Leading Change: How to Champion Sustainability in Your Company Sponsors: JPMorgan Chase, The Coca-Cola Company, AIG, AT&T, Intel, Interface, The McGraw-Hill Companies, Pfizer
Thanks to: Framework:CR, Rivanna, and Shital Patel
WNSF chair Kathy Robb and executive director Ann Goodman, PhD, launched WNSF’s fifth annual Businesswomen’s Sustainability Leadership Summit by drawing attention to the recent financial crisis and the opportunities it brings to make positive change in organizations. Ms. Robb aptly quoted Darwin: “It’s not the strongest of the species that survives, but the one who responds best to change.” She asked participants to reflect on the economic changes of recent weeks and how companies can adapt. Dr. Goodman noted that in the six years since WNSF was launched, sustainability has become a driver of business change, and that the current financial crisis highlights the opportunity to achieve a new balance of economic, environmental, and social progress and to rebuild from a more sustainable base.
She then introduced the discussion topics for the summit, which were defined based on feedback from attendees of last year’s summit.
Panel: How to Build a Culture of Sustainability
The panel moderator, Professor Anat Lechner at New York University’s Leonard N. Stern School of Business and an expert on organizational development, called the panelists “pioneers,” in thatJP they had blazed a trail of business responsibility and sustainability in their companies, in particular often addressing the cynicism of colleagues who did not see these as key business values. She then introduced the distinguished panel of speakers:
- Marlys Appleton, Vice President, Sustainability, at AIG Investments
- Lybra Clemons, Director of Global Diversity and Inclusion at American Express
- Amy Davidsen, Director of the Office of Environmental Affairs at JPMorgan Chase
- Shelly Esque, Director of Global Corporate Citizenship at Intel Corporation
Professor Lechner posed the following questions to the panelists: 1. What is the sustainability story at your company? What steps did you take to develop the culture of sustainability? What measurements were used?
Ms. Appleton: AIG Investments, has been working on sustainability since 2005 in a multi-year, multi-stage effort. Sustainability for investments is defined as the integration of environmental, social, and governance (ESG) factors into the investment decision process. Ms. Appleton, whose background is risk and valuation, first become involved in sustainability when, as part of an elite concept team, she was asked to recommend business responses to climate change, greenhouse gases, and socially responsible investing. This team of six managers completed a four-month empirical study that benchmarked sustainability activities of AIG Investments’ peers and competitors. Based on this review, the group recommended to the CEO a sustainability perspective for investments, which was subsequently approved by the AIG board of directors. Based on her leadership in this team and her background in performance management, Ms. Appleton was appointed by the CEO to lead the effort to embed principles of sustainability at AIG Investments.
Ms. Clemons: American Express Diversity and Inclusion incorporates age diversity, gender, sexuality, and race. Ms. Clemons is responsible for the effort in offices in the United States, Europe, Asia, and Latin America. Currently, the sustainability effort is focused mainly on environmental work, but it is built on the efforts established through the firm’s diversity initiatives.
Ms. Davidsen: Ms. Davidsen noted that she saw the potential for sustainability at JPMorgan Chase in 1999 when she was working with philanthropies and began dialogues with senior management in the company, including the chairman of the investment bank. Over the years, she sent e-mail tracking sustainability trends at financial services institutions. In November 2003, the executive committee created the department of environmental affairs. Ms. Davidsen focused on risk management, business opportunities, and strategic partnerships to establish the sustainability programs.
Ms. Esque: The founder of Intel, a conservationist, ingrained the idea in the fabric of the company that environmental stewardship would be underlie our manufacturing and product development. In 1997, a decision was made to incorporate the company’s philanthropy efforts into a sustainable, business-driven model too. This year sustainability was incorporated into the corporate-wide employee bonus system. 2. What concrete steps did you take to establish sustainability in your companies?
