including customers and companies. Now is the time for boards, CEOs, CFOs and HR executives to ask, “Does my organization have the right sustainability role to win this challenge? Do we have the right person in this critical role?” In this study we provide a definition of sustainability, “must have” criteria for the top sustainability job in organizations who are selecting someone to lead the sustainability function, a list of the top three sustainability bosses, and other great findings and quotes from our research of over 1200 organiza- Now is the time for boards, CEOs, CFOs and HR executives to ask, “Does my organization have the right sustainability role to win this challenge?” tions, and our interviews with over 60 sustainability executives. For the purposes of this study, we sometimes refer to an orga- nization’s top role in sustainability as the “Chief Sustainability Officer” or as the “CSO.” In practice, the actual job titles vary greatly and include terms such as Green, Sustainability, Environment, Community and Social Responsibility. In other cases the role was a sub- 4
Slide 5: set of a leadership role in another function such as Operations or Communications. through sustainable business practices. The philosophies behind many of the current organizational sustainability practices can be traced back to the Sustainability: What Is It? When companies and decision makers start to look at sustainability as an issue, they are bombarded with reams of data about green, alternative energy, recycling, carbon footprint, responsibility, and the seemingly endless variations on the definition of Brundtland Commission (World Commission on Environment and Development, 1987), which defines sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” Our study focused on the voice of the executives who “sustainability.” You might find many debates about are leading sustainability efforts on behalf of major the motives of big corporations that publicize their corporations and non-profits, and in this elite circle sustainability programs, versus the argument that of sustainability executives, there is a tendency the largest organizations are the ones who stand to toward a consistent definition of “sustainability” that make the biggest impact for the planet. If you find all is often referred to as the “triple bottom line.” The of this daunting, we have encouraging news for you. three Ps of the triple bottom line are Profit, People There are simple long-standing principles that organand Planet. izations use to measure and improve their business 5
Slide 6: PROFIT – from reducing waste and costs today, to ensuring that resources will be available for sustainable profitable operations long term. PEOPLE – from compliance in HR, OSHA and customer safety today, to social responsibility and ensuring the sustainable well-being of future generations of customers and employees. PLANET – from environmental compliance today, to long term global environmental viability to sustain the ecosystem that human life and commerce depend on. While each organization’s definition might vary, the “triple bottom line” definition at least influences sustainability practices in most companies with a commitment to sustainability. 6
Slide 7: Scope And Methodology: Leading Companies In Sustainability Of 1241 companies that are on one or more of the Fortune 500, FT Global 500 or the Forbes Largest Private Companies lists, fewer than half of the companies list in their public documents an executive with at least partial responsibility for sustainability and the environment. Most surprising is that of the 1241 companies researched, there were only a total of 191 executives listed with responsibility for sustainability (and/or the environment) explicitly indicated in their job title. As it turned out, many other companies had someone performing sustainability duties and providing cross functional leadership to green activities that were bubbling up in various functions throughout the organization. We focused our study primarily on larger global public and private organizations, and we also included several mid sized specialty companies, universities and other organizations with advanced sustainability practices. In total we reviewed the credentials of 214 executives with key responsibility for sustainability, and we engaged 61 of them in a structured individual interview. To maximize the degree to which participants could be open and transparent with us, we agreed to make their participation and their employers anonymous and their comments unattributed. As we conducted our research and interviews, the spirit of the sustainability executive community was remarkable. The executives we interviewed had a clear spirit of sharing, and a true mission of preserving the environment and its resources for future generations, and they were equally committed to their fiduciary responsi- 7
Slide 8: bility to the employers, shareholders, customers and communities they impact. Companies Represented in the Interviews: For this study, Hudson Gain conducted original research and interviews with sustainability leaders from leading companies in a range of sectors including: Automobile Manufacturers Chemical Companies Consumer Products Energy Producers Media & Publishing Food and Beverage Healthcare Services including Hospital Systems Pharmaceuticals Retailers Financial Services Business Services Technology and Computer Products Universities 8
