Earth Day Pondering: Three Pillars of Sustainability ~ Future of CIO

Sunday, April 22, 2012

Earth Day Pondering: Three Pillars of Sustainability

8:27 PM Pearl Zhu No comments

Sustainability leaders embed real, measurable, ongoing commitments to sustainability practices as a strategic differentiator, going beyond the immediate benefits of compliance, obligations, and efficiency.

Earth Day has its mission: “to raise support for a more sustainable future as climate change continues to wreak havoc across the globe. A sustainable society will only come about through the accumulated actions of billions of individuals.

Essentially, Earth Day reminds us of sustainability and perceive nature as something that sustains us and nurture us spiritually, psychologically, and emotionally.

What is sustainability anyway? From wiki: Sustainability is the capacity to endure. For humans, sustainability is the long-term maintenance of responsibility, which has environmental, economic, and social dimensions, and encompasses the concept of stewardship, the responsible management of resource use. In ecology, sustainability describes how biological systems remain diverse and productive over time, a necessary precondition for the well-being of humans and other organisms. Long-lived and healthy wetlands and forests are examples of sustainable biological systems.

1. Environmental Responsibility

1) From Compliance to Leadership

Compliance with government regulations is a key external driver and the legally required must-do tasks for business today. Engaging with sustainability to meet obligations in environmental responsibility will decide business decisions and options to meet regulations, then for efficiency and ultimately for market leadership.

Reducing energy use & waste & Emissions in operations
Managing corporate reputation for sustainability
Proactively responding to regulatory constraints or opportunities
Leveraging sustainability of existing products to reach new customers or markets
Improving employee retention and/or motivation related to sustainability activities
Mitigating operational risk related to climate change
Achieving higher prices or greater market share from sustainable products
Committing R&D resources to sustainable products, managing the portfolio to capture trends in sustainability

2) From Practitioner to Advocate & Educator

When we look at the hyper rising costs of energy in recent years, it is probably the top three most expensive unmanaged cost for any Fortune 500 company, and especially become the biggest concern for many energy-dependent businesses, they need to become advocates and educators for corporate-wide environmental sustainability initiatives, also transcribes a path that converts outside concerns into inside engagement, it becomes a significant component of every business decision large or small, focus on growth, reputation management, and return on capital. It also needs an integrated view that blends financial, environmental, and social performance.

From businesses governance discipline, organizations are disclosing significantly more nonfinancial information that underpins how value is and will be created. Disclosures include detailed plans for low-carbon products and services, and employee incentives to reduce greenhouse gas emissions.

2. Economic Demands:

1) Sustainability: From Nice to Have to Must-Have

Efficiency has been a key internal driver for sustainable practices and is the low hanging fruit when moving beyond compliance and obligation. Waste of resources is costly. Reuse and reduction of waste reduce cost and creates new revenue streams to impact both bottom-line and top-line business growth.

The business barriers need to be overcome in sustainability management:

Lack of incentives tied to performance on sustainability initiatives
The pressure of short-term earnings performance is at odds with the longer-term nature of sustainability
Lack of, or use of wrong, key performance indicators (KPIs)
Insufficient data or information to implement initiatives
Sustainability isn’t integrated into existing key process & performance management system
Company leadership sets sustainability as too low a priority, business units are not engaged with implementing sustainability initiatives
Sustainability the department is disconnected from the rest of the organization or is too low to be influential, the company lacks the right capabilities and/or skills

2) Embed Sustainability into Business Process & Operational Excellence

Sustainability needs to be embedded into key business processes and business makes the decision with an integrated view that blends financial, environmental, and social performance, to gain business insight, with which to manage the risks and opportunities in the future.

The methodology and roadmap for sustainability management are designed to evaluate a company’s sustainability opportunities and risks throughout its extended value chain. It also can be used to drive innovation efforts in the development of a holistic sustainability strategy.

• Operational input/output analysis: Examines critical inputs (e.g., materials, energy) and outputs (e.g., finished products, greenhouse gas emissions, water pollutants), giving leaders a picture of the impact sustainability efforts have across the company

• Profit and loss sensitivity analysis: Helps identify the bottom-line impact that sustainability issues (e.g., energy price fluctuations) have on a business

• Regulatory risk analysis: Helps leaders anticipate both the current and likely future laws and regulations that might affect a company’s operations

• Customer and competitor analyses: Helps uncover sustainability priorities of the company’s key customers and competitors

• Brand positioning analysis: Helps assess customer sustainability priorities against product attributes and brand positioning

• Value chain analysis: Consider how the change to link in the value chain affects the operation, also achieve a new perspective on sustainability.

• Innovation analysis: Looking at sustainability as a driver of innovation — looking beyond the company’s walls to the ecosystem of opportunities and risks posed by the dynamic set of industry partners.

3) Using IT to Drive Sustainability

Essentially, a key piece of information—information around environmental and social concerns—has been missing from most business operations. Therefore, IT can play a lead role in improving corporate sustainability performance to ensure the long-term economic success of the enterprise. The commitment to doing this needs to start at the highest level of the organization, with sustainability becoming integrated into the corporate strategy, which is supported by the overall IT strategy.

Information technology can collect, analyze, monitor, mitigate, and monetize resources within an enterprise and across its value chain, not only in the aggregate, but also across their operating units, allowing them to identify opportunities for improvement. They are able to compare themselves against industry norms to determine and report how they rank competitively in their overall sustainability performance.

3. Social Equity

The classic definition of sustainability is “meeting the needs of the present without compromising the ability of future generations to meet their own needs” well articulate the social pillar in sustainability.

Social Equity is defined as "equal opportunity, in a safe and healthy environment." Social Equity is the least defined and least understood element of the triad in creating sustainability - balancing economic, environmental, and social equity. Social Equity is the perceived value of individual, organization, or brand reputation. it includes the impact on the social systems within which the organization operates. Following categories are included:

Labor practices: Impacts on the workforce, including labor/management relations, health, and safety, training and education and diversity, investment and procurement practices, child and forced labor, security practices.