Why sustainability is eschewing the green left

Why sustainability is the middle way eschewing the green left and the fundamentalist right

Peter Neilson, Chief Executive of the New Zealand Business Council for Sustainable Development (the Business Council) told members of The Hamilton Club that managing sustainability is the right path for business to take because it improves both profits and relationships with staff and the wider community.

““We believe that those who maintain that the fundamentalist free-market route is the best and only way and that the only role of business is to make profits are missing a real opportunity. Similarly, those on the green left who believe that the business model is inherently selfish and that business is “doing sustainability” for the wrong reasons, fail to recognise the real contributions which companies can and are making.

Neilson referred to the Growth & Innovation Board’s (GIAB) market research, which indicates that New Zealanders do not see a link between better economic performance and things they do value, such as improving incomes, enhancing quality of life by preserving the environment or to pay for programmes that provide opportunities for all.

However the GIAB research also found that whilst people are feeling more positive about business, this feeling is more about small and medium enterprises. There is much greater concern expressed about “big business”. People felt quite strongly that large corporate entities are not “giving something back.”

“Given quality of life is important to New Zealanders, it has to be important to business. Business leaders become and remain successful because they create products and services that enhance people’s lives. Economic growth will itself provide a platform for investment in society and the environment. As the founder and former President of the World Resources Institute, Gus Speth, wrote recently: “Companies are the only actors with enough access to capital and managerial discipline to meet the environmental challenges.”

Neilson says: “Twenty years ago many people were persuaded that high unemployment would be a permanent feature of life in New Zealand. Higher economic growth, a more flexible labour market and wages that better reflect productivity has seen unemployment reduce dramatically. Most of the employment growth that has occurred, has been in private sector businesses but business continues to be seen as the problem not the solution.”

Sustainable management demonstrates how business is “giving something back” and Triple Bottom Line reporting provides the vehicle for communicating this with shareholders, employees, customers and society. Most New Zealand businesses are hiding their light under a bushel if they do not report on their triple bottom line of people, planet and profits.

Neilson says: “There is action with Business Council members, such as Westpac, Watercare, Landcare Research and The Warehouse amongst others, winning awards and recognition internationally for the transparency of their reporting, however there are many more laggards than leaders.” “There are conceptual challenges for businesses adopting social and environmental indicators as a measurement alongside traditional financial ones. It is difficult to optimize three objectives at one point, let alone three objectives over time. Also, while the economic and environmental dimensions are reasonably well defined and are measurable the social dimension remains controversial and is both hard to define and measure.”

“However the Global Reporting Initiative Sustainability Reporting Guidelines have emerged as global best practice for sustainability reporting and have brought a methodology and system which provides indicators for social and environmental impacts.

Neilson admits that changing a business model takes time. “The evidence base for sustainability is not always available and some companies do fear that if they appear to embrace sustainability, they will make themselves a target for detractors who will challenge their performance. There is also the kiwi phenomenon of probably rightly not wanting to hold themselves out to be better or more “ethical” than other businesses.

“Evidence is however emerging more clearly in the New Zealand context that companies listed on sustainability indices can measure the benefits in dollars. Ann Sherry, Chief Executive of Westpac, has said that Westpac’s listing on the Dow Jones Sustainability Index (DJSI) and its Triple A performance in Reputex Social Responsibility Ratings 2004 has brought investors of a higher class and longer duration.”

“In addition, sustainability provides a framework to help monitor issues because management will have its antenna tuned into the areas which pose environmental, social or economic threats to the business.”

“Ultimately a good report which addresses the key issues faced by an organisation, benchmarks the company with its peers and is subject to a 3rd party audit will help:- Manage risk Gain access to the increasing number of Socially Responsible Investment indices Communicate its values and more importantly its performance to its stakeholders Attract and retain the best employees Help identify business opportunities

“We require all our members to commit to publishing an SDR report within three years of joining. This is to encourage business to have first an internal conversation about where they are on the sustainability journey. The SDR report is simply a manifestation of that conversation.

“Our view is that the middle path is the best choice for business because sustainability is not just a nice to have, it’s a business imperative.”

To help organisations get started, the Business Council will be running its 3rd learning group for those wanting to prepare their first report. This series is open to non-members as well. As part of its Leaders in Excellence series the Business Council will be hosting a dinner on 4th May with John Elkington, one of the world’s leading authorities on sustainable development and on ‘triple bottom line’ business strategy.

ENDS

For information

More about the NZ Business Council for Sustainable Development

The Business Council’s starting position is that a business needs to be profitable in order to be sustainable. Sustainable business also needs to be sensitive to the needs of their employees and to the communities in which they operate and to minimize their impact on natural resources. Business Council members employ over 50,000 New Zealanders across North and South Islands. Based on the average family size of 3, this means it is directly responsible for the livelihoods of almost 150,000 people or 4% of the population. However its real impact is much bigger as many businesses are reliant on member companies as trading partners in local communities.

Membership is by invitation but interested companies are welcome to approach the Business Council. Members pay a turnover related membership fee. Membership requires CEO’s to directly engage in the activities of the Council.

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