Slide 9: Conclusions The authors of this study conclude that it will continue to be a competitive advantage for a company to have a sustainability function. The reason is that many initiatives yield meaningful near term cost savings. Increasingly, sustainability leaders are identifying and making progress toward initiatives that promise long term efficiencies. Experienced sustainability leaders are also keen to strike a balance, and can point to just as many initiatives that present extreme long term ROI challenges. One head of sustainability said, “We can be the greenest company on the planet but if we are losing money, we won’t be in business any longer.” He and others also talked about the importance of the long view, reinforcing that sustainability is a function that looks well beyond the near term costs and savings. After all, if businesses do not operate in a way that ensures enough clean water, soil, air and energy to support growing populations, it will make it very hard for any business to be in business. Further, it is clear that there is a very limited talent pool of experienced sustainability executives. As noted earlier just over 200 sustainability bosses could be identified from over 1200 companies. For the typical newly created position, the Board, CEO, CFO and/or HR would determine the required skills and qualifications, interview candidates (internal and external) and appoint someone to the role. Because of the newness of sustainability as a dedicated business function, and because of the shortage of talent, instead of appointing someone to set a strategy, marshal resources and engage the organization, many CEOs are simply handing off the sustainability responsibilities to an existing employee whose main credentials are an interest in sus- 9
Slide 10: tainability and strong reputation in the company. While many sustainability chiefs have flourished in this scenario, this hiring strategy runs the risk of mixed results. Because of the newness of a formalized sustainability function, there simply are very few people with more than just a few years of experience. Boards, CEOs, CFOs and HR need to take a more systematic approach to designing the role, and selecting from available talent internally and externally, and developing and supporting that talent (see more under “Requirements for the Chief of Sustainability Job”). During our interviews, innovation had a high coincidence with sustainability leaders who were finding solutions to the long term challenges. Screening for innovation ability, and supporting innovation will be cru- cial to the successful hiring and development of sustainability talent. The authors of this study believe that Wall Street will ultimately reward sustainable practices. Sustainable business practices can impact the following metrics, and when they do, they will be posi- Wall Street will ultimately reward sustainable practices tively factored into the valuation of companies: • cost savings achieved through reduction of waste • reduced liability derived from more responsible handling of materials and pollutants • performance of a business based on their ability to attract and retain the most qualified employees • long term viability of a business due to its access to sustainable resources and customer bases 10
Slide 11: The challenge for companies today is to select, appoint and empower sustainability leaders who understand and act on this connection between sustainability, company performance, and company valuation. While there is a debate about whether or not long term prospects for Return on Investment (ROI) are realistic, we found at least one case study in which ROI from long term sustainability activities was both realistic, and reflected in net present value (NPV) in the short term. positive ROIs in the last few years. “Given that wasted carbon usually equates to wasted dollars, it’s no surprise that many of these have been reduction or efficiency projects” says Andrew Van Der Laan, lead for sustainability initiatives at Random House. “And it’s become increasingly clear that our “This was a project that made good business sense, even before we considered the environmental benefits.” core business strategy and our sustainability strategy are inextricably linked because of these efficiency opportunities.” A perfect example is Random House’s recent overhaul of their warehouse lighting. They replaced metal halide lights with fluorescent lights that used 40% less energy with no noticeable dif- Case Study Random House, Inc. is one company that has imple- ference in light output. Additionally, they installed motion detectors and timers to ensure that lights were always turned off in unoccupied portions of the facility, mented a number of environmental initiatives with 11
Slide 12: which increased the energy savings. This upgrade cost Random House just over $800,000, but the investment has been well worth it. The initial analysis suggested that the upgrade would reduce annual energy consumption by about 3.4 million kWhs, generating nearly $400,000 in annual savings, and that’s been borne out by the actual results in the first nine months after the project was completed. That’s a payback period of just over two years even at current electricity prices, which Van Der Laan notes have been increasing by double digit percentages for the last several years. “This was a project that made good business sense, even before we considered the environmental benefits,” he says. However, he points out that green was definitely part of the pitch, saying “We highlighted the fact that the regional grid supplying our warehouse facility derives much of its energy from coal, and therefore produced 50% greater emissions than the electricity we were using at other facilities. That let us talk about the additional benefit of reducing more emissions per dollar invested than would have been possible at any other facility.” 12
Slide 13: Requirements For The Corporate Head Of Sustainability Job We asked sustainability leaders what the requirements of the job are, and specifically, we asked what qualities are “universal” regardless of size of company or industry, for-profit or non-profit. As a control we also asked what they felt was specific to their industry or sector. Below are the top “universal” qualities, criteria and characteristics of effective sustainability executives: COMMUNICATION – Virtually everyone we interviewed placed a high importance on communications skills. CSOs need to educate and persuade, and they need to mobilize resources and inspire people to action. Communication is also seen as a lever for driving action by creating awareness of financial aspects. One leader encouraged, “sensitize people to the effect sustainability has on finances and reporting.” Many of the CSOs also warned against making communications the cornerstone of the strategy – if it is all talk and no science, or no action, the initiatives become hollow and tend to fail. TECHNOLOGY – A good CSO candidate needs to be generally familiar with the technology of the organization he or she serves as well as the technology of sustainability (energy, waste, carbon emissions, etc.) and how their company creates footprint in these areas. One CSO said, “The technology aspects of energy sustainability are universal.” The same can be argued for the science of waste, carbon emissions and many other technological components of sustainability strategy. FINANCIAL RESPONSIBILITY – While most of the CSOs agreed there are long term benefits that compa- 13
Slide 14: nies often strive for, the great majority cited short term opportunities to save money with sustainability practices. One executive told us that it is much easier to build support for sustainability, “if it saves money, and if it improves your standing on Wall Street.” MEASUREMENT – Gather data, establish your baseline, benchmark to your peers, set goals, and continuously improve, measure, and start the cycle all over again. INNOVATION – Most of the CSOs were very modest about what is happening in the field today, and stressed the urgency to find new drivers of sustainability. To paraphrase the comments of many of our interviewees - what is going on now is not enough. ETHICS – Keeping balance among the three Ps of the triple bottom line - profits, people and planet - and pur- suing these with transparency and for the right reasons. SUPPLY CHAIN – CSOs need to understand the entire supply chain in order to reduce footprint at each stage of design, sourcing, producing and delivering the goods and services of their organization. The most advanced sustainability programs are making changes in their own operations, throughout their supply chain, and in their suppliers’ and customers’ behavior. They’re driving customer behavior by both educating their customers, and by leading R&D to change products in a way that is conducive to lower energy use, greater recyclability and reduced end of use impact. OPERATIONS, STRUCTURE AND CULTURE – CSOs need an understanding of how structure and culture works in order to have the type of impact required to make sustainability a priority for every department and 14
Slide 15: division in the organization, and have to be empowered by Boards, CEOs, CFOs and HR with the right authority and resources to get the job done. As one person put it, “Sustainability is a direction that every department must take. It’s a matrix organization; I have to partner with all the functions. Sustainability is about alignment.” The above requirements were voiced consistently during our interviews with CSOs. A number of other worthy requirements were suggested as well, and they include: • Operational expertise such as understanding of cooling systems and facilities. • Deep technical expertise in the underlying science and engineering that will ultimately drive change. • Ability to foster complete change in a business, or as one CSO put it, “we’ve been a natural gas company [for many decades]; there won’t be any gas companies in the next century.” • Commitment to the 3 P’s of sustainability. • Ability to change culture, and make sustainability part of every job. • Ability to marshal support. • Support from the CEO, the C-suite and the board. Yet one sustainability leader added, “what the C-suite is looking for is a little shy of what is needed.” • Quantitative approach, measurement, ability to quantify carbon footprint and other parameters. • Ability to influence all levels and functions. • Ability to generate cost savings, and ability to persuade others about importance of long term benefits that may incur higher costs today. • Financial approach to showing ROI. 15
