New Dynamics of Sustainability Leadership: Changing Roles, Fresh Opportunities
At The Institute for International Education, United Nations Plaza
Thank you to our sponsors: The Coca-Cola Company, DuPont, McGraw-Hill Companies, Pfizer, PricewaterhouseCoopers, Siemens
Thank you also to Alexandra Marchosky and Framework: CR for serving as rapporteur.
Four Summit Themes:
- Changing Dynamics: How the sustainability landscape has changed in the last year and the implications for business.
- Fresh Opportunity: New ways to broaden the scope and influence of sustainability in business.
- Global Perspective: How business can accelerate sustainability through global operations and networks.
- New Roles: New partnerships that are emerging because of government attention to sustainability.
WNSF Chair Kathy Robb opened the Summit. There are “instances when a new ideamarks an unmistakable and instantaneous change from everything that has come before,” she explained. One instance was the 1972 ”Blue Marble” photo of the Earth. “In it, the Earth looks like a blue pebble floating in space – beautiful and fragile. There, for the first time, we saw our Earth, as a single, self-contained, indivisible whole, with no political boundaries… . We knew, the minute we saw it, that whatever happens to this planet in the future will happen to all of us together.” In the future, “sustainability as a dynamic concept implemented in all its depth,” may well prove to be another bright line that marks a change in the way we see ourselves, she suggested.
WNSF Executive Director Ann Goodman, PhD then briefly spoke about the political and economic sea changes of the past year. In this shifting landscape, there is increasing policy interest in, and public awareness of and pressure on business to be truly sustainable.
WNSF has always focused on the nexus of three powerful influences: women, business, and sustainability. There is now increasing empirical evidence that women play a significant role in bolstering sustainability efforts and that these efforts have a positive impact on business and the larger worlds. In fact, a growing number of initiatives are measuring company performance based on principles and “metrics” that examine the links between women and sustainability in business. (WNSF plans to host a session on these metrics initiatives soon. Please check back or sign up for the WNSF mailing list for details.)
Businesswomen’s Sustainability Leadership Award Winner:
Linda Fisher, Chief Sustainability Officer, DuPont
Dr. Goodman introduced this year’s winner, Linda Fisher, who has played a major role in helping DuPont achieve sustainable growth. Before joining DuPont in 2004, Ms. Fisher served in leadership positions in industry and government. As a former Deputy Administrator at the EPA, Ms. Fisher has been able to help DuPont build relationships and credibility with NGOs and government offices.
By 2006, Ms. Fisher had helped DuPont develop watershed sustainability goals that help its customers improve their sustainability performance. Putting customer needs first has helped DuPont integrate sustainability into its core business practices.
Ms. Fisher’s Keynote Address
Themes in Ms. Fisher’s speech:
- Real change is necessary if we are going to save the world and make it viable for the billions living here.
- Businesses can’t succeed through green-washing; we must integrate sustainability into core business practices.
- Partnering with non-governmental organizations is a key part of the process.
- Good, clear government regulation is another cornerstone.
Ms. Fisher’s address highlighted that working in sustainability for the past 25 years has been dynamic, interesting and challenging; she’s hopeful that there will be even more robust sustainability practices 25 years from today.
When Ms. Fisher graduated from law school and began working at the Environmental Protection Agency, her older brother, a finance attorney, dismissively noted, “The environment. Well that will be a very nice boutique practice.” We all now know how wrong her brother was. However, Linda is the first to acknowledge that 25 years ago, it was unfathomable that businesses would ask for regulations, seek partnerships with environmental advocates, and ask stakeholders for input on environmental solutions. Twenty-five years ago, companies were fighting Superfund clean-up standards and liability; environmental advocates seemed to not understand business needs at all; and stakeholder input was unheard of. A lot has changed.
Is there green-washing? Yes and no. Some companies are guilty of green-washing; but many companies are making real, substantive changes and genuinely debating what sustainability means and how to move towards it. Leading companies realize this is not a fad; sustainability is here to stay.
