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Wielding Influence as a Sustainability Leader
December 7th, 2011
With small budgets but big responsibilities, wielding influence is a critical skill for sustainability leaders. Influence, and how to get it, are among the topics explored in the latest Green Research corporate sustainability study.
A handful of top sustainability executives believe they have total control of their companies’ sustainability strategies. Most share influence with others, but nonetheless feel they are in the strategic driver’s seat. Three quarters of them rate their influence over sustainability strategy at their company as four on a five-point scale. Perceived influence is somewhat correlated with proximity to the C.E.O. but other factors affect influence, such as the talents of the sustainability leader, the board’s commitment to sustainability and cultural factors that determine a company’s ability to adapt and to act on stated priorities.
Corporate sustainability starts with strategy and continues through tactics, policies and procedures. In the areas of communications and external affairs, sustainability executives generally perceive themselves to have substantial influence. This is partly due to where the sustainability function reports in corporations: an earlier Green Research study found that 30 percent of sustainability departments report into public affairs or marketing groups. But when it comes to other corporate functions such as procurement, supply chain or product marketing, they carry less sway. Over a quarter of respondents to our survey report having little or no influence over supply chain policies or procedures at their company and another half have moderate influence. Many companies are just beginning to contemplate how to obtain sustainability performance improvements from their suppliers.
It is rare that sustainability executive have much influence over the finance function at their companies. At some companies, finance has taken on the role of calculating and reporting sustainability metrics such as carbon emissions. With a reputation for sober and credible reporting, the finance department can raise the credibility of such reports. At a few companies we know, the head of sustainability has enlisted the finance department as an ally. One chief sustainability officer told us that his CFO has helped identify unspent funds and applied them to sustainability projects planned for the coming year, and has approved sustainability related projects with a lower rate of return than the usual investment hurdle.
How to Boost Influence
The most effective means of enhancing one’s influence over sustainability strategy and tactics at work is participating in face-to-face meetings with senior leadership. Eighty-three percent of respondents to our survey cited this as a key means of extending their influence, more than any other choice. Among top sustainability executives, the figure is 90 percent. Sustainability executives should push for face-to-face meetings, including dedicated time with the C.E.O. and at board meetings. Some companies, like Alliance Boots, the U.K. retailer, have board-level sustainability committees that meet regularly and are governed like any other topical committed such as audit or compensation.
The second-most effective approach for extending influence on sustainability inside a company, according to our respondents, is helping executives in other departments develop the business case for sustainability initiatives. Sustainability departments should compile case studies of successful sustainability initiatives at other companies, along with costs and benefits and financial models. Acting as an internal consultant and champion who can help obtain greater budget for other departmental leaders is a powerful way of boosting influence.
Another potent method for building influence inside an organization is through the use of third-party sustainability rankings. Sustainability executives cite those rankings and their companies’ standings in them to motivate employees and galvanize action. “We’ve used DJSI as a benchmark, and the questionnaire has helped drive certain reporting and analysis initiatives internally,” one chief sustainability executive told us. “I think the most immediate implication is a sense of pride that tightens bonds between employees and strengthens both their connection to their workplace and their resolve to continue to make progress.”
For more information on the Green Research Annual Sustainability Executive Survey research, click here.
Other Studies Featured This Month
The latest Green Research study (described above) reveals a paradox. Improving the sustainability of supply chains is one of the top two priorities for 2012 of the companies we surveyed. But three quarters of the sustainability executives responding to our survey say they have moderate to no influence over supply chain policies and procedures at their companies. A recent paper in the Journal of Operations Management provides an analysis of what makes supply chains tick with some suggestions for how to wring sustainability improvements from them. Sustainability execs should take note.
The paper describes two types of capabilities that companies employ in the design and management of their supply chains: technical and relational. Technical capabilities are based on the science and technology involved in producing and sourcing goods and services. Relational capabilities include the ability to design effective agreements, share information, increase commitment, and establish shared goals.
All companies have a mix of technical and relational capabilities, but the specific skills they develop differ depending on how their supply chain is configured. Supply chains configured for efficiency (e.g., in consumer packaged goods) may draw on process improvement skills, for instance. Supply chains configured for market-responsiveness (e.g., in computer manufacturing), on the other hand, may draw on product innovation skills.
The paper suggests that companies should leverage the skills they have, and which are attuned to the way they have configured their supply chain, to pursue sustainability gains. For instance, companies with efficient supply chains might leverage their technical expertise on process improvements to pursue technically focused initiatives like carbon footprint analysis. Those with responsive supply chains might focus on product innovations like dematerializing products or applying “cradle-to-cradle” design strategies.
On the relational abilities side, firms with efficient supply chains might focus on using social and environmental metrics and scorecards, as Wal-Mart, Marks & Spencer and Procter & Gamble do. Firms with responsive supply chains might rely on trust and collaboration to build shared assets like recycling practices, as Hewlett-Packard and Dell have done.
The take away for sustainability execs: understand your company’s unique supply chain skill set. Support your supply chain team to build on those skills to drive higher sustainability performance.
Parmigiani, Anne, Robert D. Klassen, and Michael V. Russo. "Efficiency Meets Accountability: Performance Implications of Supply Chain Configuration, Control, and Capabilities☆." Journal of Operations Management 29.3 (2011): 212-23. Print.
The Network for Business Sustainability has an extensive summary of this research.
Most companies have at least some “stretch” environmental goals, but such goals might just be counterproductive. According to a recent Green Research survey of sustainability executives, 57 percent of the companies surveyed say they have stretch environmental goals in place. In that research we defined stretch goals as “challenging but probably achievable.” A study published in the July issue of the Academy of Management Review suggests that, in some cases, stretch goals can actually hurt performance. That study’s definition of stretch goals--organizational objectives that seem impossible in light of current skills and knowledge--may be a bit tougher than ours, but its key points are worth considering. First, stretch goals can motivate high-performance organizations but can be demotivating for those with poor performance. And second, your best chance of making stretch goals work is if your organization has slack resources available. But for those with neither the slack resources nor a history of good performance, “stretch goals produce fear, helplessness and demotivation,” according to a summary of the research by the Network for Business Sustainability. The lesson: reflect before setting goals to understand what impact they will have on your organization. And as we recommended in our research on setting and managing sustainability goals, be sure to include in-house technical experts in the goal setting process—they know what is possible.
Sitkin, Sim B., Kelly E. See, C. Chet Miller, Michael W. Lawless, and Andrew M. Carton. (2011) The Paradox of Stretch Goals: Organizations in Pursuit of the Seemingly Impossible. Academy of Management Review, 36(3), 544-566.
The Network for Business Sustainability has an extensive summary of this research.