Slide 16: • Partner with the communications function. • Combination of business and environmental backgrounds. This is a breed of executive with multifaceted motivations. What will lure them is the opportunity to have the biggest, most enduring impact on the largest number of constituents. If your company is ready to • Measurable prior success in sustainability. • Understand your specific industry, and understand most of what gets done in sustainability is transferable across industries. support such challenges and benefit from conquering such challenges, then you will be in position to attract the best CSO talent. Even if your company already has a sustainability func- • • Strong auditing skills. • Strong vendor selection and management skills. • Strong project management skills. Ability to map the company’s impact. tion, expect it will continuously change in the coming years, as new, more impactful best practices emerge. Organizations should place in the role someone who leads, innovates and builds, rather than someone who operates or manages. Advice to companies looking to hire their first CSO and advice to new CSOs This is not your father’s career. Stock and cash alone will not lure a sustainability boss away from a top post. 16
Slide 17: Some additional advice from the panel of CSOs we interviewed • Find a way to tie sustainability to values that already exist in and drive your company. • Look for the right talent internally and externally to lead the charge. • “The better educated graduates want their personal values to align with the work. They want to work for someone they feel proud of, so the company policy on sustainability and [corporate social responsibility] is a plus for recruitment.” • Use outside experts to get a fresh look at your company and scope out the charter of your sustainability initiatives and role of the CSO. • Like any business function, there needs to be a boss, but like great HR makes everyone a better people manager, great CSOs will make sustainability part of everyone’s job. • Communications is important to build support, but avoid a communication-only strategy. • “Don’t over staff this thing. Building a big sustainability shop signals this is an operation.” Rather, imbed sustainability in the culture, function as an internal consultant, and “facilitate the process.” • Partner with government, Non-Governmental Organizations (NGOs), academia. • Find the most supportive employees, and engage and support them first. • “Your board members should be from companies that are implementing sustainability.” 17
Slide 18: Other CSOs suggested alternatives to hiring a CSO Hiring a Sustainability Boss from the Outside, or Promoting from Within? We asked our interviewees, when an organization is creating a Sustainability role for the first time, whether they should hire from the outside, or develop from within. The results are as follows: • Board member with sustainability responsibility, to act as a thought leader and catalyst on forward-looking sustainability opportunities, and a watchdog on norms and compliance. • “If someone has a passion for improving the business [and a passion for improving the business’s impact on the world], then I would go with the internal person and support them with consultants.” Making a commitment to hire a CSO is significant for any organization, and sustainability heads are in short supply. So the competition to find and identify qualified CSOs will create a fair amount of churn in the marketplace. The best sustainability executives insist on support from the top. One sitting sustainability head said, if he was approached about a new role, “I would want to interview with the top person. If there is no connection or synergy, it is not going to work.” * depends on company size, culture, need for company knowledge versus sustainability knowledge, potential need for a new perspective and/or change management ability, etc. 26.3% Outside if you don’t have someone inside 16.4% Outside 21.3% Inside 36% Depends* 18
Slide 19: Where CSOs Come From During the interviews, CSOs reflected on their backgrounds more as springboards than as prerequisites. In practice, CSOs come from a wide range of educational backgrounds, business function experience and industries. The following functions represent the areas from which many sitting sustainability executives built their credentials: • Public Relations and Communications • Strategy Consulting • Supply Chain The above functional experience in and of itself does not make someone qualified for the top sustainability job. The CSOs most recognized by their peers were perceived to have strong people skills and an ability to turn vision into action. As a broader talent pool, the • Change Management • Engineering and R&D • Environment and Safety • Finance and Audit • Human Resources and Organizational Development • Law and Compliance • Operations CSOs we interviewed demonstrated a passion about the issues, and a motivation for continuous learning. Setting Standards Throughout the study and during the interviews it became very clear that there is a short list of organizations, councils and standard setting bodies that are shaping generally accepted practices in sustainability. 19
Slide 20: Before you hire or promote anyone to lead sustainability in your organization, ask them what they can teach you about: • World Business Council for Sustainable Development www.wbcsd.org • World Resources Institute www.wri.org Additionally, sustainability leaders actively partner with specific organizations in their communities or in their sector. A strong candidate for the top sustainability post at your organization should be able to talk about their connections to and strategy for partnering with: • CERES Reporting www.ceres.org • Dow Jones Sustainability Index www.sustainabilityindex.com • Environmental Protection Agency www.epa.gov • GRI Guidelines www.globalreporting.org • ISO 14001 www.iso.org • Millennium Ecosystem Assessment www.maweb.org • National Resources Defense Council www.nrdc.org • US Green Building Council (and LEED certification) www.usgbc.org • Universities, various • NGOs, various • Energy Utilities, various 20
