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Sustainable business practices: IISD's checklist

Businesses keen to profit from the transition to sustainable development often have a longer time-horizon and a broader set of goals than traditional companies. Typically they are dissatisfied with the status quo and want to operate in a socially responsible manner, as well as protect the environment. They value the well-being of employees, society, culture and future generations. Whilst they cannot afford to ignore short-term cash flow, their definition of success is more sophisticated and long-term.

Often, the founders of these companies have a well-articulated set of principles that guide the business and help to instill the same values in employees. By declaring their goals publicly they may inspire trust, create a model for their industry sector, and provide a benchmark against which achievement can be measured.

Smaller companies, which are often at a disadvantage when recruiting employees, can attract creative and talented staff by offering workplaces that are more participatory, have greater sensitivity to family issues, share more of the wealth, offer more fun, and encourage trust between management and employees.

This broader vision of success requires new business tools, practices and relationships. Being receptive to new ideas and suggestions opens the door to an array of business opportunities.

This section of the site is designed to provide the means for companies to prosper during the first decade of the 21st century. The current focus on environment, empowerment, education, enjoyment and ethics is not likely to be a passing fad. People are finally waking up to the need for organizations that protect the environment and our social well-being.

Internal consistency

Ensuring that the values of sustainable development permeate throughout the company usually starts at the CEO's office. However, the best intentions are meaningless if they are lodged in the mind of one individual. Changing a company's culture and outlook requires a contribution from everyone, working as a team.

1. Prepare a mission statement

A mission statement is a declaration of the goals, principles and operating procedures of a company. It will vary from one company to the next, depending on the nature of the enterprise, and can help in charting a company's progress. Best issued from a committed CEO, the statement should be distributed to all employees and stressed repeatedly. If employees know that performance will be measured against the stated goals, and are given the resources to achieve them, the mission will be taken seriously.

The CERES principles, issued by the Coalition for Environmentally Responsible Economies, are a good source of ideas for a company mission statement. Drafted by a coalition of socially responsible companies, investment firms and environmental groups, the principles offer guidance and standards against which companies can measure themselves.

Another way of gaining perspective on your own company's objectives is to examine the mission statements and business practices adopted by other firms in the same, or other, sector. Innovative companies are often happy to share their mission statements.

2. Measure and report on your progress and performance

Internal and external communications can be used by a company to report on its progress in achieving social, financial and environmental goals. By developing benchmarks against which to measure progress, and reporting on successes and failures, companies can reinforce their commitment to stated objectives, and alert employees and other stakeholders to areas where more effort is needed.

Just as financial reports help employees concentrate on cutting costs and maximizing the return on investment, environmental and social audits sharpen company focus.

Many large corporations now issue annual reports of environmental performance. By defining short and long-term goals, and developing tools to measure progress, these companies gain a better understanding of how their operations affect the environment and where they can improve performance, often reducing costs at the same time.

3. In-house waste reduction and pollution prevention teams

'Green' teams, comprising personnel from different departments, can be effective in devising strategies to improve environmental performance. However, it is vital that they have top-level support, adequate budgets, and ready access to all employees.

It is best to start by setting easily achievable goals, and then becoming more ambitious as confidence and expertise are gained. For example, asking all employees to bring their own coffee mugs to work, and purchasing mugs for visitors, is an easy first step. Requiring all printing and copying to be done double-sided, providing refillable pens in the supply cabinet, and turning off unused lights and equipment, are other possible starting points.

Next might come setting up paper and packaging recycling programs, asking suppliers to offer green alternatives, and installing energy-efficient light bulbs.

After momentum and interest have been established, the tougher issues can be tackled. Maintenance staff can be asked about biodegradable cleaning products, and bathroom tissue and paper towels that are made from recycled fibre. Timed thermostats, water-efficient toilets and plumbing fixtures can be installed, as can 'intelligent' lighting systems.

It is important to quantify the payback associated with these capital investments, so that everyone understands the financial benefits of environmental responsibility. Manufacturing firms can also scrutinize their production processes.

As staff become increasingly aware of the cost and environmental benefits and the ease of implementation, suggestions for improvements are likely to be forthcoming. Some companies offer rewards to their employees for suggesting environmental improvements that could save the company money.

4. Materials that inform employees about economic, environmental and social trends

Informed employees will be better equipped to promote company goals and to respond to major trends. Well-written books and articles, videotapes, and the occasional guest speaker or external course can put a company's efforts into perspective.

Ted Turner, the American media mogul, distributes copies of the Worldwatch Institute's State of the World series to all new producers and reporters. Ben and Jerry's, the Vermont-based producer of premium ice cream, purchases multiple copies of Co-op America's National Green Pages to encourage employees to purchase goods and services from socially responsible companies. Many employees want to perform better; but in order to do so they need a better understanding of current trends and workable solutions.

