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The evolution of sustainability: a public relations and business argument
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The evolution of sustainability: a public relations and business argument
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THE EVOLUTION OF SUSTAINABILITY: A PUBLIC RELATIONS AND BUSINESS ARGUMENT by Sarah Stanley A Thesis Presented to the FACULTY OF THE USC GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements for the Degree MASTER OF ARTS (STRATEGIC PUBLIC RELATIONS) August 2012 Copyright 2012 Sarah Stanley ii Dedication The steadfast support of my family and friends has helped to make this thesis possible. I cannot express how grateful I am to you for the constant encouragement, love and motivational words that helped keep me moving through this process. Mom and Dad, you have been my never-ending source of comfort and have always given me the confidence I need to continue reaching for my dreams. I will always strive to make the most of my opportunities thanks to both of you. iii Acknowledgements The thesis process was a wonderful opportunity to explore a true area of passion. I am eternally grateful to my thesis committee chair, Jerry Swerling, and committee members, Megan Jordan and Kjerstin Thorson, for their patience and encouragement. I would also especially like to thank my interview sources for providing me with such an incredible opportunity to gain a deeper understanding from true leaders in the field. Each of you was inspiring in your own passion and dedication. iv Table of Contents Dedication ii Acknowledgements iii List of Tables v List of Figures vi Abstract vii Introduction 1 Chapter One: Argument for Sustainability 4 Chapter Two: The Sustainable Evolution of DuPont 7 Chapter Three: Walmart’s Global Responsibility Initiative 17 Chapter Four: Sustainability and Profit 27 Chapter Five: The Sustainability Index 36 Chapter Six: Communicating Sustainability 39 Chapter Seven: Awareness, Perceptions and Attitudes 48 Conclusions 55 Bibliography 58 Appendices Appendix A: Interview with DuPont Chief Sustainability Officer and 63 Vice President, Linda Fisher Appendix B: Interview with Walmart Chief Communications Officer, 68 Greg Rossiter Appendix C: Interview with GreenBiz Executive Editor, Joel Makower 70 Appendix D: Awareness, Attitudes and Perceptions of Corporate Sustainability Survey Results 72 v List of Tables Table 1: Motivation Behind Sustainability 49 Table 2: Adam Werbach’s Seven Tenets of Sustainability 51 Table 3: Applying the Triple Bottom Line 52 Table 4: Defining Sustainability 72 Table 5: Recognizing Green Acronyms 72 Table 6: Benefit Corporation 72 Table 7: Green Media 73 Table 8: Perceived Sustainable Companies 74 Table 9: Perceived Unsustainable Companies 76 Table 10: Attitudes About the Use of Sustainability 78 Table 11: Use of Sustainability Communications 78 Table 12: Green Perceptions of Top Companies 79 Table 13: Perceived Familiarity With Environmental Issues 79 Table 14: Respondent Demographics 80 vi List of Figures Figure 1: The Triple Bottom Line 5 Figure 2: Growth of the Chief Sustainability Officer 11 Figure 3: DuPont 2011 Sustainability Performance Summary 16 Figure 4: Shell Acknowledges the Concept of Climate Change 32 Figure 5: Finding a Company’s Sweet Spot 38 vii Abstract This paper will examine the emergence of sustainability public relations according to the triple-bottom-line concept. As sustainability becomes a more central issue for companies, understanding how to talk about efforts is becoming as critical as creating them. The purpose is to explore how companies are making the argument for sustainability and leveraging programs to help reposition them financially, socially and environmentally. DuPont and Walmart’s initiatives will serve as primary examples of how to use sustainability to address corporate challenges and the role communications plays in driving its programs. Furthermore, the paper will demonstrate the public relations challenges that arise when communicating sustainability, specifically the trend of greenwashing. The primary conclusion is that as the world becomes more familiar with the concept of sustainability, there is an expectation that businesses are getting involved in a meaningful and measurable way. Through strategic public relations, companies can use sustainability as a tactic to drive business or reveal how programs are demonstrating additional value opportunities for target audiences. 1 Introduction In today’s fast-changing business environment, a company is evaluated on more than just sales numbers and earnings reports. The opinions of many stakeholders, in addition to shareholders and customers and including employees, local communities and even critics, can be substantial contributors to success – or failure. The emergence of rankings and “Top” lists, such as Newsweek’s Green Rankings and Forbes’ Most Promising Companies have placed businesses in a spotlight that looks at factors beyond profitability alone. In an increasingly transparent world, audiences are evaluating companies based on an evolving list of criteria. Businesses today have more to answer for, whether they are being judged on the quality of the work environment or the percentage of profits donated to charities. One question in particular has been increasingly asked of companies in recent years: What is the environmental impact of the company? Governments, key opinion leaders and research think tanks have, for more than twenty years, studied the human impact on the natural environment, but it is only within the last ten that the concept has been seriously applied to how companies do business. The concept of sustainable development, which became the first globally accepted definition, was laid out in the 1987 United Nations Brundtland Report, stating “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (“Our Common Future”). The report came out of the U.N.’s World Commission on Environment and Development, which was established in 1983 and chaired by Dr. Gro Harlem Brundtland 2 (“Biography of Dr. Gro Harlem Brundtland”). The Commission focused on the issue of environmental degradation and its potential social and economic consequences (“Our Common Future”). Since then factions of society, from businesses and government to lobbyists and non-profits, have shaped the concept based on specific needs and interests. However, despite the amalgam of definitions, sustainability has established itself as a core issue for businesses. An initial challenge for companies faced with issues of sustainability, is evaluating the cost/benefit relationship of implementing “greener” programs. If sustainability can be justified in this sense, then companies must look at whether efforts warrant a more public announcement. It is at this point that companies often make the mistake of valuing sustainability as an external, tactical public relations tool designed primarily to improve reputation. The deeper, strategic, public relations implications, which can reach as far as stock market performance, are often overlooked. A failure to communicate sustainability as part of the larger business strategy can ultimately cause a company to lose ground in the court of public opinion, raising questions about whether intentions are genuine and have a meaningful effect. In the end, a strong platform that encourages open, two-way communication moves beyond reputational management, helping to deflect – or at least mitigate – skepticism and potential crisis situations and supports the overall business goal of driving profit. This paper will examine how the emergence of sustainability revolutionized the way businesses are innovating and competing, thus identifying a need for strategic public relations. By incorporating a sustainable strategy companies are shifting away from a 3 single, financial-bottom-line perspective and holding themselves accountable from a stakeholder, as well as social and environmental point of view. In shifting towards this multipronged approach – environmental, social and economic – companies are identifying competitive differentiators that promote growth and foster innovative leadership within industries. By leveraging corporate strategy to reflect this “people, profit, planet” direction, corporate sustainability reveals a public relations opportunity that has significant business implications across all areas of a company. 4 Chapter One: Argument for Sustainability By examining the various definitions for the term sustainability it is clear that the concept is still developing, but despite its evolutionary state, it continues to be adopted and put into practice by leading global companies. Whether used to source new business opportunities or identify ways to cut costs, sustainability has found a place within the business world. The challenge for many is justifying how it can play a significant role in determining a company’s financial success. Former Sierra Club President and sustainability thought leader Adam Werbach argues that sustainability is a major factor in determining the extent to which a business is successful. Werbach contends that by modifying its business strategy to include sustainability a company helps to assure its longevity and strength within its industry (Werbach). The challenge for companies is in understanding what constitutes a sustainable strategy. Society’s impact on the environment was recognized as a serious issue in the United States when the U.S. Environmental Protection Agency (EPA) was established in 1970. The creation of the EPA signified the need for a large-scale effort to help reduce the human impact on the environment, which was causing such serious problems as pollution. The formation of the EPA made clear the fact that societal behavior has a direct effect on the environment. In the ensuing years extensive research examined the impact of people on the environment, yielding new information about what it means to be environmentally responsible – and irresponsible. The Brundtland Report examined the relationship 5 between people and planet and introduced the idea of sustainability, contextualizing the economic ramifications of poor environmental stewardship. In 2006, former lead partner of Pricewaterhouse Cooper’s Sustainability Business Services, Andrew Savitz, developed a concept tying environmental, social and economic responsibility into a single theory. He coined the term “triple bottom line,” arguing that businesses operate across multiple platforms impacting a company beyond just economics (Savitz & Weber). Therefore, a company’s success should be measured not just in terms of financial performance (Savitz & Weber). In Table 1 Savitz identifies the three parts of the triple bottom line – economic, environmental and social – and illustrates the different ways in which value can be created and measured (Savitz and Weber). Figure 1: The Triple Bottom Line These three interdependent factors combine to create a holistic domain in which businesses must operate. The societal sphere represents a company’s ability to balance the social cost of doing business, understanding the intricacies of dealing with employee and labor relations, as well as product safety issues (Savitz & Weber). The economic implications for a company describe the standard practices of tracking sales, profits, taxes and the fiscal responsibilities companies are held accountable for (Savitz & Weber). On 6 an environmental scale, Savitz makes the argument that air and water quality combined with the amount of waste produced and the energy consumed by a company creates an additional expense that must be balanced (Savitz & Weber). It is a company’s ability to demonstrate responsible management across each of these areas that determines whether it can truly be considered profitable. The triple bottom line requires monitoring and measuring each of the three factors to determine its true value. A company’s sales and profits are a clear indication of economic performance, but when factoring in the environmental and social costs, that performance may diminish, putting the company’s potential for longevity and growth in jeopardy (Savitz & Weber). A positive triple bottom line means a company is increasing not only its value to stockholders, but also to society and the environment. Two Fortune 500 companies, DuPont and Walmart, have shifted business strategy to incorporate triple bottom line elements as a way to address challenges and grow business. A further analysis of what changes occurred and how sustainability affected relationships with various audiences will be examined in the coming chapters. As companies, like DuPont and Walmart, continue to strive for a competitive advantage, sustainability provides an avenue to innovate, improve reputation and increase profitability. 7 Chapter Two: The Sustainable Evolution of DuPont DuPont (NYSE: DD), a science-based company, was founded in the United States in 1802 (“Company at a Glance”). Today, it has net sales in excess of USD 31 billion and operates in 90 countries with over 60,000 employees (“Company at a Glance”). Its mission and values are rooted in a legacy that has been committed to the safety and health of its workers for over 200 years (DuPont). DuPont drafted its first statement of environmental responsibility in 1938 and over the next forty years, through a series of committees and reporting frameworks, looked at the different ways its operations effected the environment (“DuPont Environmental History”). The company’s history of environmental awareness reaches back further than many others can document. Despite good intentions, by the 1990s DuPont evolved into one of the worst environmental offenders and was faced with a horrific reputation and consistent financial penalties as a result of its practices. It was dubbed by the U.S. Public Interest Research Group as one of the “Dirty Five,” the five biggest polluters in the U.S. and spent over USD 6 million between 1991 and 1998 lobbying Congress to prevent harsher environmental legislation (Corporate Watch). DuPont had positioned itself as anti- environmental and a consistent challenger to increased regulatory control. Nonetheless, the company began seeing the potential cost-revenue ramifications of its environmental decisions. As awareness of environmental issues, such as pollution, and its impact on public health increased, regulatory groups like the U.S. Environmental Protection Agency (EPA) began taking a closer look at the impact of chemical companies like DuPont. In the 1980s, public interest focused on the depletion of the ozone layer 8 where evidence arose linking chlorofluorocarbons (CFCs), of which DuPont contributed an estimated 25 percent of the global market, as a significant contributor (The Elusive Saviours). Eventually the threat of severe regulation by the EPA forced DuPont to comprise with a voluntary phase out of its production of CFCs (The Elusive Saviours). As a result, DuPont’s operations and environmental decisions became a closely monitored issue for environmentalists, the media and government agencies. Throughout the end of the 20 th century, DuPont faced multiple EPA-enforced injunctions and paid millions of dollars in fines for the environmental mismanagement of many of its U.S. facilities. One of the more serious allegations involved the State of Delaware and the EPA regarding a manufacturing plant in Newport. The plant had been in production since 1902 and the investigation revealed DuPont had been disposing of toxic chemicals and waste into two landfills not lined for containment, resulting in contamination of the area’s groundwater, local river, baseball field