Slide 21: Guide to Building CSO Talent from the Inside versus Buying Experience from the Outside If your organization has never had a sustainability head before, or if you are faced with replacing, expanding or upgrading the role, these seven steps will be vital to position, and be sure that the objectives of the role align with the organization’s business objectives. • Working with a talent acquisition expert (such as your internal talent/staffing group or an outside expert in sustainability leadership and executive your success. search), map out a search process that considers • Leadership team and Board meet to determine the business objective for creating the sustainability role. Collectively envision and define what success should look like one to three years in the future. Understand both internal and external CSO talent. • In the event the best candidate is internal, prepare (in advance) a development plan for the newly appointed sustainability boss. Be prepared to invest in that adding this role may require a new level of coltraining and/or coaching in soft skills such as comlaboration at the senior leadership team level. munication, influencing, leading, managing change, • Partner with an outside expert in sustainability leadership to clarify role and responsibilities, build requirements and objectives for the sustainability etc. Be prepared to invest in hard skills and certifications in technology, audit, etc. 21
Slide 22: • In the event the best CSO candidate is external, prepare (in advance) an on-boarding plan that gets the outside hire up to speed on your culture. The best on-boarding programs involve multiple stakeholders, maximize engagement across the business, generate early wins and make the outside hire an insider more quickly. • Conduct the search including targeted candidate research, interviews, assessments and references. Ensure “apples to apples” comparison of sustainability talent by applying the same discipline for internal candidates as for external candidates. Make the hire. • Follow through on training, development and onboarding. 22
Slide 23: Challenges Of Sitting CSOs Sustainability is not a zero-sum proposition. It can be implemented in ever increasing stages of profitability and employee engagement. As you create or fill the CSO role, be prepared to support and empower your sustainability boss through a number of typical obstacles. Below are some of the specific challenges that CSOs voiced: targets in energy usage, pollution, recyclability of products, etc. • Showing the numbers to people, getting them to go green. • Reducing our footprint • Helping customers reduce their footprint. • Transcending the organizational structure and culture, “from working with a housekeeper fishing medical waste out of the garbage in a hospital to getting the CEO to issue a press release [or a new • Getting the organization engaged, pushing people beyond their comfort zone • Changing processes policy].” • Getting companies to act on their plans. • Getting the data you need to set a baseline, compare to benchmarks, set a target, and measure against • Leveraging those already engaged while educating those who are not. 23
Slide 24: • Getting the right mix of marketing/communications and operational change and HR to make things happen. • Data collection: where. what are our usages, footprint, and • Educating people in a way that makes them knowledgeable, confident and ultimately engaged in making an impact. • Complexities of a post-off-shoring world: “electricity is more [expensive] in India than in North Carolina, and the Indian facility emits more carbon than its North Carolina counterpart.” • Bring together all the disparate activities and resources in a manageable, understandable single process. 24
Slide 25: Top Sustainability Leadership – Companies And People Skeptics are quick to question the motives or genuineness of sustainability at companies like Wal-Mart or BP. The fact is other companies nearly as large are doing nothing. If shareholders come to expect that companies continuously improve sustainability, which benefits everyone, then we’ll ultimately have the Wal-Marts and BPs to thank for getting the competition started, even if they are not always seen as the perfect examples of everything that can possibly be done. During the interviews the 61 participants in the study recommended 95 individuals and named over 120 companies as being noteworthy examples of top leaders in the creation and development of sustainability functions. Their criteria for being a “Top CSO” were: • Creative, innovative and breaking new ground. • Delivering results in sustainability across the 3 P’s of the Triple Bottom Line. • Great communicators. • Someone who sets a vision, gets the ball rolling, and measures success – typical in any function, but difficult in the new and sometimes elusive area of sustainability. • Freely sharing what they do with other companies. 25