One proof of the change in attitude and commitment is that the conversation about sustainability is no longer occurring only in the legal and health and safety departments. It is now part of the conversation about the marketplace and growth. It has moved from a fringe issue to part of core business operations. The public, clients, and government are demanding healthy, safe, and sustainable products. These demands are fostering market-driven considerations of the energy used by products, how to remove toxins from them, and the volume of material waste created through production and use. The public (not government) is doing much of the pushing and monitoring. Ms. Fisher believes this public pressure is more effective than government regulation.
Non-Governmental Associations Have Learned Business. In the 1980’s, business people wished that environmentalists understood business. Now they do, and they are using the marketplace to push for change. 1) NGOs organize boycotts to create market pressure. This often leads companies to make quick, global, lasting changes. 2) NGOs are forming partnerships with businesses. Business clients want products that are more sustainable, long-lasting, and made from renewable resources, so DuPont is changing its products and services. Working with NGOs can help it meet these goals. In this way, DuPont grows markets through sustainability, in addition to reducing its own risk.
Economic success follows from being sustainable. Marketplace requests are much more transformative than government regulation.
Leading businesses know what their customers want before their customers do. In sustainability, that means being the first to market with products and services that address energy, water, and food issues, and in this way both create and respond to growing consumer awareness of the problems.
Government’s Role. We need regulations. The marketplace and corporations are imperfect. They need the pressure and minimal performance standards regulation provides. Fair, cost-effective regulations establish a level playing-field, create markets for innovative products, and guarantee safety.
Companies that need 5-10 years for research and development also need the certainty regulations provide. This is why DuPont is partnering with NGOs to advocate for regulations regarding greenhouse emissions and nanotechnology.
The Bottom Line: We cannot succeed through green-washing; we must do much more than not pollute in order to feed, clothe, and shelter a growing global middle class. Businesses must make real changes, with the help of NGO partners and good government regulations.
Questions from the audience
- What about safety, human rights, and labor, which are also part of creating sustainable organizations?
DuPont’s first focus was on reducing emissions and making its products less toxic, because it is a chemicals company. Now it is also focusing on water. The company has human rights and animal rights policies, but this is not an area of focus for the company because it does not have a lot of employees in developing countries.
- What kind of leadership is needed for companies to begin their sustainability journey?
DuPont started addressing sustainability issues well before Ms. Fisher arrived. It first began addressing these issues in the 1980’s, under the leadership of then CEO Edgar Woolard Jr.; each successive CEO has built on the work of his predecessor. When Linda arrived, DuPont’s sustainability efforts were focused inward and on doing less bad. Now the focus has evolved to doing good and providing better products for clients. Now it is a business conversation–Where are the market opportunities? That shift in focus makes a big difference; sustainability isn’t just about reducing its own footprint and risks; it’s also a way to develop market share.
- What language do you use to engage senior executives? How do you measure the market size of opportunities?
DuPont uses 11 criteria to evaluate new products; the new product must beat current offerings by 40% on 1 criterion and at least match existing products on the remaining 10 criteria.
There is an on-going discussion at DuPont about how to use the “green” and “sustainable” labels.
Ms. Fisher doesn’t tell the businesses the size of the market; the businesses know their market. Instead, she works to help the businesses understand the opportunities, externalities, and risks. And, realistically, some businesses will never be green; DuPont is not going to stretch “green” to operations where it doesn’t fit. For those businesses, DuPont focuses on reducing harm and risks.
- What about emissions cap and trade regimens?
At DuPont, they are debating where in the company cap and trade will be housed. DuPont has already done a lot of trading on the Chicago Climate Exchange because of its refrigerant reductions. Linda’s office does audits to ensure the reductions are real; the division that reduces its use of refrigerants gets the money earned from the Exchange; and the CFO is also involved. Current in-house discussions are focused on whether trades should be made internally before turning to external markets. There will be more CEO involvement to develop this business strategy.
