In December, we reported on the deepening commitment the world's largest corporations are showing when it comes to climate change and clean energy.
A majority have set renewable energy targets, greenhouse gas reduction targets, or both. In fact, clean energy practices are becoming standard for most of the largest, most profitable companies in the world, which is great news.
But they are moving far too slowly, and aside from a few standout companies, "rampant incrementalism" still rules regarding corporate sustainability, argues respected management consultant Gib Hedstrom.
While more of them may be "doing less bad," few of them are taking steps to differentiate by driving to zero impact or changing their business model to grow green revenue.
Like us, he's come to this conclusion by by analyzing the progress of companies that routinely show up on corporate sustainability rankings.
"A few standout companies like Unilever, Marks & Spencer, Nike, Ricoh and DuPont are aggressively driving growth," he says. Smart followers like GE, Google, HP, Sony, Microsoft and others are on track to be tomorrow's sustainability leaders. But most companies (~75% by our count) muddle along – making incremental improvements."
The leaders that stand out today are the same ones we wrote about 10 years ago!
Even though most CEOs claim to have integrated sustainability into core decision-making processes, the reality is that fewer than 25% really have done this, says Hedstrom.
In Hedstrom's view, companies fall into one of the following four categories:
Those looking Beyond Compliance to do less bad by conserving energy, reducing waste or addressing safety and human rights abuse. This describes the progress most companies have made so far.
Smart Followers that establish reasonably tough environmental and social responsibility guidelines, but that haven't really taken steps to change their business.
Tomorrow's Sustainability Leaders, who are setting bold positioning "goals of zero" (for waste, energy or human rights) that set them apart from their industry peers. Microsoft, for example, charges business divisions an internal carbon tax that encourages managers to push toward carbon-neutrality. GE includes "environmental performance" as a measure of business success.
"These companies are starting to realign their business models to sustainability drivers; but have yet boldly to declare that realignment across the corporation," notes Hedstrom.
Which brings us to the final category, Today's Sustainability Leaders. These companies have kick-started fundamental business transformations by investing in operations that have a low environmental or social footprint – and getting out of ones that have a high footprint.
Hedstrom's premier examples are Unilever, which has set a goal of doubling sales revenue while cutting the company's environmental footprint in half through its Sustainable Living Plan; and Nike, which puts sustainable business practices on an equal footing with quality, cost and delivery when it comes to measure operational efficiency.
His advice on how to get there?
- Assess which category describes your company today
- Understand where your customers would like you to be
- Gauge which steps are necessary to get there
"The breakthrough moment arrives when companies consumed with being less bad figure out this is actually about revenue growth," says Hedstrom.
Read his article: