September 8, 2011
Most years, people are reluctant to see summer fade into fall. But the summer of 2011 was a bit of a bummer, bringing hurricanes and earthquakes in the American Northeast; ongoing political stagnation in the United States, Europe, and Japan; and signs that the world’s mature economies are stuck in neutral—and may remain that way for some time. Leaving this summer behind feels like a relief.
It’s up to business to turn this around. That’s why BSR has made redefining leadership as the theme of the BSR Conference 2011.
We view this opportunity as having four dimensions, which we outlined in our most recent annual report. In this series of blog posts, I want to elaborate on each one, beginning with the need for business leaders to invest in the infrastructure required for sustainability.
Building the infrastructure for sustainability goes far beyond green buildings. It means advocating for systemic solutions that create the right incentives for business to make progress on crucial issues like human rights and climate change. Making this happen requires a different kind of engagement in public policy than companies often make.
These solutions fall into three categories: changing the rules that guide companies, reorienting governments to embrace a sustainability agenda and galvanizing the public. This is not the usual checklist for business. But with policymakers paralyzed by the current economic crisis, the public and business need to help change the policy agenda.
How to change the rules to reward companies that take sustainability seriously? We can start by supporting stock-exchange listing requirements that make medium- and long-term questions as an explicit part of fiduciary duty. Efforts like this are underway from South Africa, where companies are required to report on their sustainability work, to Sacramento, where California’s legislature is considering a “flexible purpose corporation,” which explicitly enables companies to consider long-term impacts. Globally, the work of the International Integrated Reporting Committee (on which I serve), which is developing a model that brings sustainability into financial reporting, holds out the prospect of further mainstreaming.
Second, we should do what we can to ensure that, within the existing rules, governments advance a sustainable growth agenda. The highest-profile vehicle for this is the Rio+20 summit next June. Many governments, including the United States, have grown very timid on climate action since Copenhagen. This makes it even more important for business to work through groups such as Business Action for Sustainable Development to push and prod government to renew efforts to focus on limiting climate change and promoting a green growth agenda. Companies like Nike are taking this responsibility seriously. The company has been a strong advocate for public policies that shift our energy system to a lower-carbon model, through BICEP and other entities. Nike has also demonstrated its commitment by creating a unit within its sustainability team that is dedicated to “mobilizing” other actors to realize its vision.
Third, business should exercise its voice, which is too often muted or expressed through trade associations’ efforts to block policies that embrace social and environmental progress. Just this week, the White House, allegedly responding to business pressure, withdrew implementation of new air pollution regulations. The pressure is intensifying to take other steps like this, in the name of restarting a stalled economy.
Starbucks’ Howard Schultz is an example of a chief executive who is taking a different approach, and aiming to be a statesman. His recent effort to halt contributions to political candidates, while not explicitly tied to sustainability, demonstrates how business leaders can influence public debates. Other business executives, like Jim Rogers of Duke Energy and Lars Josefsson of Vattenfall, have also spoken out about the need for governments to act to promote clean energy. With public support for sustainability flagging amid severe economic doldrums, business leaders have the obligation to argue on behalf of environmental protection. The bully pulpit is not just for presidents and prime ministers.
In times of economic difficulty, it’s tempting to delay investments in a sustainable future. Our times require business leaders to think not only about their own performance, but also about the robustness of the systems in which they operate. Those systems are sputtering right now. We as business must reshape the rules, reorient the system, and rebuild public support for sustainability.
Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals.