Corporate Sustainability: Friction or Synergy?

The economic crisis has caused many companies to reevaluate their business practices in order to cut unnecessary expenditures. Pursuing sustainability and green business practices in the workplace has become an important focus in the drive for increased efficiency. In order to understand the developing merge between the corporate sphere and the environmental sphere, the Dartmouth Business Journal interviewed four very diverse, yet equally insightful experts and asked them to share their opinions on corporate sustainability.

Steven Chu | Secretary of Energy, US Department of Energy 

Steven Chu, current US Secretary of Energy under President Obama, has been instrumental in directing the US government to invest in clean energy and address the global climate crisis. With a double major from the University of Rochester and a PhD from UC Berkeley, he went on to win the Nobel Prize in Physics in 1997. As Secretary of Energy, his current endeavors are focused on research and development of biofuels in order to reduce US carbon emissions.

Dartmouth Business Journal (DBJ): How can US business leaders implement sustainable practices in the corporate sector?

Steven Chu (SC): I think that green corporate behavior pays off in the long run. There are some companies that pursue sustainability genuinely, but there are many that only want to appear as though they do. Skilled and visionary leadership at the executive level is incredibly important in carving a successful approach to sustainability. Not only do shareholders prefer to invest in companies implementing green practices, these companies enjoy greater profits due to increased efficiency. If business leaders want to stay competitive in the rapidly evolving economy, they need to be ready to look forward and  face the challenge to run their companies sustainably head-on.

DBJ: Are companies that promote their sustainable practices at risk of intellectual property infringement by foreign competitors?

SC: This is a problem that we were very wary of; similar practices have been carried out by other nations regarding high-speed rail, coal, and now, nuclear energy, where they examine the systems that we have and think of how to improve. In terms of developments, a gap between China and the United States is quickly growing as it’s now become one of the top five patent producers in the world. However, it all comes down to the behavior of a country’s researchers. Some researchers prefer to remain secretive about their work, and others, who are excited and willing to share their work, collaborate to reach success more quickly. In my experience, the latter has been routinely more useful in creating change and progressing in this race for clean energy. Sure, there are chances that you will be ripped off and copied, but those are sometimes the risks you have to take to make a greater impact in the field.

Durwood Zaelke | President & Founder, Institute for Governance and Sustainable Development

In addition to his work at the Institute or Governance and Sustainable Development, Durwood Zaelke is the Director of the International Network for Environmental Compliance and Enforcement. In 2008, he was given the award of “Champion for Protection of Climate” by the U.S. Environmental Protection Agency. He currently teaches at American University Washington College of Law where he is the Director of International and Comparative Environmental Law. He has performed extensive research on fast action mitigation responses to climate change as well as on resolution for trade and environment conflicts.

DBJ: If efficient management and sustainability are connected, why do some profit-maximizing businesses degrade the environment?

Durwood Zaelke (DZ): Short term profit usually overwhelms sustainability, unless governments change the incentives, through regulatory mechanisms, best practices, capacity building, training, funding or other financial incentives.

DBJ: Does sustainability always make good business sense?

DZ: Some sustainability strategies provide high rates of return in the short term and are easier to convince managers to follow. However, even where you can make money with a sustainability strategy, you have to first get the attention of management, and then get the initial resources to get the strategy in place. Most managers are already busy and not looking for new work. The bottom line is that governance really matters. Some governance can be internal, but government-provided governance can truly change corporate culture.

DBJ: What steps can the future business leaders of America take to implement sustainable practices in corporate sector?

DZ: Future business leaders need to be futurists, who see the major forces affecting global business, including climate change, which will show its impacts in an increasingly powerful way in the coming years. It would be malpractice for a business leader not to educate him or herself about the impacts and risks of climate change, even if he or she doesn’t believe the science. Climate will affect water supplies, and food availability, Climate will affect the availability of other raw materials. A reasonable corporation should study, monitor, prepare, and progressively implement both a defensive plan to prepare for coming impacts, but also an offensive plan to start reducing the behavior that is causing climate change (whether in the form of emissions, sources, or sinks). There will be future liability for corporations that do not act in a reasonable way to mitigate and protect against climate change. This liability may be statutory, or it may be common law.