and two wetlands (DuPont-Newport). While DuPont and EPA were able to complete the project ahead of schedule and come in under budget the process cost the company USD 35 million (DuPont-Newport). The operational cost of ignoring the company’s environmental impact was substantial in the case of Delaware and was one in a long list of environmental offenses resulting in serious financial penalties. Beyond facility site checks, EPA discovered DuPont knowingly concealed harmful health facts associated with some of its products. In particular, an investigation found there was an increased risk of cancer from handling Teflon, a major DuPont product. This infraction cost the company another USD 16 million in fines and confirmed 9 for the public that DuPont’s businesses were posing serious threats, extending beyond the environment and into peoples’ homes. Faced with these charges, as well as being named a contributor to at least 19 Superfund sites – areas with hazardous waste that is abandoned or uncontrolled – DuPont struggled with the decision to change its practices or continue paying fines that would increase the cost of doing business and further damage its reputation (DuPont PAN Corporate Profile). DuPont’s tumultuous relationship with EPA brought to light a larger quality control issue across its facilities that would need to be addressed in order to overcome the financial burden. In the following years a noticeable shift towards sustainability could be seen at DuPont. Beginning in 2000, the company adopted the concept of sustainable growth as a part of its mission statement and began using sustainability has a strategic platform to drive operational and cultural changes throughout the company. In 2001, the company publicly endorsed the UN Global Compact, a policy initiative calling for businesses to align themselves around four pillars that address human rights, labor, the environment and anti-corruption (“What is the Global Compact”). It was at this stage that DuPont began engaging with organizations and initiatives that could help them effectively implement tools and communications to address their sustainability issues and the overall corporate challenges. A groundbreaking moment for the company occurred in 2004 when DuPont hired previous U.S. EPA Deputy Administrator Linda Fisher as not only the company’s first Chief Sustainability Officer (CSO), but also the first CSO in an American publicly traded company (“DuPont Leader First CSO”). The appointment of Fisher was an inward and 10 outward facing commitment to changing the way DuPont did business. Fisher became the public face for the company as it worked to overcome both operational and reputational issues. She was the chosen spokesperson to deliver the message that DuPont was moving away from its dirtier days and towards a more environmentally sensitive future. To communicate the corporate messaging and efforts, Fisher conducted interviews with Forbes, New York Times and USA Today commenting on corporate America’s shift to fight global warming. While the company’s image was not immediately deemed clean, Fisher’s efforts and willingness to speak with the media about corporate changes, helped to begin to position DuPont as a leader in the sustainability field. At the end of 2011, there were 29 CSOs at publicly traded companies in the U.S. with 90 percent of them just one or two steps removed from the CEO (“CSO Backstory”). In Figure 1, sustainability-recruiting firm The Weinreb Group shows a consistent increase in CSO hires from 2004 into 2011, supporting the business case for sustainability as a significant corporate function. Fisher’s role as a spokesperson also helped demonstrate the value of having a dedicated representative who could help effectively communicate corporate messaging and progress. 11 Figure 2: Growth of the Chief Sustainability Officer Fisher’s role within the company grew; she was also appointed vice president of Safety, Health and Environment, areas that have now been ingrained within DuPont’s corporate values. This integration of responsibilities under Fisher exhibited a need to integrate sustainability throughout the entire organization. It was at this stage that DuPont began to incorporate the triple-bottom-line principle, accepting that environmental and social activities profoundly affected the company’s overall profitability. With the addition of Fisher, DuPont began to intelligently manage the company from a sustainable perspective. As part of its new strategic path, in 2006 DuPont released an eight-page document that communicated the company’s sustainability objectives moving forward. The “2015 Sustainability Goals” report was a public relations tool that covered more than just risk management and how they would reduce the size of the company’s environmental footprint; it identified ways in which DuPont could grow its business based on a sustainable plan. The report was an effective tactic to reach stakeholders concerned about 12 the new direction the company was taking; regulatory agencies and activists who were still skeptical that meaningful change would occur; and employees and customers who were unsure how this shift would affect them. The new plan outlined two key values found within the company’s updated mission: safety and environmental protection. By strategically aligning the business with these two principles the company was able to identify “market-driven” opportunities that satisfied customer and stakeholder demands, reduced greenhouse gases and produced new revenue (“2015 Sustainability Goals”). In an October 2011 interview Fisher discussed integrating a sustainable approach throughout all areas of operation (Appendix A): [W]e see it impacts everything we do, from the companies we think about collaborating with, to the companies we acquire, to where we put our R&D dollars […] The elements of the strategy continue to evolve. We are in a different place today than we were two years ago. The company’s commitment to sustainability was seen again in 2008 when it offered the first renewably sourced products to the automotive industry, and again in 2009 when the company reported revenues of USD 500 million from products sold into the solar market (“DuPont Environmental History”). Reporting and metrics became a key piece of its sustainability tracking and communication. When asked about the progress of reaching these goals, Fisher said the company had already met most of them and was looking ahead at what new goals they would set (Appendix A). She admitted that the only one they would not achieve within the established time period was related to renewable fuels but that progress was still being made and would continue to be documented on the corporate website (Appendix A). DuPont’s shift was evidence that sustainability opened 13 opportunities for not only innovation, but also additional revenue generation. The progress was a signal to other companies that by weighing the social and environmental cost of business, a company could address challenges and grow profit. DuPont’s “2011 Sustainability Progress Report,” a 16-page document positioning sustainability efforts as a support system for the company, was a second communications tool that illustrated how DuPont was maintaining its status as an innovative, science- driven company. The report served as a messaging document that reinforced sustainability as a critical part of the company’s overall business strategy, its progress and challenges thus far and its commitment to improving its practices. It again reinforced that the interests of its stockholders and various customer base were paramount and indicated to the environmental community that this strategic decision was not only helping the company grow, but also decrease their impact on the natural world. With this newfound corporate dedication came acknowledgement from key influencers and media. DuPont found itself ranked #1 on BusinessWeek’s 2005 list of “Top Green Companies” and received recognition by the Carbon Disclosure Project in 2006 as “Best in Class” for its approach to climate change (“2015 Sustainability Goals”). In 2010, Fortune magazine named DuPont among the top 50 “Most Admired Companies” in the world; Technology Review recognized them as one of the “Most Innovative Companies;” and even Corporate Responsibility magazine included DuPont as one of the 100 “Best Corporate Citizens” (“External Recognition”). The “dirty” image of the old DuPont was slowly being replaced by one of responsible innovation and growth. 14 Despite obvious progress with their shift to a sustainable corporate strategy, DuPont discovered that not all environmentally conscious decisions were winning ones. In its continued quest to innovate, DuPont invested millions of research dollars to find ways to close the product life cycle of polyester. The desire to close the loop meant DuPont wanted to divert as much of the product materials and production process from the landfill as possible. A company that found ways to secure additional revenue from sustainability was indeed able to devise a process to keep a single material out of landfills. DuPont scientists created a recycling process called Petra Tech through which customers could give DuPont their old polyester products, which the company would then recycle and reuse in the production of new ones (Esty & Winston). The process redirected polyester from landfills and saved on the cost of raw materials. However, DuPont found that disposing of polyester was not a concern for its customers; on the contrary, buying recycled polyester cost more (Esty & Winston). Therefore, the service offered little value despite its environmental benefits. The program was eventually canceled, but the company moved forward with incorporating renewably sourced polyester into its product line (Esty & Winston). It is an example of the complexity of the triple bottom line and teaches a valuable business lesson. While an idea may address planet and profit, if it does not meet the needs of the intended customers and proves too costly for the company it fails as a triple-bottom-line solution. 15 When discussing DuPont’s sustainable growth initiatives today, Fisher talks about where she sees the company achieving a trifecta of financial, environmental, and social goals: Cost reduction is definitely good, but it is not the big answer. You cannot save your way to growth. We view the value of sustainable growth to come from using science and innovation to bring products to customers, [reducing] their environmental footprint and making their products or facilities more efficient. It is the sweet spot [and it] will continue to move and we have to keep developing new products to move with it. (Appendix A) Since adopting a sustainable growth strategy, DuPont has seen the financial benefits of its investments, with revenue from products that help reduce greenhouse gases increasing to more than USD 1.6 billion (“2015 Sustainability Goals”). DuPont’s transition to a respected example of corporate sustainable growth was an arduous one and not without serious hurdles. While the company continues to adjust to its new mission of sustainable growth, the triple-bottom-line strategy has allowed DuPont to optimize how it conducts business, focusing on the continued pursuit of balancing people, profit and planet (Figure 2 on the following page). 16 Figure 3: DuPont 2011 Sustainability Performance Summary 17 Chapter Three: Walmart’s Global Responsibility Initiative Walmart (NYSE: WMT) was founded by Sam Walton is 1962 as a discount retail and food store (“Corporate and Financial Facts”). Today, it includes Walmart stores and Sam’s Club supercenters in 28 countries and has over two million employees with net sales of USD 419 billion as of 2011 (“Corporate and Financial Facts”). As a mainstay in Middle America and symbol for affordable, quality shopping, the company has not escaped unscathed. As the subject of numerous investigations from various critics and government agencies, Walmart has been accused of injustices that that range from labor to environmental. The company’s physical and financial growth has deemed it a corporate success, but also a target for critics and activists alike. Nonetheless, accolades and recognition are in no short supply for Walmart. In 2011, the company was listed as one of Fortune’s “Most Admired Companies;” the National Association for Female Executives named it one of the “Top Companies for Executive Women;” and it was recognized as the “biggest cash contributor” to U.S. nonprofits and community organizations by leading nonprofit news source The Chronicle of Philanthropy (“Corporate and Financial Facts”). Despite slowing sales throughout the first part of the 21 st century, by all accounts Walmart was performing well. However, in 2005 former Walmart CEO Lee Scott decided to shift the company’s focus by launching a new sustainability initiative. The announcement came at a time when the company struggled with its reputation against low wage accusations and growing concerns about the consistently slowing sales. On a quarterly analyst call in 2005, Scott and other financial executives discussed how rising fuel prices were cutting 18 into Walmart’s profits and the cost of operating was being impacted; utility expenses alone rose by USD 100 million in one quarter (“A Wary Walmart”). Therefore, the sustainability announcement was positioned to help not only with the company’s reputation, but also to address financial and operational challenges that the company was facing. The announcement was not the first time the company attempted to reposition itself as sustainable. In 1989 customers began demanding better environmental performance from the company, which historically dealt with pressures through defensive, rather than proactive tactics (“Walmart”). As a result, Walmart issued a call to action, requesting that suppliers provide safer products that were packaged in an environmentally friendly way at no additional cost (“Walmart”). The decision was met with skepticism and accusations that the company’s effort was self-serving, requiring its supply chain partners to carry the financial burden while making Walmart appear more environmentally friendly (“Walmart”). The vehement opposition to the company’s initial sustainability solution caused Walmart to rethink its decision to publicly pursue environmental responsibility. In an effort to satisfy critics who found the company’s initial effort to be disingenuous, Walmart decided it needed to highlight its suppliers’ products instead, calling attention to those that made an effort to be more environmentally conscious. The company used tags to identify the environmentally improved products and at one point claimed stores held 300 qualifying items (“Walmart”). However, reports again emerged revealing that some products were not entirely environmentally friendly. For example, 19 Procter & Gamble’s paper towels used recycled content for only the inner tube and not the paper itself receiving accusations of greenwashing (“Walmart”). Eventually, the tag system was phased out and Walmart withdrew from the sustainability field until its announcement in 2005. The decision to launch a reinvigorated strategy resulted from an overall assessment of areas in which the company was vulnerable from a public relations standpoint (“Walmart”). Facing resistance from communities in regards to Walmart’s continued expansion, the company mitigated concerns by employing sustainability as a tool to demonstrate responsible growth (“Walmart”). Scott hired Blu Skye Sustainability Consulting to help determine how the company could reduce its impact (“Walmart”). The decision to incorporate a sustainability