October 2, 2007

“Fourth Annual Businesswomen’s Sustainability Leadership Summit”

SUSTAINABILITY AND INNOVATION

Sponsors: AIG, BP, Burson-Marsteller, The Coca-Cola Company, Eileen Fisher, Intel, Interface, JP MorganChase, The McGraw-Hill Companies and Pfizer

Special Thanks to: Framework CR

Introduction WNSF cofounders Kathy Robb and Ann Goodman, opened this year’s summit by introducing the theme of integrating innovation and sustainability and how together they tie into the business bottom line. Ms. Robb noted that that there has been a notable progression within corporate America in thinking about sustainability and pointed out that sustainability issues are now considered urgent enough to be discussed in boardroom suites around the corporate world. Dr. Goodman posed two questions that formed the backdrop of the summit: “Is innovation a useful lens through which to view sustainability?” and “How can the principles of sustainability be used to innovate?” She noted that innovation is what keeps business alive and thriving and that although sustainability is the balance of economic and social goals, it is an increasingly important engine of change. Ms. Robb posed the question of how sustainability is linked to corporate responsibility and noted that the basic question facing all organizations is how to marry the financial aspects and costs of engaging in sustainable activities with its many benefits; in other words, how to do well while still doing good.

Dr. Goodman then introduced the topic of the plenary panel, “Sustainability and Innovation Leadership,” and the panel facilitator, Sheila Wellington. Ms. Wellington, a Clinical Professor of Management at NYU Stern School of Business and the former president of Catalyst, then introduced the panel members:

Carol Hymowitz, Senior Editor, Wall Street Journal

Alice LeBlanc, Director, Office of Environment and Climate Change, American International Group (AIG)

Miranda Magagnini,Co-CEO, IceStone LLC

The panel began its discussion by examining why women in particular should care about the issues of sustainability and innovation. The panelists agreed that sustainability is not just a “women’s issue,” but rather a human issue, and that it is in everybody’s best interest to be involved and engaged in sustainability issues and activities. Most of the remainder of the discussion focused on specific efforts businesses are making towards implementing business practices that are both sustainable and profitable. Ms. Magagnini, who co-owns IceStone LLC, a company that creates countertops from recycled glass, discussed how sustainability drives her business and outlined the many efforts she and her employees make to integrate sustainability into the company culture. Through behaviors such as riding bicycles to work, recycling all waste products, hiring from the community, and embracing the diversity of the IceStone workforce, Ms. Magagnini said she and her business partner believe that their company is “changing the world one countertop at a time.” Ms. Hymowitz provided other examples of businesses embracing sustainability practices, pointing out that Prada showed high-end clothing made of recycled materials at the recent New York fashion shows and that General Electric has made the environment central to its marketing campaign, increasing awareness among the public that attention is needed in this area. Ms. LeBlanc described some of the products AIG is developing in both its commercial and personal lines of business and said the company has plans to invest in projects designed to decrease it greenhouse gas emissions.

A question and answer session followed the panel discussion. Several key points were made during this session, including the following:

• Customer demand is driving many of the cultural, technological, and process changes organizations are making.
• Sustainability refers not only to environmental issues but also social practices. All the panelists pointed out ways in which the commitment shown by specific organizations to social sustainability practices is helping these organizations recruit and retain talented employees. Whether employee loyalty is gained through the organization’s commitment to “doing right” or through benefits that are increasingly targeted to specific employee needs, panelists agreed that it is easier to attract and retain employees when the organization shows commitment to sustainable practices.
• Regulations will be increasingly important in shaping organizations’ efforts to address climate change. Ms. LeBlanc pointed out that regulations are much stricter in Europe than in countries such as the United States and China, and she expressed the hope that the United States will develop the regulations necessary to define and achieve substantive climate change goals.
• Investors have several tools at their disposal to encourage sustainable behavior among public corporations. An important one is the annual meeting, at which investors can ask about issues such as the company’s sustainability efforts. Another is to pinpoint a board member who is sympathetic to these issues and send letters identifying issues and demanding accountability. Still another is to actually serve on the boards of these organizations, rather than just communicate with them, and effect change from the inside rather than from the outside.
• Legislation alone will not improve the situation; individuals must also take responsibility. Standing up and demanding accountability will increase the pressure on organizations to change.