Todd Larsen | Corporate Responsibility Director, GreenAmerica

Todd Larsen oversees Green America’s efforts to encourage businesses to adopt greater social and environmental responsibility and to support socially and environmentally responsible public policies. Green America is the leading green economy organization in the US. Founded in 1982, this national membership organization works to harness economic power-the strength of consumers, investors, businesses, and the marketplace-to create a socially just and environmentally sustainable society.

DBJ: Are sustainability and corporate social responsibility linked?

Todd Larsen (TL): At Green America, we consider sustainability to be core to a company’s corporate social responsibility (CSR). We have a broad view of sustainability that encompasses both social justice and environmental responsibility, and we expect corporations to serve all of their stakeholders, including consumers and workers across their supply chain. Many corporations today focus on short-term profits at the expense of the environment, worker’s rights, and providing safe products and services. However, there is increasing evidence that sustainable companies that perform better on CSR measures have better long term financial performance. As a result, all stakeholders, including shareholders, would benefit from a company pursuing sustainability.

DBJ: Can a multinational company ever be fully sustainable?

TL: There really is no such thing as being fully sustainable. For all companies that want to pursue sustainability, it is a constant process of making improvements. There are no fixed goal posts for sustainability because as we learn more about environmental and social impacts, and how to reduce harmful practices and increase beneficial ones, the goals of sustainability keep advancing. That being said there are multinational companies whose very business models preclude sustainability, such as coal mining corporations. Other companies only somewhat pursue sustainability, such as WalMart, which improved its environmental standards but still relies on low-paid labor both in the US and abroad. In general, smaller companies have been more willing to pursue sustainability as a core component of their business model. Green America has strict social and environmental criteria for earning its Green Business Seal of Approval, and most of the companies that are able to earn our Seal are small. We do have some larger companies that have earned our Seal, including Clif Bar, Aveda, and Organic Valley, and these are companies that built sustainable practices into their business model from the start.

DBJ: How can business leaders implement sustainable practices?

TL: Most companies will only adopt sustainable practices if there are champions within the company that make the case for them. Even if a sustainable practice will save the company money over time and/or improve its brand image, a company may not adopt the sustainable practices due largely to inertia or fear of unintended consequences. Increasingly, younger business leaders are supporting sustainable practices, carefully demonstrating the benefits and addressing concerns of upper management, and, as a result, more and more companies are becoming more responsible. Also, many younger business people are starting their own business, making it sustainable from the ground up. At Green America, we have over 4,000 business members who consider sustainability a chief concern of their company. That number is only going to grow.

Joe Coleman ’11 | Public Relations Chair, Big Green Bus

Joe Coleman ’11 is pursuing a major in Environmental Studies with a concentration in chemistry and economics. He hails from Poway, California and has been a part of the Big Green Bus since Fall 2010. During his time at Dartmouth, he has volunteered at a clinic in Buenos Aires, Argentina and taught English and math to children in Yambiro, Ecuador. He is currently the President of the Class of 2011 and was a lab TA in chemistry and Presidential Scholar in organic chemistry in past years. This is his first summer with the Big Green Bus, and he is incredibly excited to spend his senior summer promoting environmental issues across the nation.

DBJ: Is this the first year that the BGB is planning to address corporate social responsibility specifically? How successful do you think your presentations will be?

Joe Coleman (JC): I’d say this is the first year that we have an emphasis on businesses. We are definitely planning on visiting some businesses. As of now, we are planning to visit Waste Management, Boloco, and LL Bean. I don’t anticipate that our presentations will directly influence these companies. I do, however, think that we will influence individuals. Through our presentations, website, and even the bus itself, I think we can raise general awareness and this will indirectly penetrate corporations in a grassroots manner. Overall, we plan to learn from our conversations with people along our trip, extend our knowledge, and spread the important messages. The bus will essentially serve as an educational classroom on wheels.

DBJ: What role do you think sustainability plays in corporate social responsibility?

JC: I think it is a critical element. Sustainabilityisasocialjusticeissue and I anticipate that the realm of corporate social responsibility will continue to grow in the future.

DBJ: Why should a company pursue CSR? What is the most important message the BGB wants to give businesses?

JC: I think it just makes practical business sense. A company can no longer focus on profit maximization in isolation. It’s not sustainable. Moreover, companies that are preemptively implementing sustainable initiatives can minimize their vulnerability to fluctuating energy prices, while also boosting their brand’s image.