Asia Inc Forum organises the Brunei Business Forum

Posted on  26/08/2011  |  Media Centre

Article from Borneo Bulletin. Published on Friday Aug, 26 2011

An interview with Steve McCoy, Founder & Principal, Counterpoint Consulting & Speaker at the Brunei Business Forum on September 15.

How is sustainability viewed today in the executive suite, and what are the trends over the last couple of decades?

Virtually every report on sustainability and the business world over the last few years has noted that the greening of mainstream business has continued to march on in spite of the global downturn – with more CEOs convinced that sustainability issues are critical to their future success (93 per cent of CEOs in 2011, up from 70 per cent in 2007, Global Compact-Accenture Report), more CEOs believing that sustainability issues should be fully integrated into the strategy and operations of a company (96 per cent, up from 72 per cent in 2007), more companies indicating that they already have a working strategy for corporate sustainability (60 per cent, up from 50 per cent in 2008 – KPMG and The Economist Intelligence Unit, April 2011), and with companies already established in the sustainability field increasing their sustainability activities, thinking longer term, and raising the bar on their sustainability targets (2011 State of Green Business Report).

Five significant trends over the last couple of decades hve been:

Firstly, Sustainability Reporting has become mainstream with most large companies either publishing a CSR, Sustainability or Corporate Citizenship report. The number of companies using the GRI framework has increased from 100 in 2000 to over 1800, while those responding to the Carbon Disclosure Project has grown from 235 to 3,050 in just eight years, and increasingly companies are integrating traditional financial reporting with sustainability reporting (The International Integrated Reporting Committee is supported by FADB and other accounting organisations).

Secondly, investor interest in sustainability has continued to grow. According to Ceres’ Investor Network on Climate Risk, shareholder resolutions were up 40 per cent last year, and voluntarily reported emission data sent to the CDP now appears on Bloomberg terminals and Google Finance.

Thirdly, sustainability Indices, Green Scorecards, and Eco-product rating initiatives have been growing in maturity and popularity.

Fourthly, energy management, water footprint assessments, zero-waste and biodiversity conservation are emerging areas of significant interest. Finally, although ‘brand, trust and reputation’ remain strong drivers, many companies are moving away from perceiving sustainability as mainly a marketing effort to seeing it as an opportunity for operational and product development innovation. Two-thirds of CEOs in PWCs 14th Global CEO Survey said developing environmentally friendly products and services is an important part of their business strategies, led by example by the major packaged consumer goods companies Proctor& Gamble and Unilever, both announcing audacious sustainability goals in 2010.

Can you explain the different models that companies have for integrating their good intentions into their corporate structures – a chief sustainability officer or putting the responsibility in the CEO’s hands or having a more junior manager? Do you have a sense of what works best?

There is no getting away from the fact that leadership is important, and that we rely on good leaders to anticipate the future. Companies that have adopted ambitious targets with CEOs who have taken personal ownership of such goals either as ‘Champions’ (out-in-front) or ‘Visionaries’ (ahead-of-the-pack), do better than those companies with ‘Lip Service’ (largely-out-of-touch), ‘Supporter’ (in-the-loop) or even ‘Steward’ (on-top-of-the-issue) type leadership.

However, one of the central challenges to corporate sustainability is being able to integrate it into core business and across business units, and this will inevitably involve an increased corporate instinct for crowd-sourcing or ‘smart-sourcing’ ideas from non-traditional partners including customers, competitors, and employees who are no longer passive parties downstream from corporate strategy and decision making, but useful actors actively and collectively shaping the future. Whether leadership in sustainability comes with the CEO or at a senior or junior-level management (personally, I feel a senior level Chief Sustainability Officer leading and coordinating a multi-disciplinary blended team is the sort of structure that works best), the ultimate test is how he or she enables others – setting big goals, listening to diverse voices, being architects of complex systems, and living both in the present and the future.

Do you think that the changes of the last 10 years are being driven simply by a change of heart in the corporate community? Is it market pressure? Is there some regulatory pressure that’s being brought to bear?

