Lately, I've been reflecting on my career and its course over the last 20 years as I attempt to flesh out the framework for a practitioner's handbook on how to integrate sustainability objectives into business and corporate culture. During my academic and professional career, my path has meandered through the multiple intersections of ecology and business. I've reflected on my work evaluating the environmental impacts of large infrastructure projects for the federal government, my graduate research and subsequent work as an applied conservation biologist in the forests of Alberta, British Columbia and the Northwest Territories, and, what I've learned from my experience as a Board Member with the Forest Practices Board of British Columbia.
I've considered how this experience and my time as a professional biologist provided me with insights during my business education and management consulting work with PricewaterhouseCoopers and IBM Consulting, and more than a decade working at the other end of the value chain as an executive with national and international retailers to develop and implement their business sustainability strategies. And during this time, one insight has emerged as a keystone in the foundation of my efforts to integrate sustainability issues and performance into business:
Adding environmental context and a systems approach to a business's value chain helps managers identify the opportunities and means to create economic value from improved environmental outcomes.
In retrospect, one might consider this insight to be rather obvious; after all, adding environmental context to one's business activities is a rather evident place to start. However, based on the fact that I've been able to make my living for 20 years on the application of this insight to business, it is apparent that it is anything but obvious or easy to do.
Back to the Future
I've revisited my roots recently while helping some retailers and manufacturers incorporate the environmental context of their products and processes that rely on wood fibre. Whether they are widgets or marketing papers, I find myself back at the intersection of applied ecology and the forest and paper supply chain. And while many things have indeed evolved over the last two decades, such as the diversity of values considered in forest management planning and the amount of environmental information that now travels through the value chain from raw material to finished product, what alarms me most is how difficult it continues to be for so many professional managers and executives at the other end of the value chain to address these issues in a manner that is both good for their business and the environment.
In my work as a business management consultant, I find that addressing "environmental issues" is most often not a person's "day job." At best, it is secondary to their core role and business function. And while this might not appear to be the ideal place from which to start, it is a common situation and not all that far off from the end goal of incorporating sustainability into day-to-day business decisions -- making sustainability just part of how one thinks about managing transportation, building infrastructure, product development and sourcing.
When starting out, many managers don't know where to turn for advice or are confounded by the information that is sometimes contradictory. Certainly, there is a lot of information out there, and some of it is misinformation -- from suppliers, to consultants, to so-called "environmental" organizations.
Creating Business Value from Environmental Context
What follows is a list of insights that I will explore over the next few months in subsequent blogs to help managers incorporate sustainability into their business. For illustrative purposes, I'm going to address the challenge of creating a responsible, "green" procurement policy. And while these insights are applicable to the procurement of many things, I'm going to use examples relevant to the forest and paper products value chain because it enables me to draw upon my collective experience, and because it is ripe for illustrating the potential opportunities and pit-falls with trying to do the right thing for your business and the environment.
- Business is the engine for environmental change -- In short, it's "the economy, stupid" -- environmental issues are business issues and that is why we have witnessed tremendous change in how businesses and their stakeholders -- investors, auditors, boards, conservation science organizations, academics, activists and market campaigners -- engage on this subject and one another.
Innovation is a social Process -- Do not develop solutions in a vacuum. Rarely, is innovation the product of someone working in isolation, generating a "eureka" moment. Best practices are those that assist in breaking down the barriers among internal functions of a company while also incorporating the broader context, perspectives and values from organizations other than your own.
- Develop a robust understanding of your economic and social stakeholders -- A stakeholder is any entity that can either add or erode business value. An economic stakeholder is one with whom your business has a direct economic relationship, such as a supplier, employee, or customer. A social stakeholder is one that is not directly involved in you value chain, but can nonetheless either add or erode business value. Even environmental organizations have a business and revenue model, and every environmental issue exists within political and economic context. For example, activist and campaign organizations are not conservation science organizations; they may not play by the rules, operate within a legal or ethical framework or even a desire to reach a solution if it is not in their best interest, regardless of the environmental outcome.
- Develop an understanding of your supplier's business -- You are not just buying a product or raw material; you're also buying the environmental and social context of every business activity of every link in the supply chain and the brand and reputational risk or benefits associated with it. Having supply chain transparency with your suppliers -- knowing from where key raw materials are sourced and ensuring that they are sourced legally and sustainably -- reduces risk and opens numerous gateways to value creation.
- Develop a procurement policy -- The objective of procurement policies is to influence and guide decisions, actions, and other matters among stakeholders that are considered wise, sensible and practicable. More than anything else, a policy needs to be a statement of principles that provides guidance to the business and its stakeholders. It must be actionable and promote measurable business objectives and environmental benefits.
- Develop quantified measures of business and environmental performance -- A "green" procurement policy must have business and environmental objectives to be sustainable and you need to be able to measure the performance of the desired business and environmental outcomes to actually manage them. Ideally, what you measure is a function of your business sustainability strategy and its objectives. Your metrics should help management establish a position for the business within the industry where they can best defend the brand from competitive forces, or influence them in its favour by creating economic benefits from improved environmental outcomes.
- Communicate your procurement policy and the results from implementing it -- Measuring and communicating one's progress to key stakeholders is essential to achieving one's business goals. A business policy, environmental or otherwise, is a waste of words unless it is implemented with objectives, timelines and a plan for putting it into action. Anything less and it could argued that one is merely proffering words without business rationale or accountability.
I look forward to exploring these subjects with you in the coming weeks and months, and I welcome your comments and feedback.