strategy was based on the notion that it would provide the company a “license to grow,” an opportunity to gain a competitive advantage, but also provide a goodwill gesture in areas that may not have been as welcoming to the company (“Walmart”). For Walmart, sustainability presented itself as a business solution, offering a chance to discover new ways to grow the company. In a press conference, held on October 24, 2005, Scott announced three overarching goals that the company would work towards: 1. To be 100 percent powered by renewable energy 2. To create zero waste 3. To sell products that sustain people and the environment (“2011 Global Responsibility Report) Since the launch of the program, Walmart has made significant changes across its operations and become a leader in corporate sustainability. In a 2012 survey of perceived corporate sustainability leaders by Globe Scan, a leading global research firm, Walmart’s 20 trailblazing position was cemented as it once again appeared in the top five behind Unilever and Interface (“The 2012 Sustainability Leaders”). The company’s ability to remain in such a position is based on its three broad goals announced by Scott that serve as a lens through which the company has taken an in-depth look at its business practices. In 2009, the company launched the first phase of its own Sustainability Index, a tool designed to measure the environmental footprint of each area of its operation (“Sustainability Fact Sheet”). Walmart’s ongoing strategic initiatives target identified issues within specific areas of the company. In a 2011 interview with GreenBiz.com’s Executive Editor, Joel Makower acknowledged that it was laudable for the company to address such ambitious goals, despite a reluctance to establish a timeline within which to achieve them (Appendix C). Walmart’s efforts were primarily focused on establishing standards for suppliers, strongly encouraging them to adopt a sustainable business approach. The effort made within Walmart’s seafood operation illustrates what Makower describes as “significant signals” (Appendix C). Walmart’s work with its corporate partners to address supply chain issues within the department illustrates these “significant signals.” The company’s ability to position itself in the business world as a model for shifting corporate strategy towards the sustainable started at first by addressing its impact in a single are of operation. A 2006 study from the University of California – Santa Barbara’s National Center for Ecological Analysis and Synthesis (NCEAS), reported that the world’s wild seafood population would be depleted by 2050 because of the intensity and inefficiency of the fishing industry (Stanford Report). However, the study revealed 21 that areas that were protected significantly increased population recovery and made ecosystems 21 percent less likely to be effected by environmental or human actions (Stanford Report). Walmart’s relationship with fisheries was significant. It invested an estimated USD 750 million in seafood annually and the volume of its seafood business was increasing around 25 percent per year (“Walmart’s Sustainability Strategy”). The company was already feeling the constraints on the industry as supplies vacillated and mark ups by partners increased (“Walmart’s Sustainability Strategy”). Walmart needed to adjust its business strategy before its seafood sales were seriously threatened, and that meant a shift towards sustainability. Peter Redmond, Walmart’s vice president of Deli and Seafood at the time, learned about a certification program offered through the Marine Stewardship Council (MSC), an organization working to promote sustainable fishing (“Walmart’s Sustainability Strategy). Unilever and the World Wildlife Fund (WWF) had originally created the program and developed its standards in line with the United Nation’s Code of Conduct for Responsible Fishing (“Walmart’s Sustainability Strategy”). Walmart worked with suppliers and the WWF to identify fisheries that met the requirements for MSC and those that needed adjustments to qualify. In order to prevent panic among suppliers, Walmart specified that as long as they were making progress towards certification they could remain a part of the Walmart supply chain (“Walmart’s Sustainability Strategy”). As Walmart began its evaluation, the company discovered other challenges and inadequacies that made the process inefficient. 22 Documenting where its fish were coming from was a serious challenge for Walmart, because the company lacked sufficient information to determine if its fish were certified. As a result, the MSC called for more transparent monitoring within the supply chain (“Walmart’s Sustainability Strategy”). By tracking the custody of the fish through each stage of its journey to Walmart shelves, the company was able to not only identify exactly where their fish came from, but could also consolidate its business with the best suppliers (“Walmart’s Sustainability Strategy”). The certification offered suppliers a new competitive advantage within their industry, as well as a method for improving relations with its biggest customer. The company estimated that the seafood supply chain improvements led to an increase in revenue of USD 14 million, which netted an additional USD 4 million in profits per year (“Walmart’s Sustainability Strategy”). The success of the seafood modifications paved the way for Walmart to take a deeper look at supply chain efficiency across all operations, including areas such as electronics and textiles. It was this decision to focus on suppliers that distinguished Walmart’s global responsibility approach. The company shed light on a new area of sustainability that revealed how corporate partners can both strengthen a company’s position in the marketplace and help address vulnerabilities. In a recent interview, Greg Rossiter, Walmart’s Director of Corporate Communications described the company’s sustainability efforts as part of a larger global responsibility initiative (Appendix B). He said sustainability “has been linked with and defined as more environmental work. That is certainly a key component, but for us there 23 is a lot more to it, for instance, ethical sourcing,” (Appendix B). Walmart’s efforts across the supply chain and its continued work around the issue of measurement has influenced how companies determine their environmental impact. “It’s a challenge for many companies. You are hard pressed to find [ones] that aren’t aware of the cost of doing business,” said Rossiter (Appendix B). Walmart achieved success by proving a planet perspective can positively effect profit, but from the triple-bottom-line standpoint, the company still had to determine how sustainability could effectively address instabilities from a social perspective. Walmart’s battles over labor issues have been widely documented, having been subjected to complaints about wages, health care and discrimination. With a dedicated outside corporate watch group, Walmart Watch, the company’s corporate responsibility is under constant scrutiny. According to Walmart Watch, allegedly, average annual wages for Walmart sales associates are below the Federal Poverty Levels, which keeps prices down across its stores (“Get the Facts – Wages”). In the face of such accusations, the company must justify why its CEO receives a pay package in excess of USD 18 million during a time of declining revenues (“Get the Facts – Wages”). Then, in 2005, the The New York Times published an internal Walmart memo confirming that 46 percent of the children of Walmart employees were uninsured or on taxpayer-supplied Medicaid (“Inside Walmart, A Larger Debate”). Clearly the company had to find a way to demonstrate that people do, in fact, matter. In an effort to address its social weaknesses, Walmart managed to create a successful employee engagement program. Through a profit- and planet-driven initiative 24 known as the Personal Sustainability Project (PSP), Walmart managed to activate its employees. The PSP was designed with the help of renowned sustainability strategist and former Sierra Club president Adam Werbach, whose goal was to create an outlet that allowed individual employees to rally around the concept of sustainability. Werbach left the Sierra Club and founded Act Now, an agency aimed at engaging the corporate and media worlds in issues relating to sustainability (“Adam Werbach”). It was through Act Now in 2005 that he took on sustainability at Walmart (“Working With the Enemy”). The decision cost him personally and professionally, as he lost clients and was the subject of open hate letters from former environmental friendlies (“Working With the Enemy”). Werbach was at first outcast for abandoning the environmental sector and taking up residence with one of the most controversial companies, but he held on tightly to his belief that if Walmart was able to implement a fraction of what he suggested the changes would matter (“Working With the Enemy”). Werbach’s success in implementing the PSP at Walmart shifted how environmental communications was managed. It was a successful example of how corporate America and activists can come together to impact critical environmental issues. In order to design a sustainability program for employees Werbach and the company needed to discover whether its workforce valued the efforts being made in the green space. After in-depth interviews and consultations with associates, Walmart discovered that a majority of employees: 1. Believed the environment was in crisis 2. Wanted to do something about it 3. Wanted to learn more about it 4. Had not made sustainability a top priority (Werbach) 25 It was an intriguing dilemma indicating that employees clearly saw a problem and wanted to do something about it, but had not invested time in learning how to solve it. The connection that Werbach and Walmart made was that in order to encourage action they needed to find a way to make sustainability personally relevant. “Just as sustainability does not work for businesses unless it serves the business need first, sustainability does not engage individuals unless it first and foremost solves problems they experience in their lives,” said Werbach (Werbach). The Personal Sustainability Project allowed for a quick start approach to looking at ways to solve sustainability issues, using employees as a testing group and finding PSP not only worked, but also helped develop employee engagement. On the most basic level, a PSP was about finding ways to be healthy. Walmart started by encouraging employees to identify one small daily action that allowed them to express their values, such as turning the television off at dinnertime (Werbach). For people who were more outgoing, the program fostered an opportunity for groups of employees to come together and develop new PSPs, creating its own sustainability social network rooted in the concept of personal values (Werbach). As a result, strong communities at individual Walmart locations started to form with plans for how they were going to develop a PSP. After six months, the grassroots program found itself in over forty-five hundred Walmarts and Sam’s Clubs in the U.S. (Werbach). As employees made pledges to better their lives, Walmart used workshops and events to support the messaging that actions, like turning the television off, can save some households an estimated $40 a year in electricity (Barbaro). Walmart was able to position its 26 sustainability work within a context that resonated with employees by encouraging them to set their own simple and relevant goals. While the PSP program brokered a new kind of relationship between Walmart and its employees, critics saw the program as a way for the company to dodge issues relating to employee health insurance. When Werbach first met with Andy Ruben, vice president of sustainability at the time, he questioned him about wanting to be a sustainable company arguing that if “employees weren’t happy with labor conditions and didn’t have health care, you couldn’t be sustainable,” (“Working With the Enemy”). Ruben argued that he didn’t think Walmart took advantage of its employees and Werbach determined that despite this claim, Walmart’s ability to reach Middle America, an audience not generally targeted for sustainable messaging, would be significant in furthering sustainability discussions (“Working With the Enemy”). Inevitably the PSP did just that, reaching a new audience and engaging them in the discussion around environmental issues. With labor relations continuing to be a large part of Walmart’s social challenges, the PSP was a meaningful step in seeing how the company can relate on a social level. 27 Chapter Four: Sustainability and Profit For executives, the decision to implement a new strategy or program usually comes back to ROI: what is the return on investment. For Walmart, the size and scale of its business creates a challenge in assigning financial value to its sustainability work. “The ongoing challenge has been demonstrating results,” said Greg Rossiter, director of Walmart’s corporate communications (Appendix B). “We’ve set lofty goals keeping with the company’s culture. When you set big goals that incorporate many people, they tend to be complex and showing results isn’t always easy” (Appendix B). Instead Walmart looks at its impact on a tactical, storewide level. By tracking on a small-scale store-to-store basis, various parts of the company are able to show profitability as a result of sustainable action. The smaller victories contribute to Walmart’s larger success. DuPont also admits that the financial case for sustainability is the most difficult to make. For many companies, that link to profitability is often through careful and precise measurement. “Most executives want to see the money, the growth, the savings, the efficiency,” said Linda Fisher, chief sustainability officer at DuPont (Appendix A). “Data and the ability to quantify are important to bringing them around” (Appendix A). It often comes down to a decision between profit and sustainability; the degree to which sustainability will be invested in will be affected by its ability to turn a profit. The profit bottom line cannot be ignored, as it is the lifeline of a company, but no company strives to maintain the status quo; growth is the goal and sustainability is a tool many of the world’s leading companies are using to get there. 