Ms. Appleton: While much progress has been made, there is still work to be done to execute on AIG Investments’ commitment to sustainability. A sustainability steering committee of analysts, vice presidents, and managing directors was drawn from the various business units: fixed income, equities, real estate and alternatives as well as support functions such as marketing, IT, and legal and compliance. In the first year the committee met twenty-five times and is currently meeting about every six weeks. A guiding document of roles and responsibilities was created which distributed the responsibility for the success of projects to the business units and stated that each member’s role is to contribute to the success of the entire initiative. Steering committee members were to be the leaders and act as champions for sustainability within their asset class. An early conclusion of the business units was that education and skills development were needed in order for the analyst and portfolio managers to integrate sustainability or ESG analysis into their due-diligence process. Another early step was a survey of knowledge to assess where people were in their understanding of sustainability, followed by a major education program that included ongoing skills development, a focus on thought leadership, the connecting of sustainability to clients’ needs, and an affiliation with external NGOs. The process of reporting and collecting metrics has been challenging due to the different nature of the different approaches to integrating ESG. Another important point is that each business unit must have flexibility to integrate based on their own internal processes and their differing time horizons but must show how they are complying with the policy. Another element of performance is the reporting of progress to executive management on a regular basis.
Ms. Clemons: The CSR discussion addressed issues very similar to the those addressed in the diversity discussion that occurred ten years ago. These include how to communicate; what is the business case; how to tie into compensation; and how to talk to business leaders and keep them engaged. Communication is valuable for attracting key talent and articulating the case for CSR.
Ms. Davidsen: JP Morgan Chase created an oversight committee, headed by very actively engaged people that were able to work sustainability and environmental initiatives into lines of business. It took a long time to find the right people to involve, and the effort is still a work in process. The committee reports to the board quarterly.
Ms. Esque: Intel began reporting environmental performance in 1994. While reporting drives change, until recently Intel’s public relations people were neither involved in nor aware of the reporting effort. Externally, Intel is quite well known for its sustainability efforts; Intel has found it much more difficult, however, to communicate its work internally. Intel believes in getting input from stakeholder communities. In particular, the social investing community has taught the company a lot in establishing their goals. 3. What are the challenges of making the culture shift and institutionalizing sustainability in your companies? What were the areas that held the most tension?
Ms. Appleton: Early on, the CEO took time to gain buy-in from his direct reports, which is critical for success. It was sometimes a challenge to speak to deal makers to help them to understand that they might be overlooking some of these emerging values in the market place. We went back to the business case–the impact that sustainability would have on their portfolios and the performance of specific investment holdings. To overcome the challenges, sustainability leaders have to be ambassadors or champions of sustainability. The culture is one in which you have to go out of your way to establish relationships and continue to emphasize the business case underlying sustainable investment practices, and further that integrating ESG factors is entirely consistent with seeking the best risk-adjusted returns. Internal messaging and terminology is important as it continues to reinforce the value and to also tie our activities to the client and investment consultant community.
Ms. Davidsen: The culture has changed over the years, given the many acquisitions and different leadership. Currently there is a lot of diversity of thought, which makes the effort a little easier. She invested a lot of energy in developing individual relationships with management team.
Ms. Clemons: American Express has an amazing culture. People are supportive, as the company is built on relationships. The corporate culture is key to moving sustainability forward. It is still important, however, to translate the sustainability effort to spend. How will impact the bottom line?
Ms. Esque: The Intel culture is about data, and results, an atmosphere of requiring employees to “prove it” meaning share the data that makes your case. Executives question everything, and want data, facts, and figures. Her team was able to show the data easily through the environmental initiatives. Competition and raising expectations are key, and Intel does a lot of benchmarking and sharing stories of what happened to competitors. 4. How does sustainability help in times like this?
Ms. Esque: Intel is not directly affected by the current times but was affected by the dot-com bust. Companies must focus on long-term decisions and their impacts and provide justification for short-term planning. If sustainability is truly embedded in a culture, it is a good thing to fall back on in difficult times.
Ms. Davidsen: JPMorgan Chase has a strong culture of ethics–the organization has been able to weather the current crisis because it did not take on a considerable amount of risk.