It is all of the above and more. There has been a gradual awakening about the crucial importance of environmental and social factors which has reached the corporate sector in a variety of ways. I’ve heard it said that the most influential factor for sustainability in corporate America are daughters of CEOs coming home from university on holiday and interrogating their fathers on what their companies are doing for the planet!

The Globescan Sustainability Survey 2011 noted that social entrepreneurs have taken over from NGOs and national governments as leaders in advancing the sustainability agenda. It think this is a trend that will continue to grow, although NGOs, governments and other stakeholders continue to be highly influential in certain places. In many sectors, consumers have been the main drivers leading to many companies allocating higher budgets for planet-friendly product and service innovation and development. Across sectors, regulatory frameworks have been influential in driving change – guidelines instituted by stock-exchanges requiring CSR or sustainability reports from listed companies, mandatory greenhouse gas emissions reporting requirements, and new EU sustainability legislation for purchasing and supply management, for example, have all been significant drivers wherever implemented. The sustainability performance of a prospective employer is increasingly important for Generation Y employees.

In addition to these stakeholder influences, there has been an increasingly important direct Business-to-Business effect. Long-term sustainability leaders such as Interface, General Electric, Marks & Spencer, Novo Nordisk etc provide good models and encourage other businesses to take the plunge, and leading large companies like Walmart, Unilever, and Patagonia etc are having a huge impact on streaming sustainability through their respective supply chains.

From your experience, what are the kinds of immediate opportunities that can derive from shifting into more sustainable/responsible approach to business?

This would vary from business to business but generally, immediate to mid-term opportunities would include cost savings from improved operational performance and efficiencies, cost avoided by minimising business risks and improving safety (regulatory risk, licence to operate, security of supply and reputational risk), cost savings from improved recruitment and retention of talented employees, cost savings and income produced through improved employee morale and productivity, and improved access to capital. Longer-term opportunities would include growth generated through the development of new products, access to new markets and new market share, enhanced brand recognition and reputation, improved customer loyalty and improved supply chain management.

What is the most common misconception of corporate sustainability? How can this misconception be rectified?

I think there are two equally-common misconceptions of corporate sustainability. The first is that it is a cost and not an opportunity… a cost to be avoided for as long as possible or kept to a minimum… just enough to keep external stakeholders happy. This can be overcome by examining the business rationale and performance of companies who have adopted a triple bottom line (with integrated reporting) and have made the switch from lowest initial-cost thinking to lowest lifetime-cost thinking. The other common misconception is that sustainability is relatively easy to do, and can be done by a small section of the company (usually corporate communications) without affecting the KPIs of other senior managers or business units. Again, looking at good corporate sustainability models would be a remedy.

What are the key lessons you look to impart at the Brunei Business Forum?

The main message would be to reinforce what most of us know already – that Business-As-Usual is no longer a viable option… and to understand why, how this has happened and what our alternatives are.

Along the way I will explain the difference between sustainability frameworks, guidelines and tools (and why the usual corporate rush to adopt tools is not a good idea); why a defensive and reactive approach to sustainability issues is so boring compared to a pro-active and innovative approach; what the First Law of Sustainability (‘You can never do one thing’) means and why it is true; and why Thumb-wrestling is an essential skill for the 21st Century!

The Brunei Business Forum is a forum for CEOs, entrepreneurs and members of government to engage in dialogues around business prospects, issues and best practices. The forum is organised by Asia Inc Forum, in partnership with Alcoa, Butra HeidelbergCement, Total and HSBC and supported by the Borneo Bulletin and Media Permata.

Steve McCoy is Founder and Principal of Counterpoint, a boutique consultancy firm based in Kuala Lumpur which provides support services on sustainability for the corporate, government and non-profit sectors.

Steve’s passion lies in creating ‘aha’ experiences for business leaders about how to capture value streams and implement visionary strategies consistent with their highest aspirations. He believes that with the right combination of stakeholder dialogue and potent data, insights that intersect at the quadruple bottom line can be generated to transform businesses.

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