Corporate Sustainability Suzanne Benn and Dexter Dunphy

The New World • • • transformed by new technologies increasingly dominated by global organisations rapidly transforming under the impact of high levels of innovation highly competitive driven by knowledge development consuming resources at unsustainable levels

Welcome to the world of unpredictable change and the chaordic organisation Dexter Dunphy

The dilemma and the challenge • The Dilemma: we cannot continue to conduct business as usual • The Challenge: to create a sustainable economy and society Readings: J. Porritt, Capitalism: As if the world matters, Earthscan, London, UK, 2006 R. Wright, A Short History of Progress, Text Publishing, Melbourne, Australia, 2004

WHAT IS SUSTAINABILITY? Sustainability results from activities which: • extend the socially useful life of organisations • enhance the planet’s ability to maintain and renew the viability of the biosphere and protect all living species • enhance society’s ability to maintain itself and to solve its major problems • maintain a decent level of welfare for present and future generations of humanity Sustainable organisations engage in activities that contribute in these four ways.

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 Hart Kenan-Flager Business School, USA

• 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?

First, we need to understand that achieving sustainability is a process – organisations advance by stages

The Phase Model Rejection Non-responsiveness Compliance Efficiency Strategic proactivity The sustaining corporation From Dunphy, D. , Griffiths, A. and Benn, S. , Organisational Change for Corporate Sustainability, Routledge, London and New York, 2003; revised edition 2007)

Less formally, the organisations at these stages can be labelled: – Phase 1: the freeloaders and stealthy saboteurs – Phase 2: the “bunker wombats” – Phase 3: the reactive minimalists – Phase 4: the industrious stewards – Phase 5: the proactive strategists – Phase 6: the transformative futurists

Nudging or leaping? Copyright Dunphy, Griffiths and Benn, Organizational Change for Corporate Sustainability, 2007

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)

So where are the opportunities? • Leave the Freeloaders, Stealthy Saboteurs and Bunker Wombats to experience increasing isolation • The 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.

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 noncompliance and create an effective risk management system. • Typical actions: – Determine what is relevant legislation, regulations and community expectations – Build an effective risk management system with an informed workforce committed to compliance – Establish organised measurement and monitoring system. • Positive outcomes: – Risk minimisation – Easier finance – Basis for positive reputation – Improved relationships with regulators.

Capabilities for effective operation with organisations in the Compliance Phase • Knowledge of relevant legislation/regulations • Monitoring of community expectations • Risk management expertise • Ability to construct measurement/monitoring systems Resource: Compliance Institute of Australia

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 spaces – Move 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 production – Redesign products: sustainably produced and environmentally friendly – Meet international Global Reporting Initiative (GRI) guidelines. Potential business benefits: – Cost reduction; savings – Increased employee productivity – Increased employee involvement/engagement – Better teamwork and lateral communication. “DO MORE WITH LESS”

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 redesign • Track record in producing efficiencies and building customised systems (TQM). Resource: NSW Department of Environment and Conservation (DEC)

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 sustainability – Re-brand build wider stakeholder support – Be early in on new product/service demand curves – Creatively destroy existing product designs, manufacturing models and reinvent the firm, leapfrog competition by early breakthroughs – Increase employee and stakeholder engagement to source innovative ideas – Shift the prevailing business paradigm in environmental and social ideas – Innovate with new models of stakeholder governance – Concentrate on adding value and innovating. Potential business benefits: – Increased revenue and market share – Stronger stakeholder support (reputation and commitment) – Higher customer retention rates; faster attraction of new customers – Established lead in developing new markets – Employer of choice – attract and retain skilled managers and professionals – Operate at high value-added end of market. “LEAD IN VALUE-ADDING AND INNOVATION”

Capabilities for effective operations in the Strategic Phase: • Understanding and experience in strategic planning processes. • Eye for strategic potential of sustainability • Skills for involving and managing stakeholders. • Ability to think ‘outside the square’ • Understanding of social and market trends.

