|April 10, 2006|
The rise of corporate responsibility
Better behaviour results in better business
Vancouver, Canada - (GLOBE-Net) - Corporate Responsibility is more than a slick PR buzzword. Why? Because a growing number of shareholders and citizens around the world are demanding that businesses practice it. And environmental and sustainability performance is increasingly linked to long-term profits, as executives at GLOBE 2006 demonstrated.
Embracing CR requires a company to do more than paying its taxes and provide jobs -- it's about considering the environmental impacts of the company's activities "beyond the gate" -- extending into the local community and beyond. As CR-savvy CEOs attest, adopting a CR plan must be part of a viable, long-term strategy designed to build sustainable shareholder value and corporate returns.
According to GLOBE 2006 speaker Bob Willard, CR is a win-win situation that enables companies to increase profits while minimizing their environmental footprint and mitigating other risks.
He should know: an expert on the business value of corporate sustainability, Willard has given over 150 keynote presentations to corporations, consultants, academics, and nongovernmental organizations over the last three years. As the author of two books -The Sustainability Advantage: Seven Business Case Benefits of a Triple Bottom Line and The Next Sustainability Wave: Building Boardroom Buy-in -- he expounds on why some companies are committed to sustainability, why others are not, and how to overcome senior executive resistance to making that commitment.
In The NEXT Sustainability Wave, Willard says that companies can experience that CR win-win by shifting from simply complying with the laws to pro-actively looking for ways to improve a company's processes through environmental consciousness, or even re-branding the firm to be seen as a sustainability leader. As he outlined at GLOBE 2006, he expects two pressures to drive companies toward the next wave of environmental responsibility:
A Perfect Storm of Threats - Five global forces will cluster together into a tempest that will threaten many companies: climate change, pollution and its effects on health, the backlash to globalization, the energy crunch, and the erosion of trust in institutions.
Compelling Business Value - Companies that commit themselves to sustainability benefit economically through easier talent recruitment; increased productivity from working for a "firm doing work that is good for the planet"; cost savings due to reducing and re-using materials, decreased energy and water use; revenue increased through attracting like minded clientele; access to "green" financing; and lower insurance costs.
Willard is not alone in seeing CR as a vital opportunity for business. GLOBE 2006 speaker Chunfeng Wang, Deputy Director of the Carbon Sequestration Management Office, State Forestry Administration from Hangzhuo, China, sees taking responsible actions on the part of the community as a necessary part of any business plan. He stressed that corporate responsibility does not kill corporate profit-making. In fact, it should be integrated into corporate strategies for profit.
A Relationship with Society
CR in practice can also build trust with key stakeholders and customers, a factor that Bob Elton, President and Chief Executive Officer of Vancouver-based BC Hydro takes seriously. "We do not do the right thing merely because it is good for business, but because it is the right thing," he says.
Elton continued these thoughts during the CEO Dialogue on Sustainability Panel at GLOBE 2006: "It's what our grandmothers told us. It's personal. You don't take more than you need," he said. "But I'm an optimist. I think we're capable to having a good standard of living while ensuring that we don't waste our natural capital."
Jim Carter, President and CEO of Syncrude Canada Ltd., agreed, but stressed that business growth benefits society as a whole. "A high tide lifts all boats," he said. But sustainability is important: "Sustainability, to us, is continually working to earn our license to operate, and we get our license to operate from the court of public opinion," he added.
BC Hydro's Elton expects that in 20 years, environmental values will be even higher than they are today. "The generation that is now in its twenties may be the first one to realize that its future could be seriously affected by environmental degradation," he says. "Just in the electricity sector, we expect that in the next 30 years, the world will double its generation capacity of electricity."
He also sees a general increasing acceptance of the idea of responsibility. "We should not be transferring that responsibility to our children," says Elton. "For us in the electricity business, that means it will get harder to increase supply by building non-renewable projects. When they are built, there will be an increasing trend to make them pay for their total costs."
World's largest firms embrace CR
As the world's second largest energy company and a world-leading chemicals company, BP and Dow Chemical are certainly aware of the tremendous environmental impacts their businesses have. They must also maintain good ties and be strong environmental stewards if they wish to maintain financial performance, said Tony Hayward, BP's chief executive for exploration and production, and Ramesh Ramachandran, President of Dow Chemicals Canada during the opening plenary at GLOBE 2006.
Hayward sees CR as intrinsically linked to profit. "You used to not be able to discuss business and the environment in the same sentence," he said. "There is only one bottom line," he added! "Profit - but profit is enhanced and sustained by good social and environmental performance."
BP's move to diversify its energy products was in part to reduce emissions linked to global warming, but was only made possible because of sound business reasons, said Hayward.
Ramachandran agrees that the goals of environmental stewardship and profitable business are now aligned. "It's is possible to have an extremely profitable business today plus be good environmental stewards and be socially responsible," he told the audience. "They are not competing goals."
"Tomorrow's customers have made it very clear they will punish us severely if we ignore these goals," he added, pointing to science and technology advances that will help assure his company's environmental record supports business success.
The importance and application of effective Corporate Responsibility policies was examined in detail at GLOBE 2006, as business leaders from around the world met to discuss how to advance the cause of business and sustainability. It was agreed by a number of global executives that the changing role of business in society demands higher standards of corporate responsibility, and that such policies can markedly enhance profitability.
The consideration of business and environmental goals as complementary has been endorsed by the private sector and the public, and the application of this thinking is now a challenge that rests with business, government, and societal leaders.