Every part of DuPont is affected by higher energy prices. Everyone benefits from energy efficiency. Twenty to thirty plants are covered by a cap and trade Bill being considered by the House. These plants will need allocations; some will receive free allocations, then there are the rest. The company has to determine how much to invest in reductions and how much to spend on off-sets. The House Bill has helped to crystallize what life under greenhouse gas emissions will look like; despite recent efforts, DuPont still releases a lot of emissions. But, Ms. Fisher reminds them, higher energy prices are great for DuPont’s solar products!
Strategic Dialogue: New Dynamics of Sustainability Leadership
Following Linda’s address, conference attendees formed groups of four to five people and discussed one of the four summit topics noted above. At the conclusion of the dialogues, the plenary group reconvened and individuals shared discussion highlights.
Please click here to read a sample of the takeaways from the café dialogues.
How has the sustainability landscape changed in the last year and what are the implications for business?
- The economic challenges of the past year have allowed some sustainability efforts to grow as these departments have gained budget and momentum, while others have had their resources limited as their companies focus on basics.
- Herman Miller is not hiding what it’s doing; it’s sharing its information to bring other manufacturers along with it on the path to sustainability. Are there new ways to broaden the scope and influence of sustainability in business today?
- Employees are the gateways to implementing change, but they have to believe the leadership really understands and supports the new platforms.
- Make sustainability language understandable to everyone.
- Use common vocabulary and standards. Broaden the “footprint” idea to include water, food, etc.
How can business accelerate sustainability through global operations and networks?
- One size does not fit all. Solutions have to be tailored to each location.
- Pilot projects are great; one group or product line tries something new, while the rest of the company watches and learns (this monitoring also creates positive pressure on the pilot group).
- Use communication channels to get employee buy-in and their resulting efforts and loyalty.
- The networks have to include NGOs, trade associations, and other businesses, as well as local communities and employees.
What new partnerships are emerging through government attention to sustainability?
- Competitors are working together. For example, Sony and its competitors now ship products together in order to save money and resources; insurance companies and property managers are also working together to protect their shared investments.
- A focus on building infrastructure and communications.
- Stimulus funding is being used for clean technology.
- Consider how the government can work with NGOs and businesses, and how new collaborations can help create new processes and materials.
Shannon Schuyler, Americas Corporate Responsibility Leader, PricewaterhouseCoopers moderated a dialogue with a distinguished panel. Ms. Schuyler began by asking the panelists to share their insights on the four conference themes.
Hye-Won Choi, Senior Vice President, Head of Corporate Governance, TIAA-CREF, and Co-Chair, SEC Investor Advisory Committee.
Beth Keck, Sr. Director for Sustainability and Strategy, International Sustainability & Strategy, Walmart Stores.
Dr. Ponni Subbiah, VP of Global Access Strategy, Pfizer Inc.
Dr. Sharon Nunes, Vice President, Strategic Growth Initiatives – IBM Green Innovations.
- Changing Dynamics: How the sustainability landscape has changed in the last year and what the implications are for business.
Dr. Nunes: Big Green Innovations is an emerging business within IBM. It is part of IBM’s Smarter Planet Initiatives, which focuses on managing world systems–energy, transportation, water, and carbon. The mandate for Dr. Nunes’s group is to explore business opportunities related to water and energy. There is great support and excitement about this initiative; IBM employees have offered to provide volunteer support to the group on their nights and weekends.
Big Green Innovations was formed just as “An Inconvenient Truth” and the IPCC report created a surge in public interest on sustainability issues. In March 2007, Sports Illustrated had a lead story on stadiums under water; to Dr. Nunes, this is great proof of how mainstream these issues have become. Further proof came from the survey of approximately 1,100 global CEOs that IBM conducts every two years. Sustainability is now one of their top three issues (along with globalization and talent retention).
Innovation and sustainability have to go together.