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 sustainability – Participate in public policy formation – Reorganise the company’s supply chain to ensure that the whole production process is sustainable – Build human and relational capital – Support dematerialisation and the growth of the knowledge-based economy – Model best practice; support/publicise best practice elsewhere – Participate in international agreements – Seek external auditing of sustainability – Influence capital markets to support long-term value-adding – Build a constructive culture that encourages openness, debate, innovation and participation. Potential business benefits: – Global leadership of the sustainability movement – Enhanced reputation and stakeholder support and involvement – Increased share value – Attraction/retention of talented, highly motivated employees. “TRANSFORM OURSELVES: LEAD IN CREATING A SUSTAINABLE WORLD”

Capabilities for effective operation with organisations in the Sustaining Phase • ‘Big picture’ thinking, broad business knowledge • Political skills • Knowledge of sustainability best practice • Reputation and confidence in working with CEO/senior executives • Active involvement in leadership of the sustainability movement

Is Corporate Sustainability Possible? A case study in hopeful achievement:

Fuji-Xerox Eco-Manufacturing Centre • FX moved from selling to leasing office equipment • The Eco-MC takes used products, reprocesses their componentry, rebuilds the machines • Most parts are recycled in the plant • Zero waste to landfill • “Waste” becomes important to others (e. g. carbon to steel making) • Rebuilt products have enhanced quality and reliability • Major R & D payoff • Basis for new business • Savings in 2000 = $25 million • Savings in 2001 = $30 million • Since then, 20% ROI To achieve these results demanded a transformation of the corporate culture.

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 practices • Science and technology will be vital but successful planning and implementation will depend on people • If the introduction of sustainable business practices is directed only by technologists, human factors will be ignored, underestimated and implementation will fail • Given the increasing priority of sustainability issues, HR must be a key part of the change or it will be shouldered aside.

Achieving human sustainability

Constructing the human sustainability agenda: the internal agenda • • • Adopt a strategic perspective on workplace development Build the corporate knowledge and skill base Foster productive diversity Increase employees’ role in decision-making Develop capability for corporate reshaping and renewal: revisioning, reflexivity, redesign • Ensure that investment in people enhances present and future performance, including ecological sustainability. the external agenda • • • Reinterpret strategy around a range of stakeholders Add value for all stakeholders Sustain on-going dialogue with stakeholders Define social goals and action plans with KPIs Build stakeholder support for license to operate and grow.

A new challenge for HR: Constructing the ecological sustainability agenda • Initiate life cycle assessment and resource stewardship throughout the organisation and in its supply chain • Eliminate waste and pollution by product/service redesign and development of industrial ecology • Form active partnerships with community groups to inform, critique and collaborate on sustainability initiatives • Institute external monitoring, reduce environmental footprint

The central problem for leaders working to create a sustainable world:

Our leadership objective: Sustainable and sustaining organisations that - • add financial value for shareholders • produce valued goods and services for society • sustain those who work for organisations • sustain our social world • sustain and renew the biosphere

Third wave organizations • Value-driven and transformative • Responsive to emerging shift in global values • Making corporate citizenship and corporate sustainability core business strategies

Resource books: how to do it • D. Stace and D. Dunphy, Beyond the Boundaries: Leading and Recreating the Successful Enterprise, 2 nd edn, Mc. Graw Hill, Sydney, 2001 • D. Dunphy, A Griffiths and S. Benn, Organisational Change for Corporate Sustainability, 2 nd ed. , Routledge, London, 2003 • Q. Jones, D. Dunphy et al, In Great Company: Unlocking the Secrets of corporate Transformation, Human Synergistics, Sydney, 2007 • D. Grayson and A. Hodges, Corporate Social Opportunity - 7 steps to make corporate social responsibility work for your business, Greenleaf, Sheffield UK, 2004 • B. Willard, The Next Sustainability Wave: Building Boardroom Buy. In, New Society Publishers, Canada, 2005 • B Doppelt Leading Change Toward Sustainability: A Change Management Guide for Business, Government and Civil Society, Greenleaf, Sheffield UK, 2003.