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How can Businesses move to Action on Sustainability?

November 6th, 2017

You’ve thought about it. You’ve talked about it—a lot. You’ve included it as a bullet point on hundreds of PowerPoint presentations. But for many senior leaders, sustainability has been a subject that’s outside of the normal scope of business—too difficult to wrap your arms around and too all-encompassing to manage effectively.

Multiple goals, multiple disciplines

While smart businesspeople understand the core components of running a profitable enterprise and can easily connect the roles of finance, marketing, and operations, they can get tripped up when trying to manage to sustainability. Why? One reason can be that while each successful business function maintains its own unique competencies, they are all ultimately aligned around a single metric of maximizing shareholder wealth. But when you take on the issues of sustainability, not all profits are equal. How you seek profitability becomes influenced by a wide variety of complex issues, ranging from removing toxic substances in products and reducing greenhouse gas emissions across diverse supply chains to increasing workplace safety, advancing community development, and incentivizing diversity and inclusion in your supplier network.

Not only are there more things to measure, but managing sustainability requires new and different skills and capabilities to find profits amid stakeholder-driven trade-offs between sustainability objectives, shifting social and environmental impacts across geographies and organizations, and long-term performance targets spanning decades. Without the increasingly requisite business acumen of sustainability, it can feel like just a collection moving targets that are difficult to measure and rarely actually accomplished in any real sense.

Many organizations are investing in their employees and systems to measure, report and improve sustainability performance. It’s widely reported that more than 80% of large companies are reporting on their sustainability goals and performance, a niche activity just five years ago. And, it’s not just reporting. More than 300 global companies, representing $6.5 trillion in market value and CO2 emissions of 158 million cars annually, have committed to set “science base”’ emissions reduction targets in line with the United Nations Paris Agreement to limit global warming to less than 2 degrees Celsius.

Companies don’t commit to targets lightly. It’s no surprise that within companies like 3M, General Mills, Target, and many more, the sustainability function is growing and increasingly being integrated into the strategies and operations in order to successfully meet sustainability goals.

Secret sauce

wind turnbineInvestments in sustainability are admirable, but when it comes to the bottom line, they still need to payoff. Finding where your company’s opportunities to integrate sustainability reside isn’t always easy, but it can lead to cost advantages, risk reduction and preferred status among key customers. An example of this in action can be seen in firms’ efforts to manage sustainability in their supply chains. Companies want to know the sustainability impact of their supply chains, and much of my research focuses on helping them uncover these upstream risks and opportunities.

For the past three years, we have been working with environmental non-profits and large food companies to map high-impact agricultural inputs through complex food systems’ supply chains. This work highlights that the strategies most effective in reducing emissions or managing water impacts for Cargill are very different than those available to Smithfield Foods or Tyson Foods. In the case of Smithfield Foods, our models and tools have helped inform the company’s recent commitment to reduce its total CO2emissions by 25% by 2025. Targeted strategies to meet this goal–and the increasing requirements of large downstream retailers–are being implemented across feed procurement, energy and manure management, and in their operations and transportation.

Finding your way to action

With this range of challenge and depth of expected outcomes, how can senior business leaders navigate the multiple and winding pathways of sustainability from talking points to action plans? One excellent place is with the new eight-day Comprehensive Executive Program on Leading Sustainability.

To describe this program as “multidisciplinary” does not begin to do it justice. A partnership between the Carlson School and the Institute on the Environment, this course began by the gathering of input from seventeen regional firms with a proven record of sustainability effectiveness. The course itself will be presented by business practitioners from leading companies and professors from top universities, all of whom are actively shaping sustainability best-practice on the ground.

It’s an opportunity to move from thinking about sustainability to uncovering ways you can effectively act on it within your own organization. To present meaningful and robust living case studies, we’ve gathered leaders from companies including Target, General Mills, Cargill, and 3M to help shape and enhance this course, ensuring a highly inspirational, educational, and practical experience. Participants will have the opportunity explore and create sustainability frameworks and analyses through exercises, homework, and group work. We’ll work with you to find ways to prioritize sustainability aspects appropriate and applicable to your own organization, and to open doors to meaningful and prosperous action toward sustainable practices.


You can join Carlson School of Management January through April 2018, for a program that can help propel your organization toward a step-change in sustainability leadership. Learn more here. https://carlsonschool.umn.edu/executive-education/courses/leading-sustainability

Tim Smith

POSTED BY:

Professor, Sustainable Systems Management, Carlson School of Management

Paris Withdrawal Won’t Stop Business Sustainability

June 27th, 2017

In the wake of the United States leaving the Paris Climate Agreements, many states, cities, and individual companies have taken pledges to continue sustainability efforts. In Minnesota, we’re lucky to have major companies and thought leaders stand firm in their commitment to environmental protection, including many members of the Minnesota Sustainable Growth Coalition.

In an effort to work toward a circular economy, environmental protection and stewardship must be a high priority. Several Coalition members have issued public statements and/or been in public support of the Paris Climate Agreements, demonstrating the leadership in our community on environmental issues.

The fact is, a commitment to the Paris Agreements, and more broadly our environment, is a smart business decision no matter your priorities.

STAYING GLOBALLY COMPETITIVE

One of the main reasons that companies and government entities are still following through with climate promises is to stay competitive. Cargill issued a statement reflecting their need to remain globally competitive, concluding that the Paris accords impact “trade, economic vitality, the state of our environment, and relationships amongst the world community.” Because of this, CEO David MacLennan said Cargill will not back away from efforts
to reduce climate change.

General Mills and several leading companies (Google, Walmart, Unilever, and more) echoed that sentiment with a letter to the President to express why the Paris Climate Agreements are important to their ability to compete globally: “the agreement ensures a more balanced global effort, reducing the risk of competitive imbalances for U.S. companies.”

INNOVATION & OPEN MARKETS

Part of being globally competitive is practicing innovation. The Paris Climate Agreements helped companies to innovate and create technologies that lower business costs. That new technology allows companies to enter new markets and keep markets open. Dow commented on how they will act in light of the executive decision, saying they will “continue to advocate for smart policies that enable the reduction of global greenhouse gas emissions and ensure that global markets stay open to American exports and innovation.”

Thomson Reuters also commented on the importance of climate innovation: “In short, having a sustainability strategy integrated into your business model is an efficiency, growth and innovation driver.”

COMMITTING TO CUSTOMERS

In addition to economic arguments, Xcel Energy made a more values-driven appeal. In an op-ed, Xcel’s CEO calls out the value of their customers, and responding to their interests in achieving a higher standard of environmental protection. As a result, Xcel is already on a “path to reduce carbon emissions by 45%
by 2021, well ahead of the U.S.-Paris commitment.”

Best Buy also highlighted what they’re doing in response to customer interests, saying, “Best Buy is focused on reducing our own carbon impact, and helping our customers use less energy as well… Collective action will result in a healthier world for generations to come.”

THE BOTTOM LINE

In the end, Minnesota businesses and corporations are dedicated to the environment for more than just regulatory reasons. Investing in environmental protection is a smart business decision. Even more than that, private-sector leaders see lessened environmental protections as harmful to their organizations and global markets as a whole.

These businesses, our state, and many others are still committed to action on the environment. It’s because of that leadership that we can still look forward to climate action for years to come.

Sam Hanson

POSTED BY:

Director, Sustainability Program
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