The Social Side of Sustainability Strategy

As per the World Business Council for Sustainable Development, “Business cannot succeed in societies that fail”.

A comprehensive corporate sustainability strategy extends beyond financial capital and environmental capital to encompass human and social capital.  This includes everything from employee satisfaction and productivity to giving back to the community and society, safety and health protection, as well as global issues such as fair trade and fair labour standards protecting the rights and wages of workers.  Each of these factors and everything in-between can have a profound, immediate effect on the success of a corporation and the growth of its bottom-line.  The notion of Corporate Social Responsibility (CSR), in which a company is accountable for its actions and takes initiative to ensure that its decisions are not only in its best interests but the best interests of the community, society and planet is a key subset of corporate sustainability strategy.

Companies with a comprehensive corporate sustainability strategy tend to attract and retain the highest level of talent by recognizing the importance of a work/life balance for their workforce and appealing to a person’s intrinsic desire to feel that they are contributing to the greater good, positively impacting employee morale, and overall job contentment.

A 2007 survey by MonsterTrak illustrated that 92% of students and entry-level hires seek an environmentally friendly company, while a 2008 study of MBA graduates by Hill and Knowlton revealed that 58% of respondents feel social responsibility is an “extremely” or “very” important company reputation measure to consider when job hunting.  As sustainability awareness continues to increase, so too do the expectations of prospective and current employees.  It is no longer enough for a company to offer competitive wages, job security and a safe workplace; the new expectation demands that a company’s operations aspire to a net positive impact on the environment and society.

There are other less obvious benefits accruing to companies addressing the social argument when adopting sustainability strategies.  Companies operating in green buildings and facilities where natural light is maximized can expect reduced employee absenteeism and improved productivity and employee satisfaction.  In retail environments, ‘daylighting’ has been proven to increase sales, while in schools, learning and retention are improved.   Pennsylvania Power and Light upgraded their lighting system and experienced a productivity hike of 13.2% and a decrease in sick leave by 25% in addition to the 69% decrease in their energy bill.  Considering that the payroll is usually the greatest expense for most companies, the economic benefits of the first two factors would far outweigh the cost savings attributable to energy efficiency.

There is a public expectation that organizations should have ethnic diversity in their ranks that is reflective of the community in which they operate.  There is a changing employment norm for diversity in the workplace.  We are in an era where the first African-American president now governs the United States, where women are given fairer treatment and are climbing to new heights in professions outside the home, immigrants are being granted an increased number of opportunities through social assistance programs, learning programs bridge the gap between education levels from country to country and microcredit financing is lifting people in vulnerable communities out of the crushing grip of poverty.

A company’s public relations efforts are an extremely important part of ensuring the success and growth of business, and contrary to an old proverb, there is such a thing as bad publicity.  Managing risks to brand reputation is a key driving force for businesses  that adopt sustainability practices.  A well-known example of the risk is Nike and the scrutiny that arose in the 1990’s regarding the poor working conditions at their suppliers’ factories.  After serious criticism by the public and media, and suffering great social repercussions for the practices of their suppliers, Nike made it their mission to ensure that their own and their suppliers’ operations had a positive impact on the community and environment, thereby demonstrating accountability to stakeholders, and practicing corporate social responsibility.  It has taken a long time for the Nike brand to reinvent itself and regain the trust and respect of millions of customers around the world.  Theirs is an excellent case that exhibits just how much impact the perceptions of external stakeholders and society can have on a company.

In 2005  Wal-Mart dedicated efforts to a sustainability strategy with three main goals: “To be supplied 100 percent by renewable energy; to create zero waste; and to sell products that sustain [its] resources and the environment.”  In addition, employees have been encouraged to actively take part in a personal sustainability initiative, focused on employee health and well-being.  As of December 2008, nearly 20,000 associates have quit smoking, and lost a combined total of over 184,000 pounds by eating healthier foods and exercising. The company has made it a mission to ensure the health and happiness of their employees, and rather than simply providing healthcare benefits and superior working conditions it is motivating employees to do more for themselves. You can bet that all of this translates to tremendous benefits for the company’s bottom line!

Agricultural goods account for 24% of lower income countries’ total GDP, as compared to only 2% of total GDP for high income countries such as Canada and the US.  These goods are usually traded at a significantly lower price than manufactured goods typically produced by high income countries.  This can contribute to a lack of fair trade practices and less than optimal conditions and wages for workers struggling to make a living.  Ultimately, this arrangement is not conducive to the long-term success of organizations with supply chains extending across the globe.  Businesses, communities and governments can collectively make a difference by creating partnerships and devoting time and resources to ensure access to essential services like energy, water, health care and associated infrastructure as well as fair trade and labour practices.

Ensuring that a company pursues Corporate Social Responsibility as part of their Corporate Sustainability Strategy will have a direct impact on its economic success. A credibly developed, implemented and publicized sustainability program increases brand reputation and recognition, and positive media coverage.  This in turn creates loyalty amongst employees and customers, appeals to a new customer base and generates positive word-of-mouth, further accelerating business success.

Contact us today to discuss how to gain competitive edge by effectively integrating Corporate Social Responsibility into your Sustainability Strategy.