28 Tachi Kiuchi, former CEO of Mitsubishi Electric America, and Bill Shireman, a leading environmentalist, embarked on a mission to study what they considered the oldest and most successful business model to-date: nature. In their book What We Learned in the Rainforest, they discovered that by mimicking nature’s own model, businesses could improve across all areas of the triple-bottom-line principle. Nature operates using a strategy that allows for minimal waste, meaning operations are streamlined and efficient. Businesses can apply a similar theory to support and sustain their own growth. One of the most basic goals for both nature and business is survival. For companies that is dictated by profit, but nature also relies on a structure that fosters a “net gain” (Kiuchi and Shireman). According to Kiuchi and Shireman the concept of waste – processes that do not directly contribute to a company’s financial bottom line – is an area that can hinder growth and profit (Kiuchi and Shireman). Nature, for instance, minimizes these areas by conserving resources; a company that follows this strategy would “maximize both economic and environmental performance” (Kiuchi and Shireman). Walmart implemented this strategy when the company applied sustainability to its seafood chain, which in turn identified areas of redundancy, ultimately allowing the company to reorganize its operations and grow profits. With an understanding that profit is dictated by design, Kiuchi and Shireman outline three steps that when implemented correctly ensure a net gain. The first strategy, integration, emphasizes the importance of simplified parts that work in a collective manner. In February 2012, Hewlett Packard’s (HP) CEO Meg Whitman admitted that HP’s recent financial troubles were a result of a failure to integrate (Bort). On a quarterly 29 earnings conference call Whitman admitted “[f]or years we’ve been running our business in silos. But it’s too complex and too slow,” (Bort). She continued discussing how the company would begin to “standardize” and “optimize” its operations in order to once again become profitable (Bort). When a company commits itself to integrating and establishing an organized, interconnected operation, according to Kiuchi and Shireman, it “leads to synergy and breakthrough innovation” (Kiuchi and Shireman). It is this connection between the different functions of a business that positively affect a company’s ability to operate efficiently. However, the complexities of today’s business world make integrating extremely difficult. Nonetheless, integration is a strategy of nature that is essential to creating a system that optimizes value. DuPont used sustainability as a tool to integrate across all areas of operation. As a part of the company’s official vision statement, sustainability was reinforced as a consistent part of every function within the business. In 2010, the company invested USD 1.7 billion in Research & Development with almost 85 percent earmarked for products and services that provided sustainable solutions, which in most cases doubled previous investments (“2011 Sustainability Progress Report”). From an employee relations standpoint, workers were encouraged to participate in deciding whether DuPont should proceed with certain sustainability initiatives. On the product development side, the company shifted its focus from products that were inherently harmful to both people and planet, such as CFCs, to ones that encouraged a healthier way of living. Fisher described how the integration of sustainability offers value for DuPont: We benchmark with others who we believe we can work from, and we think our future is more than reducing the impact of our facilities on the environment – 30 although that is very important – but directly tied to our ability to bring products to the market that make our customers and their customers more sustainable. (Appendix A) As chief sustainability officer, Fisher’s role includes ensuring that sustainability continues to be a tool for integrating the company, recognizing that no one area achieves sustainability on its own, but rather it is the sum of the parts that makes the system successful. When a new company breaks through and is deemed a success, the expectation is that it will continue on a growth trajectory. However, according to nature’s model, in order to do so the company must adopt a second strategy, replication, where the initial product or service is produced in large quantities for mass consumption (Kiuchi and Shireman). The emphasis placed on this strategy is where the paths that nature and business follow often diverge. Replication requires the consumption of resources as part of the production process. However, Kiuchi and Shireman argue that businesses place an unnatural emphasis on this function, mistaking the strategy as the dominant force behind creating value (Kiuchi and Shireman). The misconception is that the more products or services a company is able to produce the more profit it will generate, but an overreliance on that notion can instead lead to unsustainable levels of consumption driving up costs (Kiuchi and Shireman). Nature operates by placing an equal emphasis on integration and replication. Resources are used no more than necessary and even waste contributes to the overall design. A tree is a simple example, it uses renewable energy and a sustainable amount of resources creating an efficient system where even the dead leaves, or waste, 31 decompose and provide nutrients for the soil around the tree roots. The design guarantees a tree will continue to reach its net gain. Businesses rarely use resources in a sustainable manner and the oil industry is a prime example. The purpose of an oil company is to extract crude oil from the ground and refine it into a form that can be used for fuel, but it is being extracted at a faster rate than it can regenerate. This overemphasis on replication and churning out products and services implies that value, or profit, is derived directly from the resource. But, Kiuchi and Shireman contend “a business does not create profit by consuming raw materials. Never. It may realize and privatize profit that way, but it does not create it that way. All profit, all value, is created by design” (Kiuchi and Shireman). Today, some of the major oil companies, including Shell, BP and Chevron, are admitting they need to start down a more sustainable path, moving away from the idea that value is obtained through replication of a single resource. In an article from Triple Pundit, environmental reporter Gina-Marie Cheeseman discusses how an industry that has invested so much money in the fight against climate change is now publicly admitting not only its existence, but also a need to adapt (Triple Pundit). Companies and industries alike are more likely to find stable and sustainable growth when resources are better managed. Leading oil company, Royal Dutch Shell, dedicates a section of its own website to the issue of climate change, acknowledging that “the best way to help secure a sustainable energy future is by focusing on four main areas: natural gas, biofuels, carbon capture and storage and energy efficiency” as seen in Figure 3 (“Shell: Climate Change”). While statements like this are minimal and progress difficult to measure as the majority 32 of the oil industry’s business continues to be oil, companies are taking the first step to diversify their portfolios to account for this increasingly important issue. The recognition, however, that evolving and differentiating products and services promotes a more profitable design introduces Kiuchi and Shireman’s third strategy. Figure 4: Shell Acknowledges the Concept of Climate Change Through the third process of differentiation companies are encouraged to find new ways to adapt to changing demands and pressures (Kiuchi and Shireman). As companies integrate and grow, the ability to offer different versions or entirely new products creates additional value opportunities. In 1965, DuPont invented a lightweight, but very strong fabric called Kevlar® that the company was able to adapt into an entirely new line of products for use in various industries including military, automotive and mass transit (“Welcome to Kevlar”). It is this ability that encourages companies to evolve, increase efficiency and generate additional revenue streams. 33 These three strategies demonstrate that while each function within a company is significant, it is the collective whole and how each function operates that determines whether efforts will be profitable and sustainable. The three strategies – integration, replication and differentiation – together are designed to produce value (Kiuchi and Shireman). While nature has found a synergy through these three ideas, producing systems that are efficient, conserve resources and offer variety, businesses need to work harder to establish this precarious balance. Nature offers a strategic design that when to applied to business produces environmental and economic benefits. Walmart was able to reduce costs within its seafood operation by utilizing nature’s three-step design. The ability to simplify and streamline the business according to the MSC’s guidelines helped the company avoid depleting its resource, adjusting to the strain on industry supply and offering customers a more conscious way to meet their needs, creating a more balanced process that drives higher profits. In addition to cost savings more and more companies are learning that sustainability is good for identifying product growth opportunities. GE, a multibillion- dollar technology and science company, is a prime example of how applying sustainability to product innovation can significantly grow profits. As part of the company’s “ecomagination” campaign that launched in 2005, GE set out to specifically increase sales of environmental products (Esty & Winston). One way to do that was to invest directly in greener technologies, such as wind turbines and solar panels, but an alternative was to look at existing products and find the growth potential that would make them more environmentally efficient (Esty & Winston). GE directed its attention towards 34 its highly successful GEnx jet engine, used in Boeing and Airbus aircraft (“GEnx Right Now: Ecomagination”). Through research and development GE was able to redesign the line of engines making them the quietest and most fuel-efficient in the market (“GEnx Right Now: Ecomagination”). Not only did the engines allow aircraft to burn 15 percent less fuel, meaning they cost less to operate, but they emitted 30 percent less nitrous oxide, offering both economic and environmental benefits (Esty & Winston). While providing customers with an environmentally efficient product that met demands, GE did not redesign its jet engines “to have environmentalists admire them;” they invested because they saw an opportunity for profit (Esty & Winston). Today, the GEnx engine continues to be a profitable venture. GE illustrated that by integrating and streamlining the GEnx engine design it could reduce its impact on natural resources. The company was able to replicate and increase demand for the product, making it the fastest selling engine in the company’s history, and differentiate by offering models that met the needs of a variety of aircraft (“GE Aviation’s GEnx By the Numbers”). By following the simple strategic design outlined by Kiuchi and Shireman a new profitable product was delivered to the marketplace. Other Fortune 500 companies are also exploring the financial benefits of resource conservation and environmental impact. Hewlett-Packard (HP) found an opportunity in its printer business when customers pointed out that they were not sure what to do with their used printer cartridges (Esty & Winston). Instead, of waiting for a start-up to grab market share of the reclaimed cartridge business, HP developed Planet Partners, a 35 recycling and reuse program that allows customers to discard empty HP printer cartridges for free (“HP Planet Partners Return & Recycling Program”). By 2006, the service became a high dollar area for HP, grossing USD 100 million (Esty & Winston). By looking closely at sustainability, companies have discovered that it opens up avenues for additional revenue and encourages innovation. Walmart, DuPont, GE and HP have all financially benefited from sustainability-driven initiatives. 36 Chapter Five: The Sustainability Index Public companies are now exploring the relationship – if any – between sustainability and stock market performance by means of sustainability indexes. . One of the best known of these is the Dow Jones Sustainability Index (DJSI), created in 1999 to measure the financial performance of companies using sustainability as a performance indicator (Savitz & Weber). The benchmarking system, which is composed of the top 10% of companies on the Dow Jones Global Stock Market Index, is a tool for some 60 DJSI licensed asset managers who oversee a minimum of USD 8 billion on the index (“Dow Jones Sustainability World Index Fact Sheet”). According to the DJSI, corporate sustainability is a “business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environment and social development,” (“Corporate Sustainability”). Research has shown that company stocks listed on DJSI and other sustainability indices have done better than those listed on other stock market exchanges, sometimes by even as high as 25 percent (Savitz & Weber). The consensus from Dow Jones is that companies that pursue sustainability following a triple-bottom-line strategy deliver higher returns to stockholders and are considered less risky (Savitz & Weber). However, many professionals still doubt the relevance and impact of this tool. According to Linda Fisher, sustainability indexes do not serve the purpose many think they do. “[D]o they have an effect…not as much as they would like you to think. They are more about reputation to me than real sustainability and there is an element of pay-to-play with some that is distasteful,” says Fisher (Appendix A). Fisher’s conclusion 37 is that sustainability indices are a business and not a public service, thus jeopardizing the validity of what they are presenting. GreenBiz.com’s Joel Makower also sees some fault in the index system’s methodology. Without a standardized method of determining a company’s sustainability value, it is hard to truly see how one compares to another (Appendix C). The typical reaction today to being added to one or more sustainability indexes is the issuance of a corporate press release celebrating the “honor.” On February 6, 2012, Molson Coors announced it received sustainability “awards” from Sustainability Asset Management (SAM), a global sustainability investment firm, and from DJSI (“Molson Coors”). In actuality the “awards” were rankings of its stock according to these sustainability indexes, which demonstrates the misperception that exists, that these tools are rewards rather than evaluations of a company’s true worth. Nonetheless, major financial advisors are taking note and sometimes weighing these indexes when considering investment opportunities. A leading investment bank, UBS, said: Environmental performance indicators appear to be a possible indicator of strong operational performance. Strong environmental indicators in the presence of below-average profitability may signal an investment opportunity, in our view. (Savitz & Weber) Profitability is found in the meeting of business interests with stakeholder interests, including stockholders, making assessing the impact of corporate sustainability important from an investment standpoint (Savitz & Weber). It contributes to what sustainability expert Andrew Savitz calls a company’s “sweet spot” (Figure 5), the point at which 38 business contributes positively to the financial bottom line while benefiting society and the environment (Savitz & Weber). Figure 5: Finding a Company’s Sweet Spot Goldman Sachs and 18 other global investment firms issued a statement about the expected role sustainability will play in assigning value to companies: [We] are convinced that in a more globalized, interconnected and competitive world the way that environmental, social and corporate governance issues are managed is part of companies’ overall management quality needed to compete successfully. Companies that perform better with regard to these issues can increase shareholder value by, for example, properly managing risks, anticipating regulatory action, or accessing new markets, while at the same time contributing to the sustainable development of societies in which they operate. More over, these issues can have a strong impact on reputation and brands, an increasingly important part of company value (“Who Cares Wins”) While the purpose and specific effect of indexes may still be in question, the development of financial assessment tools, such as the DJSI, indicates that business and financial advisers recognize that sustainability has an impact on financial performance, but to what degree is still undetermined. 