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Wednesday, July 29, 2009

Should We Pick Our Customers?

I have been thinking for some time about companies including sustainability credentials in picking who they want as their customers.

I know, I know, readers who are sustainability practitioners are thinking now that they would get laughed out of town (or the office) if they went out to the sales force and told them not to do business with certain companies. But bear with me on this.

It is not a concept without precedent. Most companies ask about sustainability credentials in RFPs and many go on to include those credentials as a component of selecting vendors. With BT, in our capacity as a vendor, we certainly get asked about it all the time by potential customers and, as a subject matter expert, I am often called upon by potential customers to talk about our activities.

Obviously companies feel in a stronger position to state requirements as a potential customer than as a vendor, but from a sustainability perspective why shouldn’t it be important both directions?

Some businesses do make categorical statements that they won’t serve customers in specified sectors. Particularly in the media, PR and advertising world, plenty of companies refuse to take business from specific sectors that they do not favor (usually the traditional ‘sin’ sectors) and especially with regard to consumer advertising. Newspapers are a good example. There are many that won’t accept ads from tobacco companies.

And in an indirect way, companies in other commercial and manufacturing sectors are doing this too. By launching products that appeal to the sustainability marketplace, whether energy efficient cars and wind turbines or irrigation and cost effective healthcare products for developing countries, companies are seeking to attract customers who have an interest in sustainability.

Especially when signing a long term deal I think it makes sense to know and understand whether that customer has a long term perspective and will be around and profitable enough to pay its bills in five or ten years time. Approach to sustainability and corporate responsibility should be a good indicator of which sectors and which companies within those sectors have a long term, healthy future ahead of them and therefore are customers with whom you want to be doing business.

Friday, July 24, 2009

Corporate Sustainability - A Pocket Guide

I just received a copy of a new booklet on Corporate Sustainability from 'Context'. It is a great little booklet. I am a book lover and this is a tactile, hand sized publication with a flip movie in the corner - I am sucker for that sort of novelty !

And the content is pretty good too ! The first few pages contain a great overview of the history of corporate sustainability that interleaves the UK and US approaches. Another topic I am interested in.

On page 5 there is reference to the terminology of 'giving back' and 'taking away' that I blogged about in Should Businesses be Giving Back to the Community . It puts the terminology in the context of the Trans-Atlantic differences in approach.

You can download a copy here. I think it is a great primer for newcomers especially.

Tuesday, July 21, 2009

What Business Can Learn from Non-Profits

Many of us in the business world consider that we can bring our commercial experience to non-profits and help them out. I know there are opportunities to do this, but we should not overlook the opportunity for the lessons we in the business world can learn from non-profits.

I just had the pleasure of attending a speech delivered this lunchtime at the National Press Club by Gail McGovern, President and CEO of the American Red Cross (ARC). I was attending as a member of the Corporate Advisory Council of the ARC. Gail came to the American Red Cross a year ago after a corporate career in AT&T and Fidelity, and I am sure brought with her the benefits of her corporate experience. But in her remarks, she certainly highlighted what companies can learn from the non-profit world.

The speech was titled “Navigating a Nonprofit through Turbulent Economic Waters". Gail suggested 5 ways to help navigate in our current times.

1) Have a monomaniacal focus on your mission and on the people you serve
2) Be even better stewards of your donors’ dollars
3) Find new ways to raise money and engage donors
4) Embrace new tools
5) Keep looking to the horizon

Exchange donors and ‘people you serve’ for shareholders and customers and I see no reason why these principles don’t apply just as well to for-profit as to not for profit ventures.

But in my view, the most insightful observation on this topic came in the Q&A. In response to a question on the topic of what companies can learn from non-profits Gail talked about ‘heart’. She described that people who work for non-profits do so because of the mission. Every institution has a higher purpose, Gail said, though for-profits might need to work a bit harder to seek and articulate that purpose, but they should do it and they should make sure their employees know what it is, to help them act with heart.

