Presentation on theme: "Corporate Sustainability"— Presentation transcript:
1 Corporate Sustainability Suzanne Benn and Dexter Dunphy
2 The New World transformed by new technologies increasingly dominated by global organisationsrapidly transforming under the impact of high levels of innovationhighly competitivedriven by knowledge developmentconsuming resources at unsustainable levelsIn the late 1990s a few leading organisational theorists began to look at where the Organisational Renewal Movement should go next.HR and OD had moved into the Boardrooms but what was to be their role in this new world. Dunphy, Griffiths and Benn in 2003 argued for a fusion of the ORM with the environmental movement. This work brings together human and ecological sustainability. To deal with this new world we will need to understand the nature of transformational change and to explore the critical role of HR in bringing it about, as well as grasping the lifeline that new technologies are offering.
3 chaordic organisation Welcome to the world ofunpredictable changeand thechaordic organisationDee Hock the Chaordic Age – 1997 book written by the founder and CEO of Visa. Organisations are a combination of order and chaos – as the environmental crisis deepens, the degree of chaos will increase. We must learn to lead in chaos.Dexter Dunphy
4 The dilemma and the challenge The Dilemma: we cannot continue to conduct business as usualThe Challenge: to create a sustainable economy and societyReadings: J. Porritt, Capitalism: As if the world matters, Earthscan, London, UK, 2006R. Wright, A Short History of Progress, Text Publishing, Melbourne, Australia, 2004The Dilemma of development and patterns of consumption. The reality of China and India and the activities of multinationals. Need to go beyond the rhetoric of CSR
5 WHAT IS SUSTAINABILITY? Sustainability results from activities which: extend the socially useful life of organisationsenhance the planet’s ability to maintain and renew the viability of the biosphere and protect all living speciesenhance society’s ability to maintain itself and to solve its major problemsmaintain a decent level of welfare for present and future generations of humanitySustainable organisations engage in activities that contribute in these four ways.OD but in the frame of society
6 Can we rely on governments to achieve a sustainable world? “Like it or not, the responsibility for insuring a sustainable world falls largely on the shoulders of the world’s enterprises, the economic engines of the future.”Professor Stuart HartKenan-Flager Business School, USABottom of the Pyramid
7 So how will the drive for sustainability affect you and your organisation? What should you be doing now as a HR leader to plan for sustainability?What do you need to do to get up to speed now to ensure you and your organisation are prepared and contributing?These are the questions I will try and address and we must all answer in our own ways
8 First, we need to understand that achieving sustainability is a process – organisations advance by stages
9 The Phase Model Rejection Non-responsiveness Compliance Efficiency Strategic proactivityThe sustaining corporationHealth risks and uncertaintyEconomic risks - lack of job securitySocial risks – personal safety,Breakdown of communityRich/poor divide increasingFrom Dunphy, D. , Griffiths, A. and Benn, S., Organisational Change for Corporate Sustainability, Routledge, London and New York, 2003; revised edition 2007)
10 Less formally, the organisations at these stages can be labelled: Phase 1: the freeloaders and stealthy saboteursPhase 2: the “bunker wombats”Phase 3: the reactive minimalistsPhase 4: the industrious stewardsPhase 5: the proactive strategistsPhase 6: the transformative futurists
11 Transformational or incremental Transformational or incremental? Both human sustainability and ecological sustainability are needed for the sustainable organisationNudging or leaping?Copyright Dunphy, Griffiths and Benn, Organizational Change for Corporate Sustainability, 2007
12 A blueprint for transformation (from Q. Jones, D A blueprint for transformation (from Q. Jones, D. Dunphy et al, In Great Company: Unlocking the Secrets of Cultural Transformation, Human Synergistics, Sydney, 2007, copyright)Systems acting back on themselves. Increasingly organisations will face the need for transformational change and the larger the delay the more the need for transformation. This book presents 5 case studies of outstanding examples and the model summarises what the authors learnt about how to lead for transformational change.
13 So where are the opportunities? Leave the Freeloaders, Stealthy Saboteurs and Bunker Wombats to experience increasing isolationThe real opportunities begin with the Compliance Phase.So let’s look more closely at the last four phases: compliance, efficiency, strategic proactivity and the sustaining corporation.So where are the opportunities particularly the business opportunities associated with these changes?