39 Chapter Six: Communicating Sustainability When it comes to communicating a company’s sustainability efforts, history has shown that the messaging tends to skew towards either too technical or too general. Deciding how to talk to audiences about a company’s efforts is becoming almost as important as the efforts and initiatives themselves. However, before committing to a public discussion, communications professionals have to assess whether the actions the company is taking are a temporary move or a strategic decision indicative of a cultural shift within the company. For Walmart’s Greg Rossiter it was clear that corporate sustainability moved beyond the trend phase when former CEO Lee Scott made the decision to set three global responsibility goals. The question Rossiter then had to answer was how Walmart would communicate its efforts and progress with its various audiences. When asked whether the company directed its sustainability messaging towards one audience in particular Rossiter replied (Appendix B): No one audience is most important when talking about this. Global responsibility has been fully integrated into business. Walmart’s approach is different because we do not have a huge sustainability team. The reason is because our CEO who led this, Lee Scott, saw this as the responsibility of everyone at the company. Today, Walmart, like many others, uses a number of platforms to communicate its progress, including a dedicated sustainability website, annual global responsibility report and a sustainability index currently in development. These tactics along with media relations efforts, such as press releases and conferences covering announcements and progress reports, appeal to a broad range of stakeholders. 40 The tactics Walmart employs to tell its story are standard across businesses. Experts agree that there is no single best way to communicate progress, but unlike advertising and marketing-driven messages there is little tolerance for embellishment when it comes to sustainability. As former Vice President of Safety, Health & Environment at DuPont, Paul Tebo cautioned, “Once you go public, it’s no longer voluntary,” emphasizing that companies are ultimately given credit for not just making information available, but are then held responsible for the specific and relevant content provided (Esty & Winston). Communicating sustainability is about satisfying the demand for transparency and seeing that the company is held accountable in the eyes of its stakeholders. When a company makes the decision to publicly discuss its sustainability work, one of the most dreaded charges it can face is that of “greenwashing.” Once applied to a company, the greenwashing label indicates what Savitz refers to as “image laundering,” the idea that a company claims it is taking action when in reality it is not (Savitz & Weber). As the concept of sustainability continues to evolve and its elements more concretely defined, the number of companies who have misused the term has grown steadily. One of the most notorious examples of greenwashing is British Petroleum’s (BP) “beyond petroleum” campaign. In 2000, BP emerged with a new USD 125 million corporate branding platform centered on the slogan “beyond petroleum” (Rudolf). The idea was that the company would redefine itself as a leader in environmental responsibility. As the first oil company to publicly acknowledge the link between energy 41 use and climate change, the company attempted to craft an image around its new slogan, persuading consumers it was no longer just an oil company (Solman). BP claimed to have undergone a corporate shift, becoming an energy company that was invested in finding alternative ways to address environmental energy problems. For ten years, BP received praise for its efforts, positioning the company as not just an industry leader, but also a global face for sustainability. In 2005, the company was named one of BusinessWeek’s top green companies, for its leadership in cutting gas emissions (“BusinessWeek’s Top Green Companies”). It was not until the April 2010 Deepwater Horizon spill in the Gulf of Mexico that the entire campaign was labeled greenwashing. Prior to the spill, critics argued that BP was taking liberties with its new marketing slogan, but external pressures were never strong enough to significantly affect the campaign. Despite reservations, however, even those critics admitted that the company was doing more in the field than its competitors (Solman). The Deepwater incident would prove to be the catalyst for public outcry against the company’s sustainability work and expose the vulnerabilities in the campaign. As the oil spill took center stage with the media, BP’s failure to act decisively or take responsibility for the incident began to place “beyond petroleum” under intense scrutiny. As photos surfaced of the CEO yachting while officials tried to determine the cause of the explosion and a rampant use of social media constantly mocked the company’s efforts, BP’s image became irreparably damaged. One of the most notorious methods used to ridicule the company and its failure to appropriately handle the disaster, was the creation of the fake corporate Twitter account 42 @BPGlobalPR. The account first appeared on May 19 and caused an immediate sensation, catching the attention of nearly every major media outlet, as well as celebrities from Roger Ebert to Alyssa Milano. The account tweeted memorable announcements, such as “Negative people view the ocean as half empty of oil. We are dedicated to making it half full. Stay positive America!” (Kanalley). Within a week the account had five times as many followers as the real BP Twitter (Kanalley). The impact and lack of response from the company proved disastrous from a public opinion perspective and cemented the downfall of “beyond petroleum.” The Deepwater Horizon incident provided a stage for critics to voice their opinions about the campaign and be heard. In doing so, facts about the company began to emerge that crystallized the claim of greenwashing. While the company touted its position as the first in its industry to take certain steps towards addressing climate change, its 2010 first quarter profits were almost exclusively tied to crude oil and natural gas, leaving only a fraction from alternative energy (Rudolf). In addition, the company paid heavy fines for spills prior to Deepwater in 2005 and 2006 (Rudolf). BP even fought investors when a resolution proposed a closer investigation into the environmental impact of an oil project in Canada (Rudolf). Deepwater served as not only an opportunity to voice grievances, but marked the definitive end to BP’s green halo. The “beyond petroleum” campaign is a unique example of the dire consequences a company can face, such as an 18-year low stock slump and dismissal of its CEO, when it relies solely on anecdotal stories and marketing to convey sustainability efforts. Without strategic public relations support to help present hard and measurable facts 43 alongside meaningful stories, campaigns are often left vulnerable and exposed. “At the end of the day, you need facts, stats and anecdotes to tell the story. It’s those that make our sustainability work real. Something everyone can understand,” says Rossiter of Walmart’s communication strategy (Appendix B). The ability to convey a comprehensive set of irrefutable facts through carefully directed public relations increases the credibility of the work a company is doing, giving it a solid foundation should a problem arise. Accurate portrayal of where a company stands in terms of sustainability can provide a strong defense or position the company for an aggressive offense. Reporting is an important way to communicate that. Corporate sustainability reports (CSRs), often found alongside annual reports, are an opportunity to share metrics and measurements that attribute to whether a company is being transparent about its efforts. While there is no single format for reporting, the Global Reporting Initiative created a template that has become a standard for many companies (Esty & Winston). A key part of any sustainability report is not just communicating the progress the company has made, but acknowledging and identifying the shortcomings. A report that presents only the good side of the story would fall under the greenwashing label; guilty of misleading stakeholders to believe the company is positioned well in terms of sustainability efforts, when in reality the opposite might be the case. Sometimes communicating sustainability can be extremely difficult for companies regardless of whether they have strong metrics to support claims. At this point, partnerships and third-party endorsements can help build a bridge between a company and its audiences. It is common now to find credible NGOs, non-profits and other 44 companies aligning themselves as part of the sustainability discussion. Walmart has collaborated with the National Fish and Wildlife Foundation, Carbon Disclosure Project, Seventh Generation and even universities on its sustainability initiatives. The goal for these partnerships is not simply to receive praise from a credible source, but leverage experts in the field to help the company stay in line with its goals and objectives. In 2010, Walmart embarked on a unique partnership with a popular eco-blog, Treehugger.com (“Walmart’s Treehugger.com Columns”). The venture provides a monthly column for the company to describe, in its own words, the latest corporate sustainability efforts, attitudes and policies. A key advantage of the partnership is that it gives Walmart direct access to hundreds of thousands of sustainability-minded influencers, building credibility and awareness among those who might otherwise have been critics, but also offering a forum for discussion and feedback. DuPont also utilizes strategic partnerships that allow it to stay abreast of issues and potential policy discussions. Partnerships with the Keystone Alliance for Sustainable Agriculture, World Business Council for Sustainable Development and the UN Global Compact allow DuPont to have a seat at the table when sustainability discussions arise (“Voluntary Initiatives and Partnerships”). Determining which organizations to partner with requires honesty and intent. For DuPont, a significant part of the business involves agriculture; therefore, collaboration with the Keystone Alliance makes sense. Partnerships ultimately provide value when they are relevant and genuine. The strategic decision to engage with a third party works to help the company communicate its efforts on various levels. As seen with Walmart’s Treehugger.com 45 column, companies should look to proactively target key opinion leaders in a dialogue that encourages understanding, rather than aggression and accusations. “In the past we used to address [skeptics] from a defensive position. Now we sit down and listen…incorporating critics’ feedback,” said Greg Rossiter (Appendix B). Partnerships are vital in getting a company’s sustainability message out, but it also helps turn influencers into brand ambassadors. While partnerships and reporting help connect audiences to the company and encourage transparency, another major hurdle in communicating sustainability is government relations. Before sustainability became a more collaborative effort, government’s role was primarily that of regulator. Today, business and government cooperate to find the best solution for both sides. A recent example of the benefit that companies can find from working with governments is found in the new Benefit Corporation status that was passed in California January 2012. According to a Bloomberg report, a company can file to become a Benefit Corporation, which gives executives legal protection to pursue environmental and social missions over financial bottom lines (Tozzi). The concept of a Benefit Corporation has been enacted into law in six other states and upholds the triple-bottom-line principle that a company’s value is determined by more than just financial returns (Tozzi). The groundbreaking decision is a sign that corporate performance can and should be evaluated by more than just profitability. Communicating sustainability has a localized value as well. Engaging with communities supports the triple bottom line’s social perspective that labor, human rights and product responsibility will help determine the success of an organization. At DuPont, 46 Linda Fisher acknowledges that communities are a vital part of sustaining and when asked if the company works with them she responded, “We do, but not enough…This is key to any company being successful, local relationships are key. A sense of openness, transparency and trust between plant management and community leaders is important” (Appendix A). Communities have the power to grant a company an unofficial license to operate. A final audience that must be accounted for when communicating sustainability is investors. Dedicated to understanding the company’s position from a financial perspective, this group requires data and information that is in the same vain as quarterly earnings and annual reports. There is a specific language that is spoken and sustainability must fit within those parameters in order to be understood. The biggest challenge in communicating with this group is demonstrating not just long-term potential, but also the short-term growth opportunities (Esty & Winston). Sustainability is designed to be a long-standing solution, but when stockholders are more interested in the immediate or quarterly value, companies can sometimes forget to shift from the feel-good, overarching plan to the interim, strategic next steps. Former DuPont Chief Financial Officer Gary Pfeiffer explained that stockholders “will never accept ‘in 100 years you’ll love us’…they want to know how we’ll get there” (Esty & Winston). Investors are interested in the specific methods the company will use to maximize market-facing opportunities that help drive profit. Sustainability must be presented within those terms; otherwise it fails to meet the needs of this audience. 47 Communicating sustainability can be a complex and difficult task to manage. Similar to any business initiative, sustainability needs to be sold into a company at every level. Just as an organization needs to integrate its design in order to operate effectively, communications must be couched within the context of each department and pushed out to key external audiences. Once it is deemed relevant and sincere only then will audiences begin adopting it as a part of the corporate culture and overall business model. 