Dr. Subbiah: Like Dr. Nunes, Dr. Subbiah heads a pilot project/start-up business within the company. Her team is focused on creating channels to serve the base of the pyramid– including the four billion people around the world who don’t have access to health care– by looking at both near and long-term perspectives. Working with other colleagues at Pfizer, they are focused on addressing the health care needs of this population, including infectious diseases like malaria and tuberculosis that will spread to new geographies with global warming. An example of their work includes their partnership with the Clinton HIV/AIDS Initiative (CHAI) to improve access to Rifabutin, an important drug used in the treatment of TB in patients who have HIV/AIDS and are taking second line antiretroviral therapies. Pfizer will sell Rifabutin at $1 per dose, which is an approximately 60% reduction in price, and will also support registration in priority countries in the developing world. This agreement with Pfizer marks CHAI’s first partnership agreement with a research-based pharmaceutical company. Pfizer is also working with CHAI to explore a pediatric TB dose and the feasibility of co-packaging TB medicines in order to improve adherence.
Pfizer is also partnering with other organizations to develop drugs for diseases in the developing world. In addition, they are working with NGOs and public partners to change policies to address access issues.
In addition, because they work with some of the same external partners and certain issues involve both groups, Dr. Subbiah’s team has begun talking with members of Pfizer’s Environmental Sustainability team. Pfizer’s environmental efforts include a 20% reduction in emissions from its manufacturing processes since 2001 (plus a commitment to a further 20% reduction), and using fewer toxic chemicals.
Ms. Keck: Sustainability drives efficiency, transparency, and innovation. Walmart has three long-term sustainability goals: zero waste, 100% renewable energy, and selling sustainable products.
Walmart customers are frugal and price-sensitive, but they also have a growing awareness about quality and safety issues. The peanut butter and milk recalls (in the U.S. and China, respectively) had a considerable impact on consumer awareness. As consumer attitudes are changing, Walmart is broadening and accelerating its efforts, even in the downturn, and even though the sustainability team is small–just 8 people for a $400 billion business. In July 2009, Walmart announced that it is backing an independent consortium that is developing a simple sustainability index to help consumers make buying decisions.
How do you know if suppliers are really sustainable? How does Walmart define sustainability? Walmart, in partnership with NGOs and suppliers, has developed a 15-question Sustainability Suppliers Assessment Tool for suppliers. It provides suppliers with a simple roadmap to get them started.
Walmart also partnered with NGOs to bring transparency to the supply chain for certain jewelry items; a priority because jewelry has a challenging supply chain.
Ms. Choi: TIAA-CREF owns approximately 7,000 companies around the world; they are often indexed, so TIAA-CREF cannot sell company stocks at will. Instead, it works with companies to improve their policies and performance. One focus has been executive compensation. TIAA-CREF works with boards to make sure they are independent and really question management strategies and assumptions.
The company is also raising sustainability issues at the board level; it is part of governance and part of the pros and cons that need to be considered in business decisions. This is in accord with investors’ changing view on sustainability. Sustainability is not just a moral issue, it is an economic issue; sustainability impacts a business’s risk profile, reputation, brand, and franchise. TIAA-CREF is also advocating for climate change risk disclosures, including company strategy and metrics.
On the human rights front, it is currently raising attention regarding Sudan. TIAA-CREF wants companies to respect rights in all their operations–this again is both a moral issue and something that impacts risks, reputation, and investment returns–and specifically wants companies to act more responsibly in Sudan.
Because of new regulations, TIAA-CREF–and the public– can now have a stronger voice in governance issues, including executive pay. Other bills will give shareholders more say in board composition, but only if shareholders (all of us) use our new rights and powers. We have to step up and engage with the process.
There is a difference in the reputations of companies that are thinking about these issues defensively and those who think strategically and see opportunities.
- Fresh Opportunity: New ways to broaden the scope and influence of sustainability in business.
Ms. Choi: She encourages companies to take leadership on governance issues, rather than waiting for the government to impose legislation. We now have a lot of new legislation regulating companies, but it didn’t have to be this way; companies could have developed market-based solutions. She prefers market-based solutions because they are more flexible and allow for more customization than regulations.
Dr. Subbiah: Water is a big issue. Consumption of dirty water can lead to infectious diseases; diarrhea is a big killer. The roles for Pfizer in addressing water-related issues are being explored.
Pfizer is also studying the various factors that prevent low-income people from accessing health care. An example of this work includes their partnership with Grameen Bank, where they are learning more about how lower-income individuals are interacting with the health care sector in the rural areas in Bangladesh. Dr. Subbiah’s team is listening and learning from different perspectives and engaging stakeholders from the start in order to develop potential solutions that are locally relevant; they know they can’t always use first-world solutions in the third world.
Dr. Nunes: She echoes Dr. Subbiah: IBM’s growth agenda is focused on opportunities in emerging geographies. Populations will shift to the first world if the third world cannot provide the resources to support them; Southern Europe is already experiencing this. Like Pfizer, IBM is exploring new business models for the base of the pyramid, seeing at it as an opportunity rather than a challenge.
** Keck: Economic development is a very important part of Walmart’s business model; the developing economies are its future clients and employees. Working at Walmart is often a first job that helps people move up the economic ladder.
- Global Perspective: How business can accelerate sustainability through global operations and networks.
Dr. Subbiah: She cautions against accelerating too quickly–what works in one part of the world may not work in another. It is critical to get local input and local buy-in. You can teach the approach globally, but you have to develop localized solutions in partnership with an engaged community.
Ms. Keck: Walmart pairs a simple framework of three goals (zero waste, 100% renewable energy, and sustainable products) with tremendous freedom in each country for local innovation and methods for communicating what works. It is currently developing business processes and accountability systems related to sustainability. The Sustainable Value Network is comprised of business leaders, NGOs, academics, and government officials that work on issues. For example, the Packaging Network created a scorecard which has driven huge savings in supply chains. Business processes help people do more by demonstrating how new goals can be achieved.
Ms. Choi: Businesses need to incorporate different social norms and customs into their practices. You must be responsible to shareholders when you take public money. Europe is much more stakeholder friendly; companies are viewed as owned by the whole community, not just shareholders, and employee welfare is much more important. Europeans generally have a longer-term view. U.S. companies should follow this example.
- New Roles: New partnerships that are emerging through government attention to sustainability.
Dr. Nunes: IBM is much more focused on public-private partnerships now that it is focusing on helping to develop and re-build public infrastructure. Both public water and utility infrastructures are incredibly inefficient; they lose 30-50% of the water/energy during transmission from centralized facilities to end-users.
IBM has co-invested in pilot projects such as a project in the U.S. Northwest that communicates real-time energy use information. Simply providing users with real-time data reduces use by 15% off peak loads, delaying or potentially eliminating the need to build new power plants.
The dialogue can begin either with government entities or NGOs. Investment money is often coming from business, so the NGOs are willing to start a conversation in order to access the corporate funding.
Ms. Keck: Regulations can be the confluence of what is possible and feasible. Good regulatory frameworks provide useful power and influence. An example: Walmart is dedicated to reducing shopping bag waste by one-third globally In China, use is down 95% because of a pre-Olympic ban on plastic bags. On the other hand, in Brazil there has been almost no reduction because there are no local policies that discourage use of plastic bags.
The message from an NGO session on food and agriculture was clear: invest in local farmers. In South America, Walmart partners with U.S. AID and local groups to provide resources and training to farmers. In Brazil, Walmart is working with meat suppliers to reduce environmental degradation and rainforest destruction related to raising cattle. Walmart credits a Greenpeace report for bringing this issue to the fore. Walmart then acted as a catalyst to bring the meat processors to the table. During its Walmart Brazil Sustainability Summit, it had the 20 largest suppliers, including every Brazilian beef processor, sign a corporate responsibility pact and commit to audits.
Walmart purchases very large heating and cooling systems, so it challenged the manufacturers to create systems that are 70% more efficient than EPA standards. Most companies refused to even try, but one company succeeded in creating the more efficient heating and cooling systems. Walmart now purchases exclusively from that company, helping to create a market for the new technology.
The panelists also answered questions from the audience:
How many Boards have sustainability committees?
Ms. Keck: Walmart is a young, fast-growing business that did not have all the needed systems in place, and as a result had problems with employment practices. It has now invested in infrastructure and systems to address those issues. Walmart has always complied with environmental laws and regulations, but then CEO Lee Scott saw a great opportunity for Walmart to become an environmental leader–the environment was an area where Walmart had not yet been publicly criticized. Its first efforts were defensive, but then Walmart recognized the possibilities for business innovation and employee engagement.