Slide 26: COMPANIES MOST NOMINATED BY THEIR PEERS AS DOING THE MOST IN SUSTAINABILITY Wal-Mart (10 mentions) DuPont (8 mentions) Coke, Interface, Nike, and Starbucks (6 mentions each) The Making of a Sustainability Success – Featured Executive Dawn Rittenhouse joined DuPont in 1980 and has held positions in Technical Service, Sales, Marketing, and Product Management within the Packaging and Industrial Polymers business and Crop Protection businesses. In late 1997, she began working in the INDIVIDUALS RECOGNIZED BY THEIR PEERS AS TOP SUSTAINABILITY PROFESSIONALS Ben Packard VP Global Responsibility Starbucks Dawn Rittenhouse Director, Sustainable Development DuPont Matt Kistler SVP Sustainability Wal-Mart corporate organization to assist DuPont businesses in integrating sustainability strategies into their strategy and business management processes. She leads DuPont’s efforts at the World Business Council for Sustainable Development (WBCSD) and the United Nations Global Compact. She also manages the corporate recognition program for Sustainable Growth Excellence. In 2007 she also picked up responsibility for DuPont’s efforts on climate change. She is currently on the Board of ERTHNXT, the Advisory Committee of Bridges to Sustainability and the Education 26
Slide 27: Committee of the Delaware Nature Society. Dawn has a double major in Chemistry and Economics from Duke University. puts science to work by creating sustainable solutions essential to a better, safer, healthier life for people everywhere. Operating in more than 70 countries, DuPont offers a wide range of innovative products and A Note About DuPont DuPont is one of the first companies to publicly estab- services for markets including agriculture and food; building and construction; communications; and transportation. lish environmental goals which it started doing 18 years ago. It has broadened its sustainability commitments beyond internal footprint reduction to include marketdriven targets for both revenue and research and development investment. The goals are tied directly to business growth, specifically to the development of safer and environmentally improved new products for key global markets. DuPont is a science-based products and services company. Founded in 1802, DuPont 27
Slide 28: Looking Ahead To Sustainability 1.0 And 2.0 Regardless of what industry you look at, there are basic “1.0” sustainability practices that may seem like competitive advantages now, but will soon become eclipsed by “2.0” level sustainability innovations. That said, there are other industries or organizations, where taking a 2.0 approach now may be too disruptive, and initiatives may not generate enough support to be effective. The art of success will be gauging the right strategy for your business. Sustainability may have a long way to go, but it is nothing new. One CSO told us that a U.S. based luxury car maker, during in 1980s “developed a new headliner, [the covering on the interior roof]. It was a new product. We wanted to make the headliner out of a fairly rigid material. We evaluated materials. The one we went with was recycled bottles. It was the best kept secret at [luxury car maker].” This CSO explained further that the company couldn’t tell customers that recycled bottles were in a [luxury car brand]. But it sparked an interest in other recycled materials, which led to “recycled compact discs in switches.” Sustainability goes back farther than that. You might recall returnable reusable soda bottles, or the diaper service that picked up dirty diapers, and dropped off clean diapers. Perhaps reusable products will make a come back. But sustainability goes back even farther than these. A popular maker of environmentally responsible consumer products, Seventh Generation, takes its name from the Great Law of the Iroquois which states, “In our every deliberation, we must consider the impact of our decisions on the next seven 28
Slide 29: generations.” Revitalizing timeless truths to drive a futuristic approach to business is working for Seventh Generation. Let’s take a look at where large organizations are today, and where they are taking sustainability. We’re confident the future of your business will benefit from this collective insight. Sustainability Version 1.0 • The sustainability boss is a C-level position, empowered to make sustainability integrated in the business and part of everyone’s job. • Educating your customer about the company’s current sustainable practices. Reactive Sustainability Practices (pre-1.0) • Communications or legal or regulatory affairs related activities only. • Packaging made from recycled materials. • Eliminating secondary packaging. • Reducing energy usage in plants, offices and via corporate policies such as reducing executive air travel. • Traditional ‘environmental’ function steeped in safety and compliance. • Retooling and reorganizing plants for more sustainable operations. • Biggest reason for activity is to save money. • Recycling programs. • Labeling products and packaging for recyclability. • Enabling the sustainable behavior of your employees, customers and of your suppliers. • Lighter paper that takes less energy to ship and less energy to cart away to recycle. 29
Slide 30: • Conducting sustainability audits, and managing people and resources to improve key sustainability metrics. One CSO cited, “It is not a top down process . . . some of our most exciting savings with energy use came from challenging the employees on the floor” • Networked power supplies in computer networks: when users turn off computers, the network detects what peripherals, servers and cooling systems won’t be needed, and switches them off too. • Regenerate energy from the heat from computers, battery chargers, power supplies and servers to contribute to the generation of electricity. Sustainability Version 2.0 • Agenda of “zero footprint”. • Normal business operating at a negative carbon footprint (and possibly selling carbon offsets as a by-product) rather than buying carbon offsets to make normal operations carbon neutral. • Designing for the sustainability at each phase of the product’s creation, production, use and disposal. For example, one CSO suggested, “in electronics, reducing energy use in the products, and reducing the toxins that are released from the products at disposal.” • Outside verification of the sustainability audit, “a lot of people are suggesting Carbon Offsetting should fall under Sarbanes Oxley” . • Popularizing the consumption of foods and beverages at room temperature for foods and beverages that don’t require refrigeration such as soft drinks. • Redesigning products for sustainable manufacturability. • Influence and measure the rate at which your products are recycled after use. 30