14 3. COMPLIANCE PHASE: The Reactive Minimalists Objective: Seek to be compliant to the law and all environmental, health and safety requirements and relevant community expectations.Business opportunities: Avoid the potentially huge costs of non-compliance and create an effective risk management system.Typical actions:Determine what is relevant legislation, regulations and community expectationsBuild an effective risk management system with an informed workforce committed to complianceEstablish organised measurement and monitoring system.Positive outcomes:Risk minimisationEasier financeBasis for positive reputationImproved relationships with regulators.The Reactive Minimalists are those making the first major step forward on the road to creating more sustainable organisations. While this is a minimalist approach it is a vitally important step.Executives in these organisations are surveying the key legislative and regulatory requirements of their industry. Governments are increasingly raising the bar on environmental pollution, OHS, energy and waste etc. The costs of ignoring this can be significant the real payoff is your licence to operate.Basically these organisations are making a step forward by cleaning up their act. Mining giants for instance, have been hit by the collapse fo tailings dams or other such disasters and are trying to put positive programs in place to prevent further occurrences.At its best these companies have effective programs of risk management. A recent KPMG survey found that 85%of executives believe that an effective risk management strategy is critical to achieving the objectives of their company.A great resource in this area is the Compliance Institute of Australia which has hundreds of members and runs courses in identifying areas of concern in achieving compliance and risk minimisation.You have to walk before you can run and there is no point in skipping this phase.
15 Capabilities for effective operation with organisations in the Compliance Phase Knowledge of relevant legislation/regulationsMonitoring of community expectationsRisk management expertiseAbility to construct measurement/monitoring systemsResource: Compliance Institute of AustraliaAvoid Trouble and Conflict is the motto here
16 4. EFFICIENCY PHASE: The Industrious Stewards Objective: Progressively eliminate waste and increase process and materials efficiencies.Key business opportunity: Increase efficiencies by waste reduction and reorganisation.Typical actions:Reduce resource use (energy, water, materials)Design/redesign buildings/plant to dramatically reduce ‘footprint’, create adaptable spacesMove to front-of-pipe solutions to eliminate waste or return it to the production cycle as a resource (biomimicry).Recycle/remanufacture (life cycle stewardship; cleaner production)Dematerialise –service provision rather than material productionRedesign products: sustainably produced and environmentally friendlyMeet international Global Reporting Initiative (GRI) guidelines.Potential business benefits:Cost reduction; savingsIncreased employee productivityIncreased employee involvement/engagementBetter teamwork and lateral communication.“DO MORE WITH LESS”This is the next step in achieving sustainability and is often taken when the benefits of compliance have been achieved. HP for instance became an industry leader in going beyond compliance, becoming “dissatisfied with mere compliance”. They wanted to be an industry leader in actively contributing to the formulation of governmental environmental standards for the industry. They are engaged in redesigning their products to make them easier and cheaper to recycle.Efficiency means making sustainability an integral aspect of the supply chain and production process. Sustainability has to be built in not bolted on to get the rewards.Interface is the world’s leading manufacturer of modular carpets. In 1994 Interface made a commitment to become sustainable not an easy ambition for a company whose product was based on petrochemicals. They started by eliminating waste – rather than costing them money the exercise has saved them $300 million since Interface is redesigning its carpets to replace oil-based carpets with fibres manufactured from starch. Even more importantly, the firm has moved into servicing carpets rather than supplying them. The firm has reduced its greenhouse gas emissions by 46% and solid waste to landfill by 65%In Australia more and more organisations are signing voluntary agreements with environmental agencies such as DECC in NSW. For example, Pilkington Glass is Australia’s largest glass manufacturer and has signed a Sustainability agreement with the Victorian government in which it has agreed to reduce its greenhouse gas emissions at its Dandenong plant by 35%. Other companies associated with such covenants include Sensis and HP.
17 Capabilities for effective operation with organisations in the Efficiency Phase In-depth knowledge of at least one key basis for resource efficiency (eg. energy, water, materials)Understanding of systems analysis, production processes, supply chain analysis and/or product redesignTrack record in producing efficiencies and building customised systems (TQM).Resource: NSW Department of Environment and Conservation (DEC)
18 5. STRATEGIC PROACTIVITY PHASE: The Proactive Strategists Objective: Pursue the strategic opportunities in sustainability.Key business opportunity: Become market leader through pursuing the strategic potential of sustainability.Typical actions:Commit strongly to sustainabilityRe-brand and build wider stakeholder supportBe early in on new product/service demand curvesCreatively destroy existing product designs, manufacturing models and re-invent the firm, leapfrog competition by early breakthroughsIncrease employee and stakeholder engagement to source innovative ideasShift the prevailing business paradigm in environmental and social ideasInnovate with new models of stakeholder governanceConcentrate on adding value and innovating.Potential business benefits:Increased revenue and market shareStronger stakeholder support (reputation and commitment)Higher customer retention rates; faster attraction of new customersEstablished lead in developing new marketsEmployer of choice – attract and retain skilled managers and professionalsOperate at high value-added end of market.“LEAD IN VALUE-ADDING AND INNOVATION”Example of BP switch in branding which reaped it benefits in terms of reputation but it has to be sincere and applied over the organisation. Innovation is the mark of this phase. For example, Vicptr Smorgon and International Power are working on developing biofuels from carbon dioxide using algae and photosynthesis. Waste becomes fuels.