48 Chapter Seven: Awareness, Perceptions and Attitudes A 2012 survey of 70 working Americans ages 21 and over examined participants’ awareness, perceptions and attitudes relating to corporate sustainability (Appendix D). The assumption going into the survey was that respondents would consider the environment the sole beneficiary of sustainability programs, failing to make the connection to the social and economic elements. As the triple bottom line concept is something that developed into a more mainstream idea within the last decade, familiarity with the principle and a full understanding of its components was expected to be minimal. As the definition of sustainability has changed and shifted over the years, it was important to determine whether respondents recognized that environmental impacts went beyond just the natural world. However, results indicated that respondents, while skeptical of the motives behind corporate sustainability, did in fact associate all three of the triple bottom line principles – environmental, social and economic – with the concept. The survey assessed how participants characterized corporate sustainability. The first question looked specifically at this asking: In the context of corporate conduct, which statement most closely defines sustainability (Appendix D). A resounding 53 percent considered the idea of “being economically, environmentally and socially responsible” the closest definition. A second statement that nearly 40 percent felt most closely encapsulated the concept was related to the Brundtland Report’s 1987 notion that present generations must be able to meet its current needs, without compromising the needs of future generations. The preference for these two definitions is evidence that not only is sustainability perceived to be a long-term perspective, but the efforts do in fact 49 have economic, environmental and social implications. It is clear that the individual parts of the triple bottom line are being recognized as contributing factors of corporate sustainability. After respondents were asked to define corporate sustainability, the survey then analyzed how the concept was used. A majority of respondents felt strongly that it was commonly employed as a reputation-building tool. Over 50 percent agreed, but whether they believed companies to be genuine in their efforts presented inconclusive data (Table 1). The data clearly suggests that corporations’ primary goal in employing sustainability is to address reputational challenges, but there is uncertainty as to whether the commitments are genuine. Similar to DuPont and Walmart, who both saw reputational improvement in certain areas as a result of its sustainability efforts, skepticism remains when looking at whether the programs were developed merely for that purpose or for the larger social good. Table 1: Motivation Behind Sustainability Indicate the extent to which you agree with each of these statements Strongly Agree Agree Neither Agree nor Disagree Disagree Strongly Disagree 1. A company that recycles is considered sustainable 2.9 % 31.9 % 18.8 % 42.0 % 4.4 % 2. Most companies use sustainability primarily to improve corporate reputation 18.8 % 56.5 % 14.5 % 10.1 % 0.0 % 3. Most companies that set sustainability goals are genuine in their commitments 2.9 % 33.3 % 31.9 % 30.4 % 1.5 % 4. The U.S. Environmental Protection Agency effectively regulates companies' environmental actions 5.8 % 18.8 % 31.9 % 33.3 % 14.5 % 50 After examining awareness and determining how efforts are perceived, the survey analyzed how respondents reacted to each of the three elements of the triple bottom line when placed in a more specific context. Sustainability consultant and expert Adam Werbach developed the “Seven Tenets of Sustainability,” a set of statements that encapsulated the various elements of the triple-bottom-line perspective, helping establish a strategic framework for corporate sustainability programs. These tenets included: 1. Nature’s resources will become increasingly scarce and expensive 2. Massive demographic change is occurring 3. People are the most important renewable resource 4. Cash flow matters more than quarterly earnings 5. How companies conduct business will change as dramatically in the next three to five years as it has changed in the past five 6. A chaotic external world requires internal cohesion and flexibility 7. Only the truly transparent will survive (Werbach) The widely held beliefs were laid out for respondents to indicate on a one-to-five scale the extent to which they agreed or disagreed with each. There was overall agreement with the tenets, but two in particular, numbers three and seven, were inconclusive, meaning the greatest majority of respondents indicated they neither agreed nor disagreed (Table 2). These two statements, in particular, hint at an uncertainty surrounding the social element of the triple bottom line, and allude to skepticism that discernible sustainability efforts are necessary. Nearly one third were both unsure whether people are an important renewable resource or that the truly transparent will endure, bringing into question the real social role of sustainability and again calling into question its sincerity. 51 Table 2: Adam Werbach’s “Seven Tenets of Sustainability” Please indicate the extent to which you agree with Adam Werbach’s “Seven Tenets of Sustainability” Strongly Agree Agree Neither Agree nor Disagree Disagree Strongly Disagree 1. Nature’s resources will become increasingly scarce and expensive 45.8 % 45.8 % 5.6 % 1.4 % 1.4 % 2. Massive demographic change is occurring 31.4 % 50.0 % 17.1 % 0 % 1.4 % 3. People are the most important renewable resource 14.1 % 25.4 % 31.0 % 23.9 % 5.6 % 4. Cash flow matters more than quarterly earnings 2.8 % 31.0 % 49.3 % 12.7 % 4.2 % 5. How companies conduct business will change as dramatically in the next 3 to 5 years as it has changed in the past five 20.8 % 41.7 % 22.2 % 13.9 % 1.4 % 6. A chaotic external world requires internal cohesion and flexibility 32.4 % 45.1 % 18.3 % 2.81 % 1.4 % 7. Only the truly transparent will survive 9.7 % 25.0 % 31.9 % 27.8 % 5.6 % When comparing these responses to other questions that dealt with the social and economic aspects, the answers reveal an uncertainty when it comes to comparing these areas with sustainability. Despite an agreement that in theory the triple bottom line is part of corporate sustainability, there are concerns as to whether these two elements really do contribute when put into practice. To test this, participants were asked to agree or disagree with statements that allude to a social or economic relationship. The survey presented the same five-point scale and again asked participants to determine the extent to which they agreed with the more specific statements that applied the triple bottom line to business situations in Table 3. At this stage, each of the three triple bottom line principles were broken out separately and additional statements that focused on the social and economic elements were added. 52 The data showed opinions varied as to the degree a business and its operations are effected when the triple bottom line is applied. Table 3: Applying the Triple Bottom Line Please indicate the extent to which you agree with each statement. Strongly Agree Agree Neither Agree nor Disagree Disagree Strongly Disagree Businesses have an ethical obligation to consider their environmental impact 60.2 % 29.4 % 1.5 % 4.4 % 4.4 % Businesses have a bottom-line, financial obligation to consider their environmental impact 38.2 % 42.7 % 7.4 % 10.3 % 1.5 % Businesses have a social obligation to consider their environmental impact 52.9 % 32.4 % 10.3 % 1.5 % 2.9 % Businesses have a reputational obligation to consider their environmental impact 50.0 % 25.0 % 7.4 % 4.4 % 2.9 % A company's stock value will be affected by its environmental performance 11.8 % 26.5 % 26.5 % 29.4 % 5.9 % Customers expect companies to be sustainable 10.3 % 30.9 % 25.0 % 32.4 % 1.5 % Employees expect companies to be sustainable 8.8 % 22.1 % 35.3 % 32.4 % 1.5 % A majority of respondents agreed to some extent that businesses have both a financial bottom line and social obligation to consider their environmental impact. However, when asked about specific financial or social components, such as stockholders or employees, the responses vary widely as to whether it actually affects sustainability. One explanation for this data is that while respondents believe social and economic elements are a part of sustainability there is uncertainty or unawareness about what constitutes social and economic factors. 53 Another revealing piece of information from the data is that 75% of respondents agree to some degree that companies also have a reputational responsibility to consider the environment. This shows that regardless of the business implications, environment and sustainability have a serious reputational affect. Again, DuPont and Walmart were clear examples of how a company’s reputation can benefit implementing environmentally sensitive initiatives. The ability to address serious image issues remains a critical selling point for corporate sustainability. The reputational power it plays weighs heavily on the decision of whether or not to pursue the environmental cause. Ultimately, corporate sustainability is not as easily discernible as data originally indicated, but when it comes to identifying examples of sustainable companies there are definitive leaders. When asked to name a company they consider to be sustainable three appeared on the list most frequently: Patagonia (18%), Starbucks (8%) and GE (8%). From a list that contained 35 unique submissions, nearly 15% stated that they were either unable to think of a sustainable company or did not think one existed. The diverse number of answers indicates that there is not a clear corporate winner when it comes to sustainability, but a large number that have made efforts to associate themselves with the concept. The same question was asked again, but instead respondents were instructed to list a company they considered unsustainable. This time the number of unique responses decreased to 29 with nearly 25% designating BP and nearly 30% indicating Exxon Mobil. The reiteration of certain unsustainable companies – compared to the more diverse answers given for the sustainable – adds depth to the results that indicate respondents are 54 familiar with the various elements of the triple bottom line concept, but unable to recognize specific examples. It shows that in a broader context corporate sustainability, as defined by the triple bottom line, is a recognizable and accepted definition. However, when asked to identify examples that illustrate corporate sustainability it is easier to name those who do not encapsulate the term than those who do. Survey Methodology: The participants for this survey were males and females between the ages of 21 and 40 and came from a variety of professional backgrounds including public relations, transportation and government and public policy. Respondents were solicited through the USC Annenberg Graduate School of Journalism and also included employed and retired professionals in the communications and sustainability fields. When asked to assess whether they considered themselves knowledgeable about environmental issues a majority indicated they felt slightly informed. The survey took place online between January 17 and February 14, 2012. 55 Conclusions The triple bottom line has proven a recognizable and strategic concept for helping companies successfully find ways to implement sustainability initiatives and improve corporate reputation. The theory also demonstrates that businesses, such as DuPont and Walmart, can find success from not just from an environmental perspective, but also a social and economic point of view. The bi-products of a successful sustainability strategy, such as brand reputation repair, can also lead to an increase in employee recruitment and retention. Since its origins as a tool in fighting environmental degradation, to its evolution as a strategic platform for businesses, corporate sustainability has helped companies both grow and profit by identifying inefficiencies and areas for improvements within operations. DuPont’s demonstration that a company can utilize sustainability as a reputation- building tool and also a method for identifying potential growth opportunities, confirms the many facets and advantages of a well-formulated and strategic program. As one of the largest businesses in the world, Walmart was able to apply the concept of sustainability across all areas of the company, from larger operational departments, such as seafood, to smaller storewide efforts related to its Personal Sustainability Program. Based on the survey results, however, Walmart was listed as an example of an unsustainable company, indicating the company’s green reputation is not reaping the full benefits of a well- formulated program, making the argument for greater public relations support to help communicate its efforts. 56 Both companies initially employed sustainability to address serious business issues. For DuPont its reputational crisis, as well as consistent loss of revenue helped by federal fines as a result of poor environmental performance, was the catalyst for adapting the strategy. The company shifted focus to examine how its business units could reduce risk, engage employees and improve community involvement all while identifying growth opportunities. The lesson was that unsustainable solutions may offer immediate, temporary benefits, but would not help the company sustain over a longer period of time. Instead, the company implemented strategic sustainability initiatives that filtered throughout every level of the organization and were echoed in its values and mission. Walmart’s introduction to sustainability was based on the need to identify where the company felt vulnerable and identify ways to mitigate it. The cultural shift to sustainability allowed the company to establish a relationship with some of its skeptics and critics as it worked to solve some of its social issues through environmental means. As a publicly traded company, they were also obligated to solve its problems in a way that enhanced value for shareholders and grew profits. Sustainability served as a vehicle to address these issues while identifying potential growth areas. The inevitable challenge in exploring corporate sustainability is how a program can be sold in to executives from a financial standpoint. The need to demonstrate a return on investment is a crucial part of justifying such a shift in the way business is done, but sometimes a positive reputational impact is enough for short-term changes. Regardless of the reason, a need for precise benchmarks and measurements contextualize efforts and demonstrates improvements over time. As a developing area, sustainability and how best 57 to measure it, is something companies will continue to refine as more businesses, such as DuPont and Walmart, take a leadership role in demonstrating strategic programs that address fundamental concerns. With the creation of these new sustainability programs and initiatives, companies are beginning to see that knowing how to talk about their efforts is just as important as implementing them. As Americans become more sustainability literate and gain a better understanding of the social and economic relationships, companies will be held more accountable for their efforts and expected to use sustainability as more than just a reputational tactic. In the fast-paced business world, how companies are being evaluated is shifting to focus beyond just earning statements and stock value. Instead consistent profitability will be directly affected by how a company contributes on an environmental, social and economic platform. The triple-bottom-line principle is a fundamental business model that allows companies to mine growth opportunities while contributing to a greater cause. The ability to strategically communicate efforts across these three areas will redefine the concept of “doing good” and determine whether a company emerges as a leader in the eyes of its stakeholders. 58 Bibliography “2011 Dow Jones sustainability index.” Awards & Recognitions. MolsonCoors. N.d. 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And who is involved in developing sustainability strategy (customers, employees, NGOs, etc.)