5. Lines of communication

Regular staff meetings, e-mail bulletins, accessible managers and an in-house newsletters can help maintain lines of communication. Centrally located bulletin boards or suggestion boxes can stimulate discussion and ideas. Human resources staff who treat employees as individuals and help them juggle the competing demands of work and family promote loyalty. When employees are given the rationale for major decisions, they are less likely to listen to rumours and speculation.

External credibility

Customer loyalty, public credibility, and investor confidence are gained by companies that are perceived to be doing things right. Perfection is not possible, but definable progress and effective communications are essential.

1. Annual sustainable development report

An annual report highlighting progress made towards improving environmental performance and enhancing workplace and societal well-being may be the best advertisement for a company. When read by corporate stakeholders, including customers, suppliers, employees, investors, regulators, members of the local community and environmental groups, such reports can go a long way toward demonstrating a company's commitment to environmental protection and social responsibility.

A clearly articulated set of internal goals, a method for measuring achievement, and openness about current failings can all help to make a company appear responsible and human. It takes a brave firm to adopt a 'warts and all' approach in its reports, but the gains are usually worthwhile.

Ben and Jerry's is committed to promoting a variety of causes, including rainforest protection, world peace, and community economic development. The Ben & Jerry's Foundation, established by the company, channels a percentage of profits to charities around the world. Meanwhile ice cream ingredients are purchased from companies that employ homeless people, recovering alcoholics, and drug addicts, as well as from collectives in developing countries.

Economics professors Stephen Erfle and Michael Fratantuono at Pennsylvania's Dickinson College have studied the link between companies' social performance and profitability. They found a positive correlation between profits and five criteria: environmental performance, advancement of women, advancement of minorities, charitable giving, and community action.

In an era when large companies are regarded with suspicion, being open about failures, as well as achievements, can go a long way toward building trust and cultivating loyalty.

2. A commitment to honest and accessible public relations

Successfully conveying information about a company to customers, the press, the local community, plus anybody else who has an interest in what you do, requires an up-front approach and clear, understandable language. People are naturally sceptical of what they do not understand. With knowledge comes familiarity, security, and support.

In recent years, many manufacturers of consumer products have established toll-free telephone numbers to sell merchandise and to respond to customer enquiries. Where these are staffed by knowledgeable and courteous personnel, these numbers can provide information about how products are made, and about how to use and dispose of them safely. Conversely, an operator who is unhelpful or unable to answer questions satisfactorily will serve only to frustrate and irritate customers.

Companies that make or sell highly technical products face another challenge: namely the inability of many scientists and to explain in plain English what they do. Where this is the case, well-informed marketing or communications staff should be brought in.

If a company is new to the community, or has just developed an innovative production process to solve an environmental problem, or if it is the victim of damaging rumours, an 'open house' policy can help to build support and quell fears. Community groups often want to feel pride in local companies - but first they have to be given something about which to feel proud.

For example, when Anita Roddick, founder of Body Shop International, opened a new Canadian headquarters in 1993, she explained to invited guests that the building was the most environmentally sound in Toronto. Favourable press, of any type, can boost sales and engender customer loyalty.

Bad press, by the same token, is bad business. It can be avoided with readily available, credible information about successes, failures and routine activities.

4. A commitment to community development efforts

Although many companies still measure their contribution to the community by the size of the cheque they write to local charities, a growing number are engaged in more active forms of community work.

At Tom's of Maine, employees are paid for contributing as many as five hours a week to community projects. To help the local community establish a recycling program, Tom's supplied recycling bins to every household in town.

Meanwhile employees at Body Shop branches around the world are encouraged to devote one paid day a month to community education and development efforts. Body Shop stores routinely donate valuable display space to local environmental and community development drives. Anita Roddick believes environmentally aware customers will want to become her customers.

Patagonia, an outdoor equipment and clothing supplier, gives 10% of its profits to grassroots environmental groups. More than 350 organizations have benefited from grants, ranging from a few hundred dollars to $20,000. The company gives away more money than it spends on advertising.

Forging external relationships

1. Work with innovative business associations

A growing number of trade associations and business networks are issuing environmental performance guidelines, preparing educational materials on environmental and social issues, and holding seminars on subjects of interest. Below are some of the organizations that are likely to be of interest to eco-entrepreneurs.

Business for Social Responsibility (BSR), founded in 1992 in Washington DC, focuses on human resource issues, environmental performance, community relations, and resolving international problems. Its 1,400 members and affiliated companies pay between $150 and $25,000 a year to belong, and to receive advice on improving their social, environmental, and financial performance.

Similarly, Canadian Business for Social Responsibility is an alliance of companies committed to business policies and practices that actively contribute to improving the quality of life in their communities. Its 100 members pay between $200 and $3,000 a year, and receive guidance on implementing social responsibility programs.