19 Capabilities for effective operations in the Strategic Phase: Understanding and experience in strategic planning processes.Eye for strategic potential of sustainabilitySkills for involving and managing stakeholders.Ability to think ‘outside the square’Understanding of social and market trends.
20 6.THE SUSTAINING CORPORATION PHASE: The Transforming Futurists Objective: Redefine the business environment in the interests of a more sustainable world and to support the core strategies of the firm.Key business opportunity: Create a constructive culture that continually renews the long-term viability of the organisation.Typical actions:Participating in changing the ‘rules of the game’ to achieve sustainabilityParticipate in public policy formationReorganise the company’s supply chain to ensure that the whole production process is sustainableBuild human and relational capitalSupport dematerialisation and the growth of the knowledge-based economyModel best practice; support/publicise best practice elsewhereParticipate in international agreementsSeek external auditing of sustainabilityInfluence capital markets to support long-term value-addingBuild a constructive culture that encourages openness, debate, innovation and participation.Potential business benefits:Global leadership of the sustainability movementEnhanced reputation and stakeholder support and involvementIncreased share valueAttraction/retention of talented, highly motivated employees.“TRANSFORM OURSELVES: LEAD IN CREATING A SUSTAINABLE WORLD”
21 Capabilities for effective operation with organisations in the Sustaining Phase ‘Big picture’ thinking, broad business knowledgePolitical skillsKnowledge of sustainability best practiceReputation and confidence in working with CEO/senior executivesActive involvement in leadership of the sustainability movement
22 Is Corporate Sustainability Possible? A case study in hopeful achievement:
23 Fuji-Xerox Eco-Manufacturing Centre FX moved from selling to leasing office equipmentThe Eco-MC takes used products, reprocesses their componentry, rebuilds the machinesMost parts are recycled in the plantZero waste to landfill“Waste” becomes important to others (e.g. carbon to steel making)Rebuilt products have enhanced quality and reliabilityMajor R & D payoffBasis for new businessSavings in 2000 = $25 millionSavings in 2001 = $30 millionSince then, 20% ROITo achieve these results demanded a transformation of the corporate culture.
24 What’s the relevance of all this to HR? Movement toward sustainability depends on corporate culture change: achieving sustainability involves a major transformation of business assumptions and practicesScience and technology will be vital but successful planning and implementation will depend on peopleIf the introduction of sustainable business practices is directed only by technologists, human factors will be ignored, underestimated and implementation will failGiven the increasing priority of sustainability issues, HR must be a key part of the change or it will be shouldered aside.
26 Constructing the human sustainability agenda: the internal agendaAdopt a strategic perspective on workplace developmentBuild the corporate knowledge and skill baseFoster productive diversityIncrease employees’ role in decision-makingDevelop capability for corporate reshaping and renewal: revisioning, reflexivity, redesignEnsure that investment in people enhances present and future performance, including ecological sustainability.the external agendaReinterpret strategy around a range of stakeholdersAdd value for all stakeholdersSustain on-going dialogue with stakeholdersDefine social goals and action plans with KPIsBuild stakeholder support for license to operate and grow.
27 A new challenge for HR: Constructing the ecological sustainability agenda Initiate life cycle assessment and resource stewardship throughout the organisation and in its supply chainEliminate waste and pollution by product/service redesign and development of industrial ecologyForm active partnerships with community groups to inform, critique and collaborate on sustainability initiativesInstitute external monitoring, reduce environmental footprint
28 The central problem for leaders working to create a sustainable world:
29 Our leadership objective: Sustainable and sustaining organisations that -add financial value for shareholdersproduce valued goods and services for societysustain those who work for organisationssustain our social worldsustain and renew the biosphere
30 Third wave organizations Value-driven and transformativeResponsive to emerging shift in global valuesMaking corporate citizenship and corporate sustainability core business strategies
31 Resource books: how to do it D. Stace and D. Dunphy, Beyond the Boundaries: Leading and Recreating the Successful Enterprise, 2nd edn, McGraw Hill, Sydney, 2001D. Dunphy, A Griffiths and S. Benn, Organisational Change for Corporate Sustainability, 2nd ed., Routledge, London, 2003Q. Jones, D. Dunphy et al, In Great Company: Unlocking the Secrets of corporate Transformation, Human Synergistics, Sydney, 2007D. Grayson and A. Hodges, Corporate Social Opportunity - 7 steps to make corporate social responsibility work for your business, Greenleaf, Sheffield UK, 2004B. Willard, The Next Sustainability Wave: Building Boardroom Buy-In, New Society Publishers, Canada, 2005B Doppelt Leading Change Toward Sustainability: A Change Management Guide for Business, Government and Civil Society, Greenleaf, Sheffield UK, 2003.