? The elements of the strategy continue to evolve. We are in a different place today than we were even two years ago. Each year, we have a sustainable growth review with each of our 13 businesses. This past year’s reviews were deeper and more strategic than in prior years. I believe that is because our customers, the marketplace, and the increased regulation we see globally have led our businesses to understand the importance of taking sustainability into account. This yearly review is before each businesses strategy review with senior leadership team, therefore, it allows sustainability to be built into strategic business decisions. This is still a work in progress, but evolving nicely. Our strategy is developed internally, but there is prework done to be sure we have external thinking and perspectives. A question each business has to respond to is around world trends and how they impact the business, so external perspectives can make a big difference…but it is internally developed. What difficulties have you experienced in selling in sustainability to executives? Most executives want to see the money, the growth the savings, the efficiency. Data and the ability to quantify are important to bringing them around….that and the market place. Some of our businesses are much closer to the customer than others. In those businesses, they see the impact of the “Wal-Mart” effect. What challenges do you face when trying to communicate sustainability initiatives and progress? Metrics are critical. To avoid charges of green washing, you have to be sure you can validate any claims you make with good data. Life cycle analysis is critical, “green claims” without data can get you in trouble. 64 In our class, we have studied the CSR “sweet spot” where making profit and achieving sustainability meet. Energy conservation and emission reductions led to $3 billion in avoided costs for DuPont between 1991-2005, according to Chris Laszio’s book Sustainable Value. Would you say the company has found that “sweet spot?” We look at corporate social responsibility as a part, but not our entire journey toward sustainability. These are terms people use both differently, or interchangeably. I will send you a chart separately that outlines what we put in each box. Both boxes are important, but different to us. CSR to us, is focused on “responsibility,” but not necessarily on sustainable growth…so it is part of your risk management, your employee engagement, your community involvement…sustainable growth is around the solutions society needs to address the needs of the world and that we can develop and get shareholder (i.e. make money) for. Unsustainable solutions may make money in the short term, but won’t be successful in the long term. Employee health is big part of DuPont’s value system. As chief sustainability officer are you responsible for other aspects of DuPont’s CSR? I head up the Safety, Health (including Occupational Health, but not medical) and environmental staff function. We set standards for the rest of DuPont to follow, but the responsibility to ensure our employees are safe and healthy falls to their line managers. Our responsibility is to be sure they have the tools they need to know what to do and how to do it. Are there other areas of DuPont’s CSR strategy where you see that “sweet spot” emerging, aside from cost reduction? Cost reduction definitely is good, but it is not the big answer. You cannot save your way to growth. We view the value of sustainable growth to come from using science and innovation to bring products to our customers that will reduce their environmental footprint, make their products or facilities more efficient. It is the sweet spot. Examples: working on a new material that will make the batteries in cars, computers, phones, run longer, be smaller and lighter and safer (able to handle heat without fire); materials that take pounds off automobiles, so that they are more fuel efficient without sacrificing safety; agricultural products that allow our farmers to produce more food on an acre of land, using less fertilizer or water, and have our customers pay us for that. The “sweet spot” will continue to move and we have to keep developing new products to move with it. DuPont announced a series of 2015 sustainability goals. Which of these do you foresee being the most difficult and how will the company approach them? 65 We have already met most of our goals, and are now looking at setting new ones. The only goal we missed was around renewable fuels. See our website for more info and our status update. In a 2006 U.S. News & World Report you mention a key to working with Washington on climate change is a more effective policy that leads to economic growth. Do you believe Washington has made progress in that direction? Washington has made no real progress on climate perse. There are some good things happening. The reeducation/change out of refrigerants under the Montreal Protocol has led to significant reduction is those GHGs. They are not carbon reductions, but other GHGs with significant warming potential. Important gains made. The push and money going into renewable fuels is important, as getting off coal and oil will be important. The discovery of shale gas will also make it easier to use natural gas to fuel utilities, rather than coal…all good for climate policy. What role do green indexes play for DuPont sustainability, such as the Dow Jones Sustainability Index? Do you see green indexes playing a bigger role in the future? Green indices drive me crazy. I can go on a rant on them that I don’t want to put into writing, so I will save it for when we speak…do they have an effect…not as much as they would like you to think. They are more about reputation to me than real sustainability and there is an element of “pay to play” with some of them that is distasteful…I think market/customer drivers are more important in changing behavior. If they are going to play a larger role they will have to be more transparent, stop charging for their data, and get some sort of rationalization to why companies score they way they do, etc. They are a business, not a public service. What were the most difficult challenges DuPont faced incorporating CSR initiatives in the 1990s? I wasn’t around DuPont during the 90s, so I cannot answer this question. CSR wasn’t really around either…or just beginning… What trends do you see emerging in sustainability? Trends: more focus on water, natural resources utilization, renewably sourced materials, fisheries and food issues, oceans, data transparency, collaboration…so historically a company works alone, brings a solution, everyone cheers. I think partnerships across a group of stakeholders will be important to get the right solutions and have them accepted by society. What do you see in the future for DuPont and sustainability beyond 2015? 66 Our 2015 goals are just a stake in the ground keeping everyone focused. The real work is inside our R&D organization and businesses to develop new products and services to meet our customers’ needs in a way that lessens everyone’s impact on the environment. That is ongoing with no 2015 deadline. When a company such as DuPont has operations and production processes that harm the environment what is the company’s attitude towards addressing that? Not sure what you mean by “processes that harm the environment.” All of our plants are regulated by several federal and state agencies. We insist on compliance, although we are not perfect. We have a core center of competence in safety, health and environment that sets the standards and works with the plants to assist them in meeting requirements, the plants management is responsible for compliance, and we have a strong elaborate system of audits to do our best to insure we are in compliance. In addition to compliance, we take steps to reduce our emissions beyond that required by law. Or are some processes just unable to be adjusted? What is DuPont’s greatest criticism with regards to the environment? We are a 208-year-old company so that has changed over the years. We made CFCs, which were eventually found to be depleting the ozone layer (we have since invented first and second generation substitutes); more recently there is a chemical that we have produced and used that is found in people’s blood and that is a concern to people (we have pledged to exit the chemical and bring substitutes to the market by 2015). See our website on both of these. With regard to plants, we have a long list of Superfund-type sites, as you might expect of a chemical company of our size and age. Most of these are in some phase of clean up in conjunction with federal and state agencies. What is DuPont’s strategy with regards to affecting government policy? By and large, we work with government agencies and legislatures on public policy issues. We have been very vocal supporters of the need to pass legislation to control green house gases and to reform and strengthen the Toxic Substance Control Act. Does DuPont work with the local communities where they are? If so, how? We do, but not enough. I worry that with all the cutbacks in funding because of the economy we are not putting enough into working with our communities around our sites. This is key to any company being successful...local relationships are key. A sense of openness, transparency and trust between plant management and community leaders (both elected and others) is important. Does DuPont engage in social media? 67 We are just beginning to use social media as a part of our PA program. If so, what role does it play? It’s small but growing. What are some important pieces of legislation that DuPont consistently has to be aware of and watch for updates on? For example, CARB’s AB 32. We are a very diverse company so many bills could have an effect on us. There is the general business legislation (health care, tax reform, labor laws, transportation and freight bills, chemical site security, trade issues, ) almost all environmental laws (climate, chemicals reform bills, clean air, clean water) because we have a big Agriculture business ( farm, farm related bills, biotechnology legislation, pesticide laws); we have a soy business ( nutrition and wellness or health legislation),…I have probably missed many. Any other comments about DuPont’s sustainability efforts? Sustainability is a constantly evolving concept, which keeps me employed (as the chief sustainability officer) and keeps the company on its toes. We have to keep abreast of what the public thinks, what science is telling us, how best to measure our societal value and how all this is playing out globally. We have to be mindful of the fact that we are more stringent here in the US on some issues, the EU is more stringent on others and China and India are behind us, but will compete with us directly in the market place. We take our vision and mission around sustainability seriously, challenging as it is. We are constantly challenging ourselves to think more broadly about what the term means, how to measure, and how to avoid being considered by the public as “green washers.” We do try to be able to measure all our claims, and avoid generalities. I am on a crusade to stop labels to our products such as “green” and use more specific, (improves energy efficiency by X%) language. We benchmark with others who we believe we can work from, and we think our future is more than reducing the impact of our facilities on the environment (although that is very important) but directly tied to our ability to bring products to the market that make our customers and their customers more sustainable. What that means is if we can make lighter weight materials for cars, it will enable them to be more fuel-efficient. If we can make pesticides that pose no risk to farm workers, water, or consumers, yet helps farmers improve their yield that will help the environment. If we can develop a filter that enables salty or brackish water to be used, it will be a great boost for society, and our shareholders. It is in the type of product that we produce that we think we can make a difference in the world. That commitment to more sustainable products really appeals to our employees. # # # 68 Appendix B: Interview with Walmart Chief Communications Officer Greg Rossiter What are your initial thoughts on dealing with corporate sustainability from a profit perspective? The argument for sustainability from a profit perspective is a challenge for many companies. You would be hard pressed to find companies that aren’t aware of the cost of doing business. Feeling it from both a personal or corporate level. It all comes back to “What’s the impact” is it a positive, neutral…what is the cost of doing business? Corporate sustainability moved into another phase. A few years ago, we were figuring out whether this was real and not just the flavor of the month. It’s clear that’s not the case, but providing real measurable results, providing a metric for people that goes along way towards legitimizing/authenticating is the challenge. Sustainability has amassed a number of meanings, each one depending on to whom you are speaking. In your own words, how would you define sustainability? For Walmart, the phrase the probably better applies is global responsibility. Sustain has become linked with/defined as more environmental work. That is certainly a key component, but for us there is a lot more of it. For instance, ethical sourcing, a retailers approach to doing business. Energy, Waste and Products, but the social instance involves the supply chain Who would you say is the most important audience when it comes to communicating Walmart’s sustainability program? And why? No one audience is most important when talking about this. GR has been fully integrated into business. Walmart’s approach is different bc we don’t have a huge sustainability team. The reason is bc our CEO who led this, Lee Scott, saw this as the responsibility of everyone at the company. People are compensated based in part on how well they do based on goals they set. Intergrated into jobs on an everyday basis Leslie Dock, Corp. Affairs, who reports directly to the CEO. Bill Simon, CEO of US, the largest part of our business. Makes sure it’s operating effectively. The team works across the organization, such as with Sam’s Club. For instance, sales goals, but also sustainability goals, TVs that are built with more recycled materials and use less energy. 