After the panel session, the format switched to café dialogues facilitated by Dianne Culhane, Group Director, Internal Communications, The Coca-Cola Company andRenee Moorefield, CEO, Wisdom Works. The conference attendees sat at tables in groups of four and discussed a pre-selected question. The questions that were posed were:

• What structures, practices, and systems in your organization encourage both innovation and sustainability? Does one help or hinder the other?
• What conditions in your organization have helped you to be a change agent for sustainability and/or for innovation?
• My organization is or strives to be a leader in sustainability and innovation. How did it happen? How do we now keep the momentum going for both?
• What challenges emerge as you implement sustainability practices within your organization? What new challenges might limit your ability to continue to integrate sustainability practices within your organization? What might encourage you to be a change agent in this direction?
• What might we expect as outcomes–intended or unintended–of innovations in service of sustainability? Are there specific examples that come to mind?
• In your experience, does the introduction of innovative practices for sustainability lead to business performance that extends beyond compliance? If so, discuss the practices and benefits.

Several key points were made throughout these discussions, many of which were woven into the answers to more than one of the questions.

• Packaging is a big issue. While many companies are exploring options in environmentally friendly packaging, the challenge is the high cost of this packaging, which leads to higher costs for the consumer. Wal-Mart was mentioned several times as a major influence on companies’ packaging decisions; the retailer is increasing pressure on manufacturers to develop sustainable packaging, using its immense leverage to drive innovation by its suppliers.
• Regulations drive innovation because they force companies to explore new ways of doing business. Sarbanes-Oxley was repeatedly mentioned as a specific set of regulations that caused entire organizations to reexamine their operations and ultimately increase the efficiency of their processes.
• Compliance becomes a competitive advantage as companies fight to attract and retain employees who prefer to work for companies that engage in sustainable business practices. It also becomes a selling point that attracts an increasing number of consumers who prefer to purchase products solely from companies that are committed to sustainability. The effect of this is a shift from engineering-driven compliance efforts to efforts driven by social goals.
• A major issue for companies is determining how they prioritize their efforts and deciding where they should spend their “green” money.

Companies are increasingly marketing themselves in terms of their green efforts and promoting their green value. Some of their messages are so-called green-wash, however, with everybody trying to market their products as environmentally friendly. The challenge then is for the marketplace to determine what is real and what isn’t.

• Customer needs and demands are driving companies to develop more sustainable products and practices, which is leading to customer-driven innovation. Many companies are using surveys, internal brainstorming sessions, and external focus groups to learn and bring back ideas; companies are also increasingly benchmarking their sustainability efforts against those of other companies. This shows an increased desire on the part of companies to gain useful information and pass it down through their respective organizations.
• Market conditions often drive sustainable behavior. These conditions include changing regulations, market demand, customer and investor demands, and internal pressure from senior management.
• The impetus for change comes from many places, including customers, upper management, and competitors, and there are many paths to innovation. One of the primary ways to keep the momentum toward innovation going is by ensuring continued and sustained dialogue both within an organization and between stakeholders and management.
• Individual and personal responsibility is important in trying to change corporate culture. If you find that you can’t support your management and its efforts, you need to create change yourself, though time and resource constraints would likely be constant frustrations.
• The bottom line is a major motivator for innovation. Getting management buy-in for any sustainability effort requires the presentation of a strong business case, though it is often hard to quantify the results of environmental and, especially, social programs.
• The biggest challenges to organizational efforts include budgets, alignment of goals, lack of time, and criteria that are not clearly defined.
• There is often tension between the marketing efforts of a company and its efforts at sustainable packaging. Marketing requires packaging to be a competitive differentiator, though such packaging may not be sustainable. An overarching corporate agreement on direction is necessary to help establish cultural expectations and avoid tension that can be counterproductive.

Keynote Speaker

At the conclusion of the caf é dialogues, the keynote speaker, Cecily Joseph, Director of Corporate Responsibility at Symantec Corporation, shared her thoughts about innovation and sustainability.

