The CRO staff took flights from Newark and LaGuardia on 9/11 and we headed into Chicago for today’s Fall 2007 CRO Conference at the Union League Club in the Windy City.What struck me yesterday during a focus group, the cocktail hour, numerous one-on-one conversations and panel discussions today, is just how much the corporate responsibility industry is in flux.
People find themselves in new jobs with new titles that deal with various and overlapping facets of CR and sustainability. Executives and their companies are looking for best practices, for answers, for templates on how to begin the process. In some cases, this evolution/revolution in global business practices has touched companies for years, and these companies have slotted board committees dealing with citizenship and diversity, for example, for a decade. But for many companies, CR is a new game, requiring a cultural revolution (with apologies to Mao and the Gang of Four) within the firm.
Sometimes it is a matter of translating and disseminating the correct CR “tone at the top” to the management team, workforce and suppliers, who may be scattered across 100 or more countries around the globe. But, for many companies, pressure may be coming from below, including from mid-level management, other employees, unions, institutional investors and advocacy groups. In these cases, the challenge may be to convince the CEO and senior management to buy into the theory that corporate responsibility and sustainability are essential components of strategies to move the company forward over the next few years.
This morning, in a panel, “Green As A Growth Strategy,” current and former executives from Interface Americas, a commercial carpet manufacturer, and Kraft Foods, respectively, highlighted the disparate phases that companies find themselves in regarding CR. Interface hopped onto the sustainability bandwagon more than a dozen years ago when actually there was no bandwagon. That’s when Ray Anderson, the founder and chairman of the firm, discovered he couldn’t answer a client’s question about the intricacies of Interface’s environmental strategy. It was a tough question, according to John Wells, Interface America’s president and CEO, because the company didn’t have a sustainability strategy at the time. Wells described to some 225 conference attendees this morning how that daunting question led in part to Interface’s 12-year sustainability journey, which led to the company’s reducing greenhouse gas emissions by 60%, avoiding $336 million in waste-management costs, and pledging to be producing zero waste by 2020.
One really cool Interface product, Entropy, which the company developed along the way, now accounts for about 35% of Interface’s sales.This modular carpet, introduced after the company dispatched designers out into the woods and boondocks to find out if they could mimic some of nature’s sustainable processes, uses random design patterns. Every modular piece has a slightly different pattern and color so when a piece of the carpet needs replacement, an installer can reinstall just that little piece instead of the whole carpet.
With Entropy, Interface has reduced waste in carpet installations from around 10% to 1%, Wells said.
The sustainability process is at an entirely different stage at Kraft Foods, noted Richard Gylling, the company’s former vice president of supply chain sustainability. Kraft embarked on developing its sustainability efforts in 2006 after Walmart called in suppliers to assess how they are integrating sustainability into their business processes, Gylling said.
Gylling said he studied Kraft’s sustainability options, and then had to plot a strategy on how to get senior management and shareholders to buy into the sustainability push. He brought in outside experts from Interface and ERS Global to help make the case to senior management, including senior vps in R&D, global supply chain, and marketing. And he sought the vps’ help in making the case to shareholders.
Susan Graff, principal and founder of ERS Global, told conference attendees that one vital ingredient in launching a viable sustainability program is that the CEO must “put a stake in the ground” and exhort the company to follow through on the sustainability business plan. Hey, the entire company and its partners need to know where the buck stops and that the company is serious about CR.
Some companies mentioned at the conference that their employees know they will be fired for ethics violations, for instance, and that department heads have to issue memos to employees if there are compliance transgressions by supply chain partners or others. Gylling reinforced that theme, arguing that for a sustainability program to have meaning, CEOs must understand the critical impact that sustainability issues will have on businesses’ long-term success. And, it is clear that in the current climate, if chief executives don’t get on board, there will be plenty of stakeholders who will call them on the carpet.