I think ‘heart’ and ‘mission’ gets to the root of why many of us in the CR field and the many employees of the companies we work in want to be involved with, and volunteer for, charities. Without diluting the focus on volunteering for charities, emphasizing the heart in our day jobs is a valuable learning point from the non-profit world to the for-profit world. The corporate responsibility practitioner has a role to play in that.

It is not posted at the time of writing, but a video of the speech is going to be available here on CSPAN and the transcript will apparently be made available from the archives of the National Press Club.

Crocs and Fur

Apparently Crocs are in trouble and one of the reasons, according to this Washington Post article is “the problem with a nearly indestructible product is that shoppers rarely need to replace it”. Whatever your views on the fashion component of Crocs, this is bad news for business sustainability and a win for the built in obsolescence argument.

We need new models for business success that allow long lasting products to be successful (maybe with some assurance that they are ultimately bio-degradable). Perhaps it comes with making money from such things as reconditioning and refurbishing, upgrading and servicing. Of course we have to shift consumer preferences too so they don’t want new stuff all the time.

That got me to thinking about what models there might be for sustainable materials and I think fur fits the bill .

If you are reacting with horror to my statement that fur might be an example of a sustainable material let me ask you to put aside the issues of animal rights and sustainable farming/hunting and just look for a minute at the material itself to help me illustrate my point.

In the interests of full disclosure, my father, now retired, was a furrier in an earlier part of his career (hi Dad!).

Growing up I would spend time in the fur workshop. Customers would bring the product back for refurbishing and redesign, retaining the original material. A five year old coat would be brought into the workshop and my grandfather would spend a week dismantling it and recreating it into the latest design. At the time, the fabric was so valuable, relative to the cost of my grandfather’s labor, that this model made business sense.

The key characteristics here are a material that is valuable and long lasting, where the labor cost of reworking it into a new design is less than the cost of starting again with new material.

I wonder though, whether things are going to have to get a lot worse with regards scarcity of raw materials before we reach that crossover point for the more mundane raw materials that go into the products we use every day. Or is there a way we can create business models with those drivers now before we are forced down that road by adverse circumstances?

Thursday, July 16, 2009

Should the Corporate Responsibility Officer be an Ombudsman?

I have written in the past on the role of the Corporate Responsibility Officer. I recently noticed an interesting comparison point in the role of the newspaper Ombudsman.

It has been a difficult few weeks for The Washington Post with the recent disclosure in of the publication’s plan to sell sponsorship of off-the-record salons. In a recent opinion piece, Andrew Alexander, Ombudsman of The Washington Post calls the plan “an ethical lapse of monumental proportion”. And they pay him to say that about them!

According to the Post’s description of the role “As The Washington Post ombudsman, he serves as its internal critic and represents readers who have concerns or complaints on a wide range of topics including accuracy, fairness, ethics and the newsgathering process. In his role, he also promotes public understanding of the newspaper, its Web site and journalism more generally. He operates under a contract with The Washington Post that guarantees him independence.”

The Organization of News Ombudsman (ONO) description of the role also includes both complaint handling and to ‘write regular columns that deal with issues of broad public interest’. Regarding independence The ONO’s website also states, “A few are on fixed-term, non cancelable contracts.”

It seems to me that the ombudsman role is characterized by a level of independence, a primary responsibility to be a representative of the organizations stakeholders and leverage through having an external voice.

I think for those of us in corporate responsibility it is interesting to consider to what extent our role should contain components of the role of a news ombudsman. I am not sure many companies would pay for someone to be vocally critical of them outside the organization - maybe it has applicability in the media sector that it doesn’t have in other sectors. But I think that enlightened businesses do benefit from an open culture that encourages open constructive criticism, internally if not externally, and the CR folks should be taking a lead by taking that on as a part of their role.

Thursday, July 9, 2009

The Pope on Corporate Responsibility – Should Religions Comment on Business Ethics and Should Businesses Listen ?