After thanking Dr. Goodman and Ms. Robb for inviting her to speak and stressing the importance of the topic, Ms. Joseph began by saying that she initially questioned the idea that she should speak about sustainability. She noted that many companies represented at the summit have been tracking and reporting their efforts for many years, while the software industry was new to it all. However, she pointed out, innovation is vital to the software industry as products are replaced every two years or so, and at Symantec, it’s a core value. Using Symantec’s definition of innovation as “leading rather than following,” doing things differently, and driving change and new processes, Ms. Joseph drew a parallel between innovation and sustainability, saying that, like innovation, sustainability offers leadership opportunities and drives change. She concluded then that innovation and sustainability are really not that different from each other and that she could contribute valuable perspective.

Ms. Joseph offered a brief summary of her career, which began as a corporate lawyer. She had a subsequent opportunity to run a corporate foundation and then was asked to start a corporate responsibility program for Symantec, which is her current job function.

Key points of Ms. Joseph’s address included:

• The software industry needs to better understand and execute its responsibility to sustainability. Historically, the industry has been interested solely in earning profits and has not felt any pressure from either external or internal sources to address societal or environmental concerns. However, an increasingly diverse workforce that is committed to sustainable practices, a new set of expectations that companies will act ethically and responsibly, and the increasing challenges of climate change are forcing software companies to change their priorities and begin to focus on their corporate responsibilities.
• As an industry that moves quickly and often stays ahe ad of the regulators, the software industry will have to regulate itself in the area of sustainability. Ms. Joseph cautioned software companies that, contrary to their long-held belief, sustainability does apply to them, and she challenged the industry to define corporate responsibility for itself before somebody else defines it for the industry.
• The software industry has many contributions to make to sustainability. These include providing a broad means of communication through technology such as social networking and user-generated content, a diverse staff of highly trained technology professionals around the world, and “green” information technology solutions.

The industry faces challenges as well. These include getting management to focus on the issues, the lack of competitive motivation within the software industry, and getting people to align their efforts in a single direction. Some of these challenges, while difficult to overcome, become a little easier to meet when pressure comes from stakeholders who constantly ask management about the firm’s efforts in the area of sustainability.

Ms. Joseph went on to describe the three year evolution of Symantec’s corporate responsibility program, beginning with the initial phase, in which the company informed stakeholders that it was focusing seriously on sustainability. During this phase, Ms. Joseph convinced management of the value of sustainability to the profitability of the company and Symantec became a signatory to the Global Compact. Since then, Symantec has successfully launched several corporate responsibility initiatives, strengthening the company’s commitment to its sustainability goals.

The second phase was gathering, controlling, and managing information. Through the use of an industry software tool and by engaging with socially responsible stakeholders and investors, Symantec identified steps it could take to address corporate responsibility issues. The company formed a cross-functional Environmental Stewardship Council with the goal of defining an environmental platform that could be supported by all employees as well as the industry. The third phase is the reporting phase, during which the company se cured executive approval for developing a corporate responsibility report, which is being developed and scheduled for publication in the summer of 2008.

Ms. Joseph went on to describe the three areas of sustainability on which Symantec is concentrating its efforts: workforce sustainability, eco sustainability, and cyber sustainability. The challenge of workforce sustainability is how to build an inclusive and diverse workforce and leverage the knowledge and experience that comes from all the diversity. Increasing the number of women engineers at Symantec is a major corporate goal and Ms. Joseph described several programs the company has instituted designed to encourage women to come to–and stay with–Symantec.

The challenge of eco sustainability has been that management felt that environment issues didn’t apply to the software industry. However, Ms. Joseph noted that by examining manufacturing processes, software packaging, paper usage, and transportation procedures, Symantec has identified several opportunities to develop innovative corporate practices that will improve the company’s performance in this area.

Ms. Joseph defined cyber sustainability as the ability to keep people secure as they transact business online. She outlined many programs Symantec is spearheading in areas such as maintaining transactional safety and keeping children safe online.

Ms. Joseph summarized her thoughts by reiterating that software companies are new to sustainability and have much to learn, but also much to offer. Almost by definition, these companies are innovative; they must now apply their innovation efforts to sustainability issues and, in return, let sustainability drive their innovation.

A question and answer session followed Ms. Joseph’s address and Dr. Goodman then closed the summit by thanking all the summit sponsors and participants.

Notes compiled by Framework CR – Photos by Liza Pullman