The Co-op America Business Network in Washington DC has screened each of its member companies to evaluate their adherence to the principles of sustainable development. Prospective members are asked to fill out a social responsibility profile that covers the company's relationship with the local community, customers, employees and the environment. The network is looking for demonstrated efforts that go beyond general standards. Only those companies regarded as socially responsible are approved for membership by the board of directors.

The Social Venture Network, formed in 1987 in San Francisco, is a membership organization composed primarily of entrepreneurs, investors, and investment professionals who believe business is not only a source of financial prosperity but a potentially powerful force in creating a more just, humane, and sustainable world. The organization strives to build a community of business leaders who have demonstrated concern for social issues, and to strengthen the credibility of innovative business initiatives. The 400-member organization sponsors national meetings twice a year. Members receive specialized mailings and regular newsletters, and a database is maintained on each member's activities and interests.

2. Tap the expertise of non-profit organizations

Non-profit organizations have a wealth of expertise to share with business. Although some adopt an adversarial stance towards the business community, many others are open and willing to participate in collaborative efforts.

When Loblaw, the Canadian grocery giant, decided to launch its 'Green Line' products in 1990, the company went to Friends of the Earth and Pollution Probe for advice. Both NGOs suggested products for the line, evaluated the merits of a variety of items, and made recommendations on marketing strategies. Their familiarity with environmental issues, coupled with an ability to distinguish the truly superior environmental products from those making spurious claims, lent credibility to the launch.

Thermco, of Mississauga, Ontario, a manufacturer of energy efficient, low-CFC condensers for refrigeration and air conditioning systems, solicited advice from Friends of the Earth. The company benefits from FoE's assessments of policy and industry trends, and receives valuable free advertising. For its part, FoE gets the satisfaction of helping put its policies into practice.

Bryan Thomlison, formerly Canadian marketing director of Church and Dwight, the manufacturer of Arm & Hammer baking soda, started working with environmental groups after receiving an unexpected phone call from an environmental leader. She told him the environmental community was promoting baking soda as an alternative cleaning agent. Thomlison met with her and learned rapidly about impending regulations, as well as the agendas of a variety of environmental organizations. Thomlison watched as baking soda sales, which had been flat for seven years, grew 30 per cent in 36 months.

In 1989, when the US Environmental Defense Fund (EDF) approached McDonald's with an offer to collaborate on reducing the company's waste stream, neither side knew exactly what to expect. But after many meetings and site visits to get a sense of each other's operations, the two developed a working relationship that resulted in revamped McDonald's packaging, procurement, and waste management practices.

3. Contract with the best

The construction industry has long relied on subcontractors to perform specific components of a large job. Pooling resources can be useful to any company trying to create a stronger, more competitive whole.

Until the 1980s, undertaking large projects, entering new markets or working globally was the exclusive privilege of large corporations and conglomerates. Today, thanks to the innovative use of 'virtual' corporations, strategic alliances and joint ventures, small and medium-sized companies are beginning to compete and to win contracts outside their traditional markets. Rapid advances in communications technologies, a global orientation within even the smallest business, and the greater efficiencies that can be offered by a team of small players, enable these firms to perform on the global stage.

Virtual corporations, with their low overheads and geographically dispersed staff, can be competitive and provide a range of expertise. Many consulting firms, for example, now employ professional staff 'teleworking' from home.

By entering into strategic alliances, small and medium-sized companies can build capacity in the market place. Environmental engineering companies, marketing firms and financial advisers, for example, can work together to provide a comprehensive set of skills. Similarly, collaboration between companies in different countries provides the opportunity to enter global markets without incurring many of the costs.

4. Have fun, stay healthy, and enjoy your work in an increasingly stressful world

'Burn-out' is a common complaint among employees, but some low-cost, innovative changes in business practices can help reduce the risk. At Ben and Jerry's, the volunteer 'Joy Gang' endeavours to make the working environment more fun. At toymaker Hasbro in Rhode Island, workers are given Friday afternoons off in the summer. Many employers now permit staff to 'dress down' on Fridays, or all of the time, and arrange informal 'happy hours'.

At Quad/Graphics, the Wisconsin-based printing firm, owner Larry Quadracci employs the services of his goat, Gruff. 'Be a Gruff... Recycle Stuff' is his company's slogan for its recycling program, and Gruff has his own e-mail address for questions and comments about recycling.

A growing number of companies are establishing health clubs or offering discounted memberships at local gyms. Others are installing showers and lockers for staff who cycle to work. Calvert Social Venture Partners in Bethesda, MD, buys running shoes for employees who walk to work, and Patagonia provides cycle locks for those who commute by bicycle.

Similarly, creating daycare facilities and offering flexible working hours can ease the stress borne by employees who have children.

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