Dialogue with the Director

April 18, 2011

The Evolution of Corporate Sustainability

Do you recognize it?  Whether you are a business manager or academic you probably noticed the world of sustainability is going through a significant transition. You may remember when environmental health and safety was the focus for companies after environmental incidents such as Love Canal and Bhopal during the late 1970s and early 1980s.

By the 1990’s, attention was being paid to a new round of labor law issues, which highlighted the growing problem of resource depletion. Then, at the turn of the century, we witnessed the growth of environmentally conscience investors and the power of consumers, which spawned corporate-social responsibility.

That brings us to now. We have entered a new paradigm with an increased focus on defining green products for the consumer and providing transparency of the supply chain. Additionally, astute business leaders have awoke to the efficiencies that can be gained by creating and selling more sustainable products and embracing more sustainable practices. I call the stage we are currently in — the transition from firm sustainability to product sustainability. 

Product sustainability is about much more than products. It is about transparency — quantification rather than qualification and it is about the global value chain. 

So just who is responsible for this transition?  Industry itself has been at the forefront through initiatives such as the Wal-Mart initiated Sustainability Consortium, the Apparel Coalition, and the Outdoor Industry’s Eco-Index. These have been developed to create greater insight and transparency in the supply chain as well as to find opportunities to reduce environmental burdens and economic inefficiencies.

Government is also driving this transition.  In the United States the General Services Administration (GSA) will soon require its suppliers to provide scope I, II and III greenhouse gas reporting; a logical first step to even more inclusive environmental impact reporting. The Federal Trade Commission is more aggressively regulating how manufacturers and retailers make sustainability claims. Even the Securities Exchange Commission, in a February 2010 discussion of materiality, gave notice to CEO’s that sustainability now plays an important role in the product and services they sell. This is fairly evident as we observe major institutional buyers such as Wal-Mart, Best Buy, GSA and others who are looking to make purchasing decisions through some form of a sustainable index. 

Finally, while consumers may not be demanding transparency they are frustrated by the lack of consistency in communicating about sustainability.  It will be interesting to see, down the road, if organizations such as UL Environment, the U.S. Environmental Protection Agency, or others take a leadership role to create universal product sustainability labels or certifications.

Stay tuned!

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