Ms. Clemons: American Express is stable, but the economy is not, so morale is down. It is critical at this time to communicate what a company is doing related to sustainability and tie it to employee satisfaction. Right now, it is the “right thing to do,” which helps to provide a productivity boost.
Ms. Appleton: We believe that the value of a company is based on cash flow three years and beyond and therefore doing our best to understand if a company is sustainable or not is important. Poor governance and a failure of risk management are major contributing causes of the current financial crisis. We have learned that good governance at the board, department, and project level is key to preventing another major failure such as we see today. Many people have come to particularly appreciate the value of understanding good governance. While we may not expect good governance to generate alpha for us, we strongly feel it can help us manage beta or risk, which is key to good performance. 5. What one focus point can people use to implement a sustainability program?
Ms. Clemons: Attracting key talent is vital to implementing a sustainability program. Generation X was shaped by the Gulf War and international events. Generation Y is focused on global issues such as climate change, and members of this group are collaborative, multicultural, and impatient. If companies want to create a dialogue with these groups, you will see a change in the culture of a company. What is important to Generations X and Y–flexibility, a company’s sustainability and critical philanthropic efforts, and then money.
Ms. Esque: If you have executives that aren’t on board with your program, you should look to understand what is important to them and use that as leverage to get them engaged.
Ms. Davidsen: Talent is critical. The sustainability concept becomes more ingrained as newer people come in. It is time to embed it into the culture.
Ms. Appleton: Employees are a key stakeholder. Management that does not pay attention to employees will not survive. It is also important to have a consistent internal message.
Strategic Café Dialogues
Following the panel session, the format switched to café dialogues facilitated by Dianne Culhane, former Group Director, Internal Communications, The Coca-Cola Company. The conference attendees formed groups of four and discussed one of the six summit topics noted below. The groups rotated every twenty minutes, allowing attendees to participate in three separate discussions. At the conclusion of the café dialogues, the plenary group reconvened and the small-group leaders shared discussion highlights.
The topics and a sample of the takeaways of the café dialogues are as follows:
A. What structures, practices, and knowledge systems in your company encourage or inhibit a culture of sustainability?
- Inhibitors include a lack of understanding by senior leaders of how sustainability connects to the core business model, lack of connection to the mission or core values of the organization, and the belief that the individual or organization cannot make a difference.
- Cultures of sustainability can be encouraged by integration into the core business strategy, finding and nurturing champions to launch the dialog within the organization and inclusion of sustainability into performance management.
- It may be useful to look to the European community to understand what it has done.
B. What is the role of leadership/management in building a culture of sustainability? What opportunities do leaders see in a culture of sustainability? What barriers exist, and how have successful leaders used these barriers to their advantage?
- Management is responsible for creating interdisciplinary sustainability leadership roles so that sustainability can be integrated throughout the organization.
- Leadership can model stewardship, support sustainability initiatives as producing value to the organization, and promote sustainability as profitable a long-term Return on Investment.
- The current economic downturn can be perceived as a barrier to encouraging sustainability or as an opportunity to show leadership and differentiation by applying the principles of sustainability within organizations.
- Leadership can be helpful in supporting product innovation to reduce cost and risk, enhance reputation and build deeper relationships.
C. In a culture of sustainability, what are the best and worst ways/approaches to setting goals and measuring results?
- It is not possible to look at everything, but it is important to set boundaries and to make clear why you choose what you are addressing and measuring.
- One key approach is to make sure that knowledge is shared and the culture is embedded in the organization, especially given that the champion sometimes leaves the organization.
- Look at reporting standards, which can provide guidance on how to be a leader within industry. Establish management systems, which spur continuous improvement.
- Gain input and make the process inclusive of stakeholders, in particular employees.
D. As you build a culture of sustainability, how do you move from the ideal to the real? What is the ideal? What is real?
- It is very important to have a vision, to connect the organization and business strategy to the vision, and to connect the vision to the execution.
- Champions of the program can be a catalyst for real change. Reward them and give them voice. Empower and educate all within the organization.
- The current reality is still the importance of demonstrating a return on investment.