69 Can you point to a few of the challenges that you personally have faced when dealing with communicating sustainability? Ongoing challenge has been demonstrating results. We’ve set lofty goals, keeping with the company’s culture. When you set big goals that incorporate many people, they tend to be complex and showing results isn’t always easy. How you demonstrate an impact on the bottom line: from that POV, we can’t yet. Our results aren’t material. It’s integrated within the business. So we provide very real and tactical date at a store level. For example, this past fall we pointed out that some of our impact that’s had an effect is commonsense. If we just turn two of our palettes on every truck, we could get two more on every truck. When you look at how much we drive, the impact is substantial. Through software we decided to reroute trucks based on how full we could keep them, not the shortest distance. Avoids driving empty miles. It is a far more efficient way of moving products/materials around the country. At the end of the day, you need facts, stats and anecdotes to tell the story. It’s those that make our sustainability work real. Something everyone can understand. Implications for labor as well, it gets back to the idea of profitability. Much less long haul driving, lowering expenses by keeping drivers closer to home. Walmart is no stranger to criticism. Can you explain a little about how Walmart deals with the skeptics and critics? Cultural shift Lee Scott was responsible for: change the way you approach your skeptics. In the past, addressed them from a defensive position. Now we sit down and listen. Sustainability shouldn’t cost more, but should instead help reduce costs and the company was in a position to lead in that way. Incorporate critics feedback The jurisdiction of sustainability, much like its definition, changes from company to company. How much influence and involvement do you, as director of corporate communications, have on Walmart’s sustainability program? California is the most recent state to pass “benefit corporation” legislation. Is this something Walmart would consider? We run our company one store at a time. Pay attention to legislation. We work closely with legislator on these programs in advance to make sure they know what the impact is going to be. On waste for example, we disclosed over a year ago we r recycling a high percentage of the waste in Calif. We’ve been able to do that by collaborating with regulator officials on the state and local level. We’ve been able to set an example of waste reduction programs for elected officials. It just requires an ongoing dialogue, to make sure it’s a positive for everyone. The challenge is understanding the real world implications for what we do. # # # 70 Appendix C: Interview with GreenBiz Executive Editor, Joel Makower The phrase “triple bottom line” has become a common theme when discussing sustainability. What are your thoughts on how companies are using it today? Well, it’s becoming an increasingly more common concept. Sustainability is gaining favor, particularly as it relates to each of the social, environmental and economic areas. It’s probably the weakest on the social side and in general the environmental level is only being explored at a very shallow level. When communicating corporate sustainability what messages/stories are the important ones for companies to tell? What is not worth publicizing? This is actually an area where companies are walking more than they’re talking. It’s hard to determine what stories are the best to tell for a number of reasons. For instance, communicating that a company is doing less bad, is not the same as saying they are doing good. Also, many companies are doing significant things within corporate sustainability, but it’s not because it’s part of the value proposition of selling. This sort of effort usually isn’t publicized for that reason. For example, over ½ of General Motors’ assembly plants are zero waste, but that’s not widely discussed, because it has nothing to do with selling their cars. The other issue is that many companies don’t know how to tell their story for fear of illuminating new issues the public didn’t know existed. When efforts are communicated is tends to be in data points, which isn’t useful. There is no context or sense of the larger journey of where the company is trying to go. There have been countless positive and negative articles written about Walmart’s sustainability. Can you explain a little about how Walmart deals with the skeptics and critics? Walmart has set three lofty sustainability goals for itself. Do you think these are effective goals? Why? It is laudable for Walmart to say they want this, but it doesn’t go very far. You can only hang out there with a vague goal for so long. It’s probably as good as you’re going to get from a company of that scale. What they are doing is sending significant signals upstream to their suppliers. They’ve found their own style of doing something. DuPont has received a fair amount of coverage from GreenBiz.com for their efforts. What are your thoughts/reactions surrounding their initiatives? For DuPont it was about changing their business from chemical to agricultural and energy efficiency. The evolution of the company has thus been colored by this shift. It 71 has very little to do with sustainability, but more with the marketplace. It was a strategic shift in focus. It’s interesting though that you don’t see them out talking about it very much. Green indexes have been a growing area. What role are they playing and how impactful do you think they are? This is a highly debated area. There is no standardized methodology, yet everyone wants to see how they compare. Corporate Knight’s results looked funky and Newsweek’s is probably the biggest. Sustainability reports have been popping up in addition to companies’ annual reports. Do you find them valuable? What role would you say they play? Sustainability reports target a slightly different audience then annual reports. The most important thing is that you need to identify is who you’re trying to talk to with them. These days, if you’re a major company it’s not really an option, we have to produce them. Sustainability can be a highly attractive venture when companies can show a relationship to profit. From a financial-bottom-line perspective, how would you make the argument for sustainability? It really depends on what’s driving you. Companies like McDonald’s, HP or Bank of America each have different cultures for innovation and chance. How much leaders really get it, whether it’s visceral or they don’t really care, today it’s a box they have to check off in order to be in business. Where do you think companies are missing the mark when it comes to sustainability? The biggest issue is when companies use sustainability as a checklist of things you do versus a comprehensive strategy within, which you operate. It’s not a matter of random acts, but a holistic way of thinking that’s driving it. You also have to determine what are the challenges and opportunities when looking at sustainability. Walmart and DuPont get the strategy perspective and its impact on the future of its business, which will keep them competitive. What is one major trend or next step that you see emerging for companies dealing with sustainability? I think the next trend we’ll see has to do with the convergence of technology as it relates to sustainability. # # # 72 Appendix D: Awareness, Attitudes and Perceptions of Corporate Sustainability Survey Results Table 4: Defining Sustainability In the context of corporate conduct, which statement most closely defines sustainability? Statement % Doing no environmental harm 3% Meeting the needs of present generations without compromising the needs of future ones 39% Establishing environmentally-friendly efforts within the company 5% Being economically, environmentally and socially responsible 53% Total 100% Table 5: Recognizing Green Acronyms On a 1-5 scale, indicate the extent to which you are familiar with each of the below green acronyms? Acronyms 1 Not at all familiar 2 3 4 5 Very familiar EPA 2 2 3 8 57 GHG 32 3 2 2 32 GRI 54 6 3 1 7 LEED 8 3 6 9 46 NRDC 24 2 2 7 37 Table 6: Benefit Corporations Are you familiar with the term "benefit corporation"? Answer % Yes 18% No 82% Total 100% 73 Table 7: Green Media What green websites have you visited at least once? (Choose all that apply) Answer % Ecorazzi 10% Treehugger 79% GreenBiz 64% Other (Please describe) 28% Other (Please describe) None of the Above none EPA NYT, ClimateWire Renewable Energy World, Greentech Media, Green Wombat, Scientific American-Climatewire, Earth2Tech epa too many to list! grist.org Many environmental non-profits inhabitant.com 74 Table 8: Perceived Sustainable Companies When I think of a sustainable company, I think of (write name of company) Answers Simply Green Toms Google Patagonia whole foods I could care less if a company is sustainable. Can't think of one NA Starbucks Toyota whole foods Patagonia Walmart 7th Generation Seventh Generation, Body Shop, Patagonia Patagonia Ibredrola renewables Starbucks Whole Foods Starbucks Seventh Generation Patagonia not sure Aurora Algae Enviance Local family farms none Proctor and gamble Johnson and Johnson nothing comes to mind immediately Adidas, General Electric, Toyota, Starbucks, Johnson Controls 75 Table 8, Continued FedEx hewlett packard HP Interface GAIA Honestly, none come to mind. Suncor Lush Cosmetics GE Starbuck's General Electric Proctor and Gamble General Electric REI, The Walt Disney Company, Patagonia, Chevron, Walmart, Nike, GE. Ikea Patagonia and Herman Miller Patagonia whole foods, toms, Patagonia Ricoh TreePeople Patagonia Patagonia I can't. None Seventh Generation Herman Miller Disney Google East End Brewery 76 Table 9: Perceived Unsustainable Companies When I think of an unsustainable company, I think of (write name of company) Answers BP BP ExxonMobil Exxon Mobil Exxon exxon I could care less if a company is not sustainable. Oil companies. (How sustainable is oil?) NA Exxon BP ibm Oil & Gas Companies Mcdonalds Target BP Most manufacturers, fast food (most companies, really) Exxon BP NIke Wal-Mart Walmart Big Oil Exxon no sure BP BP McDonald's Exxon-Mobil, BP anyone in the oil, coal, gas industries. walmart. any fast food. Bp BP BP/oil companies 77 Table 9, Continued Walmart oil companies Exxon exxon Sears Ford a coal mining company Where I work, we print so much paper and waste so much money. We're a small international tour operator. Massey Energy Co. Hummer Ford Exxon Newspapers BP Coca Cola Foster Farms, Dell, Apple, Chevrolet, Ford, Chrysler, Caterpillar. Exxon/Mobil Apple (too much packaging, disregard for worker conditions in the developing world, profit over ethics) British Petroleum banks Exxon/Mobil State and Federal Government coca cola Exxon Exxon Mobil General Electric Exxon Chevron Exxon BP Consol Energy 78 Table 10: Attitudes About the Use of Sustainability Indicate the extent to which you agree with each of these statements Statement Strongly Agree Agree Neither Agree nor Disagree Disagree Strongly Disagree A company that recycles is considered sustainable 2 22 13 29 3 Most companies use sustainability primarily to improve corporate reputation 13 39 10 7 0 Most companies that set sustainability goals are genuine in their commitments 2 23 22 21 1 The U.S. Environmental Protection Agency effectively regulates companies' environmental actions 4 13 22 23 7 Table 11: Use of Sustainability Communications Indicate the number of times you have read the following materials Materials 0 1-3 4-7 8-10 More than 10 A company or product's environmental or sustainability report 22 28 6 4 8 Environmental or sustainability text on product packaging 8 12 10 5 33 The environmental or green section of a national newspaper or magazine 11 12 11 5 29 The environmental or sustainability sections of a company or product's website 14 10 16 7 21 79 Table 12: Green Perceptions of Top Companies Please indicate whether you consider the following companies to be environmentally responsible Company 1 Not at all environmentally responsible 2 3 4 5 Very environmentally responsible Apple 5 18 24 16 3 Boeing 9 28 23 5 0 BP 39 19 6 1 0 Coca Cola 12 24 22 5 1 ConAgra 13 23 23 1 0 Disney 6 22 24 9 3 DuPont 15 28 17 4 0 Johnson & Johnson 11 22 21 8 0 L'Oreal 10 24 26 2 0 Nissan 4 24 26 8 1 Pepsi 10 26 21 4 1 P&G 10 22 15 14 1 Shell 24 26 9 4 0 Toyota 2 23 19 16 4 Unilever 13 22 22 2 1 Walmart 17 26 17 6 0 Table 13: Perceived Familiarity With Environmental Issues Please indicate the extent to which you think you are informed about environmental issues 1 Not at all informed 2 3 4 5 Very informed 0 8 21 26 13 80 Table 14: Respondent Demographics Gender % Male 34% Female 66% Total 100% Age Range % 18-20 0% 21-25 12% 26-30 29% 31-40 24% 41-50 13% 51+ 22% Total 100% Highest level of completed education % High School 1% Undergraduate 28% Graduate 69% Doctorate 0% Other 1% Total 100% Industry of Employment Retail Clothing Entertainment Government/Public Policy Healthcare Marketing Education Public relations international organizations - environmental sustainability Public Relations nonprofit 81 Table 14, Continued Industry of Employment Public Relations public relations and special events Advertising/Public Relations Market Research Non-profit Retail retired governmentl Public relations Non profit Hospitality Property Management Entertainment Financial services business services (consulting firm) PR Public Relations PR Public Relations Public Relations Public relations PR PR Public relations Sports Non-profit Government - Environment retired government automotive government Service Environmental Non-Profit RETIRED Travel/Tourism transportation consulting 82 Table 14, Continued Industry of Employment Public Relations/Advertising Transportation Transportation Retail Public Transportation Transportation Professional Services Transportation non-profit environmental Environmental nonprofit environmental field non profit Parks and recreation environmental Environmental Non-Profit Environmental non profit Environmental non-profit Environmental sector Environmental Non-profit Non Profit Non-profit environmental nonprofit ###
Abstract (if available)
Abstract
This paper will examine the emergence of sustainability public relations according to the triple-bottom-line concept. As sustainability becomes a more central issue for companies, understanding how to talk about efforts is becoming as critical as creating them. The purpose is to explore how companies are making the argument for sustainability and leveraging programs to help reposition them financially, socially and environmentally. DuPont and Walmart’s initiatives will serve as primary examples of how to use sustainability to address corporate challenges and the role communications plays in driving its programs. Furthermore, the paper will demonstrate the public relations challenges that arise when communicating sustainability, specifically the trend of greenwashing. As the world becomes more familiar with the concept of sustainability, there is an expectation that businesses are getting involved in a meaningful and measurable way. Through strategic public relations, companies can use sustainability as a tactic to drive business or reveal how programs are demonstrating additional value opportunities for target audiences.
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University of Southern California Dissertations and Theses
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Asset Metadata
Creator
Stanley, Sarah B.
(author)
Core Title
The evolution of sustainability: a public relations and business argument
School
Annenberg School for Communication
Degree
Master of Arts
Degree Program
Strategic Public Relations
Publication Date
07/25/2012
Defense Date
07/02/2012
Publisher
University of Southern California
(original),
University of Southern California. Libraries
(digital)
Tag
communications,corporate sustainability,Dupont,environment,Green,OAI-PMH Harvest,Public Relations,sustainability,Walmart
Language
English
Contributor
Electronically uploaded by the author
(provenance)
Advisor
Swerling, Jerry (
committee chair
), Jordan, Megan (
committee member
), Thorson, Kjerstin (
committee member
)
Creator Email
stanlesb17@gmail.com
Permanent Link (DOI)
https://doi.org/10.25549/usctheses-c3-64142
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UC11290620
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usctheses-c3-64142 (legacy record id)
Legacy Identifier
etd-StanleySar-994.pdf
Dmrecord
64142
Document Type
Thesis
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Stanley, Sarah B.
Type
texts
Source
University of Southern California
(contributing entity),
University of Southern California Dissertations and Theses
(collection)
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The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the a...
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Repository Location
USC Digital Library, University of Southern California, University Park Campus MC 2810, 3434 South Grand Avenue, 2nd Floor, Los Angeles, California 90089-2810, USA
Tags
corporate sustainability
environment
sustainability
Walmart