Who bears the responsibility for damage to water tables caused by years of manufacturing/production efforts? In general, who bears the responsibility for legacy problems?
Dr. Nunes: Responsible companies will remediate, even if they inherited the problem with an acquisition. Even as companies innovate, there will still be problems. In fact, there might be more problems as better detection methods allow us to discover more problems.
Ms. Choi: This is a policy issue. Your business accounting is not reflecting the full costs of the business and real economic situation if it does not include these issues.
Dr. Subbiah: Companies need to partner with local communities to address these issues. It is a matter of individual leadership. Companies are made of many employees; employees can push companies to do their part.
Closing Keynote Address by Michelle Moore, Federal Environmental Executive, Council on Environmental Quality, Executive Office of the President. Ms. Moore is responsible for promoting sustainability and environmental stewardship throughout the federal government’s operations. She previously served as the SVP of Policy and Public Affairs at the U.S. Green Building Council, where she created partnerships and programs that helped to grow green building from a niche market to a mainstream movement. Ms. Moore’s office leads the implementation of the new Executive Order on Federal Sustainability, which focuses on leadership by example in federal agency operations. It will leverage the size and scale of federal operations to build on the momentum of the Recovery Act and help to create a clean energy economy. The federal government owns significant amounts of land and nearly 500,000 buildings, operates more than 600,000 vehicles, employs more than 1.8 million civilians and 1.6 million military personnel, and purchases more than $500 billion of goods and services each year (that’s half a trillion dollars a year). It encompasses many varied agencies, organizations, and types of operations, including land management, administrative agencies, and military operations. In other words, the government has substantial purchasing power. It has the scale to move markets. This can be strategically used as a policy tool. The government can be a transformative actor; it can make a market for good entrepreneurial ideas that can become great American enterprises that create jobs.
Ms. Moore’s approach is threefold:
- Focus on what is abundant. For example, the federal government has an abundance of wonderful people who have been interested in sustainability for 20+ years.
- Integrate, avoid silos. The many federal agencies are very diverse with diverse missions, but they can learn from each other.
- Keep score. In 2006, the Office of Management and Budget started using scorecards to measure energy use and environmental and fleet performance in order to meet an efficiency mandate. The scorecards are very effective at driving action. Similar scorecards will be used to measure the reductions required by a new Executive Order (see below), and they will be published on government websites so that all of the public can review them.
President Obama signed an Executive Order on October 5, 2009 requiring the federal government to incorporate sustainability into its operations. From the White House Press Release: Demonstrating a commitment to lead by example, President Obama signed an Executive Order today that sets sustainability goals for Federal agencies and focuses on making improvements in their environmental, energy and economic performance. The Executive Order requires Federal agencies to set a 2020 greenhouse gas emissions reduction target within 90 days; increase energy efficiency; reduce fleet petroleum consumption; conserve water; reduce waste; support sustainable communities; and leverage Federal purchasing power to promote environmentally-responsible products and technologies.
More information about these goals:
- The emissions targets incorporate scope 1, 2, and 3 emissions; scope 3 includes emissions resulting from employee travel and commuting, so this is setting the bar at a challenging level. These efforts have to be cost-effective, to showcase that greenhouse gas emissions reductions also save money.
- The goal is not just to reduce energy use; it’s also to increase agency use of renewable energy.
- Water use reduction targets will be set and storm water will be managed (Washington D.C. actually charges a fee for sending storm water to the sewer plants).
- To meet petroleum reduction goals, the army just made the largest electric-vehicle purchase by a government organization – more than 4,000 vehicles.
- The federal government, as a large employer, can help to make communities more livable and sustainable. It provides economic opportunities and can also affect issues like traffic by locating offices near public transportation.
Special thanks for their contributions to: Coyne PR, Framework: CR, Hudson Chesapeake LTD, Institute of International Education, Mohawk Paper, Orange Sparkle Ball, Pam Snook Public Relations, Rivanna Designs