E. How do you use communication effectively in changing culture? What leadership communication changes culture? What could be done to ensure communication moves up, down, and across the organization?
- Participants agree that new technology, advanced media, and webcasting are useful tools in effective communication. These may help in creating an interactive platform for communication and inspire dialogue
- Listen to stakeholders, tailor the message to your audience, and be sincere. Lead by example, because actions communicate as well as words.
- There must always be substance behind communication. Utilize statistics to support the message.
F. How do we give voice and support to the next generation of sustainability leaders? What do they need to be successful?
- The younger generation is pushing change in organizations, so it is important to listen to them, encourage their feedback, and create opportunities for engagement, including recognition of the value they bring and creation of mentoring and facilitating networks for additional development.
- Engage in partnerships and dialogue to promote sustainable education.
Gail Blanke: How to be a Champion for Change
Gail Blanke, CEO, Lifedesigns, began her discussion by drawing parallels between a ride on Disney World’s Space Mountain and today’s economic turmoil. She recalled how she had never been so terrified in her life on Space Mountain; never quite knowing when the ride was going to go up or down. She said that this is how most people feel in corporate America today, not knowing when the next high or low is going to hit. Ms. Blanke posited that we’re not meant to be comfortable in our lives and in our jobs – we are meant to change. Those that can adapt to or create change are the ones who make a difference.
Ms. Blanke shared five steps for becoming a champion for change from her book, Between Trapezes: Flying into a New Life with the Greatest of Ease:
Step 1: Tap into the incredible power of a vision. Ms. Blanke asked the participants what their vision is, and about what they are passionate. She asked them to understand how powerful a vision can be in being a champion for change. Motivation comes from vision. She shared how Walt Disney directed the castle to be built first when opening a new theme park. When you see and feel the magic, you have the motivation to build something beautiful. She warned not to be bogged down with tactics or information when constructing your vision, as this will not help you to achieve it.
Step 2: Let go. Ms. Blanke asked the participants to be aware of what keeps them from achieving their vision. This old view of the world and yourself–regrets, resignation, anger, being right, the fear of not being recognized, the fear of failure–is part of the past. Ms Blanke challenged the participants to leave that vision in the past and to discover who they are now. She also challenged each participant to go home and throw out fifty things, whether they are physical or mental things that keep them from taking action. She explained that courage to do something bold comes with action. Referring to the analogy of her best-selling book, “Between Trapezes”, she said that the greatest fliers are the greatest fallers. Great trapeze artists do not confuse falling with failing. Sometimes the new trapeze bar doesn’t show up until you let go of the old one.
Step 3: Make a list of defining moments. Ms. Blanke asked participants to think of moments throughout their lives when they found out they had something they didn’t think they had–perhaps a moment in which they won, or lost, or in which they changed as a person. She also asked participants to look back into the life of their organizations, to assess their companies’ defining moments. There would be a pattern in these moments, a definition of courage. She suggested they utilize the knowledge of this pattern to find the stamina to be bold, to recreate these moments, and to move forward.
Step 4: Adopt an entrepreneurial spirit. Entrepreneurs are passionate, risk-taking, and agile. They thrive on change. Rigidity is the entrepreneur’s enemy. Be agile, stay light.
Step 5: Understand the difference in life between fact and interpretation. Ms. Blanke explained that fact is a demonstrable thing, inarguable. Interpretation is something we make up about the fact, which becomes our truth. When something happens, we slap an interpretation on it, and that becomes our truth, whether it is a crisis or an opportunity. She noted that each of us gets to decide if something is a crisis or an opportunity. When making the interpretation, it is important to assess the fact and decide what you are committed to.
Ms. Blanke concluded with the thought that this is exactly the right time to make a difference. She challenged the audience to step into the change and inspire others to join them.
The Women’s Network for a Sustainable Future would like to thank all of the summit speakers and participants for attending this year’s event. We are grateful to our host and our sponsors for making this summit possible, and for their continuing support of our organization.
WNSF Summit notes compiled by Framework:CR.