Pope Benedict XVI issued his latest encyclical “Caritas In Veritate”(Charity in Truth) earlier this week. It contains many views on the international economic system, on economic development, on the role of companies and investors and on other issues of interest to Corporate Responsibility practitioners.

I have always been interested in the overlap between religion and business. Many religious traditions have comprehensive guidance on issues of business ethics but I struggle with how we can bring the ideas into our corporate responsibility dialogue without compromising the separation of religion and business at a doctrinal level. In the interests of full disclosure, I describe myself as an observant Progressive Jew.

Marc Gunther refers to the overlap between faith and business in his book Faith and Fortune. In his excellent blog “On the Move” Bill Marriott sometimes refers to his religious convictions as a Mormon. In this post he references both the overlap and separation between his religious convictions and Marriott’s positions.

Back to the Pope and “Caritas In Veritate”. It is a pretty accessible text and I thoroughly enjoyed reading it. I was encouraged to read a religious text with specific and contemporary commentary on issues of the economy, globalization and the corporate world.

You will read significant criticism of some corporate activities such as “Among those who sometimes fail to respect the human rights of workers are large multinational companies as well as local producers” (paragraph #22). But also there is significant discussion of the broadest principles of CR and sustainability across the corporation;

- The role of profit is important but not the exclusive role of the corporation (#21)
- Recognition of the problems of short term investment and decision making (#22)
- Comment on the responsibility of the company to the broad range of stakeholders (#40)
- The role and responsibility of the stakeholder (including management employees, consumers and investors) as drivers of the corporate world (#40, #65, #66).
- The evolution of social enterprises (#46)

It is worth a read, and I would love to hear what you think about whether religion has a role in suggesting guidelines for business and where the appropriate boundaries might be.

Tuesday, July 7, 2009

Green IT Survey Results - A Hot Topic

We have received the responses for the Green IT survey that I referred to in a short post Who Cares More ? in June.

The responses have not been analyzed yet, but the response numbers themselves are informative. About 150 responses were received from IT professionals. This is a respectable representation of the importance of the topic within the field. A quick look at the response levels of other surveys shows response rates for 'applications performance' and 'virtualization' at around 140 and 'unified communications' down at 107. Most popular topics were 'VOIP' and 'IP Addressing' around 260 each.

These all represent hot topics amongst IT professionals and I am encouraged that Green IT holds it own as a topic area amongst them. More on the results of the survey as they are analyzed.

Monday, July 6, 2009

Is Charitable Giving Cleansing ?

My recent post “Should Businesses be Giving Back to the Community” stimulated some insightful comments in response. Of course the critical word in the post was ‘back’. I absolutely believe that companies should be investing in the community and, as I said, I also believe they should be clear about their rationale for giving. But if indeed they are giving back to compensate for taking away, those companies should stop the taking away.

In the Science Digest section of today’s Washington Post, underneath a full page analysis of the Climate Bill is a short piece On Good Behavior by Rachel Saslow. Saslow reports on an article in the Psychological Science journal by Rumen Iliev, a Northwestern University psychologist.

Psychologists at the University gave 46 undergraduate students what the students thought was a handwriting test. One third of the participants copied out positive words such as caring, generous and fair; one third copied out neutral words and one third copied out negative words such as selfish, disloyal and greedy. The participants then had to write a short story about themselves using those words.

After the activity, participants were asked if they would like to make a donation to charity. Donations from the negative word group averaged $5.30, the neutral word group averaged $2.71 and the positive word group $1.07. According to Saslow, the researchers concluded that people who engage in immoral behavior “cleanse” themselves with good work. (unless there was more research that was not reported in the article I would say that big donations might be more accurate terminology than good work).

This is only one small study of course and the dynamics of companies is different to that of individuals. Nevertheless corporations are comprised of individuals and we should remain clear about the rationale for our charitable giving.