Slide 31: Best Quotes from Our Interviews “More and more the board is discussing [corporate social responsibility] and considering [it] when making decisions.” “I can make buildings 100% [green], but then we won’t be in business.” “Some employees are pushing for us to change faster than we are. Younger employees tend to be more green. I think [buying into sustainability] is a generational issue as much as an industry issue.” “Lead customers rather than follow their lead. We research chemicals, and pull them before the government issues a warnings or a ban.” Examine “. . . the environmental fate of chemicals, where do they go after use, what are the substitutes, are they worse . . .” “Europe is head and shoulders ahead of [the U.S.]” “China has no environmental regulations; everything is going to the air, the rivers. We [consumers] are polluting the planet so we can have cheap goods.” “We have to end our ‘dependence on foreign oil’, that phrase has one too many words, we have to end our dependence on oil period.” “We have an OD [organizational development] group that we lean on to move these issues forward.” “Recycling isn’t true sustainability”, but another person added, “recycling is not saving the world, but it gets 31
Slide 32: people where they live. It is a visible, noticeable, interactive program that is understood by everyone.” “The chief consideration is a broad and strategic mindset because sustainability is not about a single function. It’s really about the fact that the earth is about to double in population in the next couple of decades and the people in those areas that are about to double are in developing areas. They are becoming more affluent and will be vying for the same resources as we do. Sustainability affects all inputs.” On behalf of a leading beverage company it was said, the perception is that bottles and water are its big sustainability issues. “The reality is [beverage company’s] biggest impact on the environment is its refrigeration.” 32
Slide 33: Credits About the Authors of this study: James Celentano founded Hudson Gain Corporation in 2003, has 14 years of human resources, executive search and leadership development experience and is an adjunct professor at New York University. Roger Thorne has over 25 years of experience in organizational development, process improvement, and human resources leadership, and is a Managing Partner at Hudson Gain. Victoria Zelin has over 20 years of change management, organizational development and executive search experience, and is a Senior Vice President at Hudson Gain. Patricia Samperi has over 10 years of experience in corporate communications and management consulting, is founder of Green Your Culture and is a senior consultant in the extended team at Hudson Gain Corporation. Hudson Gain would like to thank the many organizations, sustainability professionals, consultants and members of academia who participated in this study. Sharing your insight and comments on an unattributed basis maximized the frankness of this study. Without your contributions this study would not have been possible. Additionally, we thank Andrew Van Der Laan and Random House for sharing their case study; we thank Dawn Rittenhouse and DuPont for sharing their details for publication; and we thank Jonathan Cloud, the entrepreneur-in-residence at the Sustainable Business Incubator at Fairleigh Dickinson University for his insight and feedback as we conceived of and conducted this study. 33
Slide 34: About Hudson Gain Incorporated in New York in 2003 to deliver talent acquisition and talent development services, Hudson Gain Corporation is a boutique leadership solutions firm serving the needs of client companies throughout the world. Hudson Gain works with client organizations Contact To discuss sustainability, leadership or any need your organization may have in executive search, human capital development or change management, feel free to directly contact Roger Thorne and Victoria Zelin. Roger Thorne to acquire leadership talent, accelerate the development of management and leadership skills among high potential managers and leaders, and provide guidance, support and solutions for companies in transition. Our service offerings include Executive Search, On-Boarding, Executive Assessment, Recruitment Process Design, Leadership Development, Talent Management, Sales Effectiveness, Management and Communications Skills Training, Organizational Design, Employee Engagement for Leaders, Human Capital Aspects of Merger Integration, and Change Management for Sustainability. Managing Partner Hudson Gain Corporation roger.thorne@hudsongain.com 212 835 1601 Victoria Zelin Senior Vice President Hudson Gain Corporation victoria.zelin@hudsongain.com 212 835 1602 ©2008 Hudson Gain Corporation 34
Slide 35: Hudson Gain Corporation 5 PENN PLAZA, 23RD FLOOR NEW YORK, NY 10001 WWW.HUDSONGAIN.COM