When it comes to marketing buzzwords of the day, sustainability has, well, staying power. But it’s about much more than just protecting the planet.
The Minneapolis/St. Paul Business Journal held a panel discussion recently about sustainability. Panelists included Emilio Tenuta, senior vice president and chief sustainability officer, Ecolab Inc.; Ingrid Mattsson, director of brand and sustainability, Uponor North America; and Matt Kucharski, president, Padilla. Carla Inderrieden, sustainability coordinator, Minnesota Pollution Control Agency, served as moderator.
The conversation covered topics including the importance of sustainability programs, commitment from leadership and employee engagement.
It seems like we’ve been talking about sustainability for a long time. Why do you think it’s taking so long to get traction?
Sustainability is getting a lot of traction now, because there’s been a convergence of altruism and pragmatism. It used to be driven by an altruistic interest: We need clean water because it’s right for the world and for the environment. And then companies like Coca-Cola, Budweiser and Marriott come to the realization that they can’t make products or deliver services unless we have clean water. So, there’s an altruistic element that now intersects with a business imperative, and that’s when things really get done.
How are organizations balancing the demands of customers and investors? Aren’t the two always going to be at odds with each other?
I think it’s more than just customers and investors. It’s customers, employees, investors and community. To some degree, you’ve got to find a stasis between all of those key stakeholders. In the past, the idea was if you do something good for one of those groups, it’s going to have a negative impact on the other. Pragmatic companies are saying, “We’ve got to find the right balance.” Let’s take investors. Certain investors say, “Every dollar you spend on sustainability, you’re not spending on profitability.” But other groups of investors say, “I’m building a portfolio of sustainable investments.” You’re seeing mutual funds that are all related to sustainable investing. Then you have employees who are making decisions about their employer based on that commitment to sustainability. So it’s no longer a tradeoff; if we don’t prioritize sustainability, we actually aren’t going to appeal to the very people we need if we’re going to have a successful business.
How does sustainability fit within the broader context of corporate social responsibility (CSR) and what we call ESG, or environmental, social and governance?
CSR was really thought about as the triple bottom line. It’s not just about profits, it’s about people and the planet, as well. A lot of good deeds were happening with CSR, but they weren’t necessarily true business commitments.
There’s been a transition from CSR to the broader concept of ESG, which adds a level of accountability. And for any organization that is doing business on a global scale, certain countries will make it a requirement for you to adhere to the UN sustainable development goals. Companies are also looking at ESG as a holistic way to improve the long-term sustainability of the business and to overall manage risk. Investors don’t like us to spend money unnecessarily, but investors absolutely do like businesses to manage risk. And if you’re thinking about sustainability as a way to manage the long-term risk of the organization, that’s right in the wheelhouse of investors’ concerns, and the board’s concerns.
So I think CSR, over the course of time, will become yesterday’s news and it’s going to be increasingly about ESG.
What advice would you give someone who is just beginning their company’s sustainability journey?
Think about both the altruistic and the practical imperative behind it, because there is business justification for doing this. Second, think about the stakeholders. This impacts customers, employees, your supply chain and your investors. Think about the effects on them, and that’s going to help you communicate your intent in a way that you’re going to be appreciated for the actions you are taking. The last is, rely on experts, people like Ingrid and Emilio; they are further down the journey. There’s a lot of ground that’s already been plowed, and you should take advantage of that.
Every day at Padilla we help clients get credit for their Environmental, Social and Governance (ESG) programs in ways that resonate with employees, customers, investors and communities. Contact us to learn more.