Career advice, insights & tips for HR professionals
The sustainability challenge: why corporate 'tree hugging' isn't enough 07/03/2011
Category:
Zhike Lei explains why an eco-friendly business is only a part of the bigger sustainability picture.
Click to jump to section
- Going green at McDonalds?
- More than just 'going green'
- Who does sustainability well?
- Responding to consumer demand
- The question of engagement
- Putting sustainability at the heart of business
Going green at McDonalds?
A McDonald’s franchise owner recently hit the news in the United States by opening an eco-friendly branch of the chain in North Carolina. Complete with energy-efficient refrigerators, low-flow toilets, tables made from sunflower seeds, a fryer that reduces oil consumption by 40%, and even recharging stations for electric cars, the branch is any environmentalist’s dream.
It’s fair to say that, in recent years, McDonald’s has made its business more environmentally friendly. However, green efforts alone do not qualify McDonald’s as a champion of sustainability. Many of the meals are still notoriously unhealthy. True, the “supersize” option is no longer available, but portions are still unnecessarily large. McDonald’s still fails to use grass-fed beef and organic fruits and vegetables. Finally, there’s the disturbing question: Why don’t McDonald’s burgers decompose?
More than just 'going green'
Many business leaders now understand that sustainability profoundly affects the competitiveness and long-term survival of their organisation. Yet, to many more, sustainability is mistaken for environmentalism, and simply equates to solar panels, wind turbines, and LEED-certified buildings. This can leave potentially great ideas stuck in the recycling bin. Sustainability is about more than just green credentials. It’s a fundamental strategy that aims to create lasting value as opposed to piling up short-term transactional wins.
While an overwhelming amount of current sustainability efforts emphasise the green angle, organisations seem in danger of overlooking the human connections vital to their success. Wal-Mart has also made impressive strides towards sustainability by using locally-grown produce, energy-efficient products and implementing innovative internal recycling policies. However, it isn’t exactly known for being employee-friendly; and its $10.76 average full-time hourly wage isn’t too impressive either.
Of course green initiatives are commendable, and businesses should continue to invest in them, but at the same time, core values that connect businesses to people and their well-being should not be forgotten.
Who does sustainability well?
Events of recent years have damaged society’s trust in corporate systems. This trust has to be restored if large companies want to regroup and survive. While some are falling short, others are making a wider effort. For example, companies like Levi Strauss and Unilever are embracing a lower-impact future by encouraging consumers to wash their clothes at colder temperatures in order to lower the indirect environmental impact of their products.
Others have begun to support the community. For example, Marks & Spencer is partnering with Oxfam to create consumer incentives to support Oxfam’s charitable goals.
While these are examples of great sustainability initiatives, they can’t erase the financial and psychological trauma of the oil spills and product recalls of the last two years, for which the corporate world as a whole has taken a blow. But where companies do invest in solutions that visibly provide services for the wider community, customers are generally willing to believe their sustainability pledges.
Responding to consumer demand
Sadly, it seems that the majority of organisations are just dipping their toes in the metaphorical sustainability pool by adding green features to existing products, procedures, and boosting their philanthropic efforts. While these innovations may enable organisations to evolve incrementally, they do little to prepare them for the rapidly changing priorities of consumers.
Take the banking industry for example. Consumers are now demanding that banks behave morally when handling their money, especially following the recession. While banks have access to reams of customer data, customers, are left in the dark as to how their money is being used.
The American Wainwright Bank makes its socially responsible lending strategy public. It’s one of the few banks in the US with a department solely dedicated to socially responsible lending. Currently, over 50% of the bank's commercial loan portfolio is committed to these types of loans and of the $700 million in loans provided; there has never been a single default.
Similarly, in Europe, banks like Triodos and Co-operative also push the transparency barrier. These ethical banks, as they call themselves, have formed the Global Alliance for Banking on Values and have experienced greater customer loyalty as a result.
The question of engagement
A company’s most talented employees can have a considerable effect across the business. A recent Gallup study showed that engaged employees outperform others by wide margins, demonstrating 2.6 times higher earnings-to-share growth rates. However, according to a recent study by the Corporate Leadership Council, about 30% of today’s high-potential employees admit to not putting all their effort into their job and a staggering quarter intend to jump ship within a year.
When burgeoning talent is unrewarded and disengaged, overall performance and employee commitment and retention is damaged across the firm. For any organisation that’s serious about embedding sustainability into its culture, involving employees in the decision-making process and demonstrating concern for their wellbeing are the first steps.
Putting sustainability at the heart of business
Sustainability is critical to the success of businesses worldwide. Despite the recent economic slump, executives are more committed to sustainability than ever. In fact, a new study from Accenture and the United Nations Global Compact has shown that 81% of CEOs have made sustainability part of their company's core strategy, up from 50% in 2007.
Nevertheless, some business leaders are still struggling to place it as a core aim. For a truly sustainable future, they must apply sustainability to all aspects and at all levels of the organisation and put sustainability on every organisational member's agenda. Mere green emoting won’t do the job.
Zhike Lei, assistant professor, European School of Management & Technology
Zhike is assistant professor at ESMT - European School of Management and Technology www.esmt.org.

