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Sustainability reporting has gone mainstream. But in their haste
to affirm a commitment to environmental and social responsibility,
some corporations may be neglecting their homework. A case in point
is Ford Motor Company's rocky road toward credible corporate sustainability.
William Clay Ford Jr., a self-described environmentalist, became
chairman of the company in 1999 and CEO in 2001, publicly proclaiming
his intention to lead a green industrial revolution. After initial
widespread praise, several environmental groups have criticized
the company strongly for not making better progress. Ironically,
recent profiles of Ford's environmentalism have identified resistance
within Ford Motor Company as the greatest obstacle to the automaker's
pursuit of sustainability.
This article makes a case for working "inside out," that is, engaging
employees in the design, adoption and promotion of a worthwhile
sustainability program before significantly communicating the commitment
to the outside world. We envision this as a three-step process:
- First, define what sustainability means to the company and articulate
a value proposition—how sustainability drives business value.
- Second, work with employees to interpret sustainability in terms
of their job functions, and to frame a comprehensive communications
strategy.
- Third, implement and continuously refine the strategy using
various communication channels, including a sustainability report.
Aligning the organization prior to extensive external communications
provides a firm foundation for building credibility and realizing
shareholder value.
From Vision to Value Proposition
There can be no "cookie cutter" approach to designing a sustainability
program because the issues confronting each company can vary enormously.
With few regulations governing sustainable practices, companies
have great discretion—and opportunity—in choosing what
issues to emphasize.
A number of leading companies are aligning their sustainability
programs with their business strategies and core competencies. For
example, 3M has focused on introducing life-cycle thinking into
product innovation. Kimberly-Clark has focused its sustainability
efforts, in part, on developing health and hygiene products that
promote social well-being. BASF, a chemical company, has analyzed
alternative product technologies in terms of their impacts on customers
and end users.
Most companies begin with a vision statement involving the three
aspects of the "triple bottom line"—social, economic and environmental.
Composing vision statements is relatively easy; the details, however,
become more challenging. Sustainability can seem daunting, with
its long time horizon and breadth of scope ranging from social equity
to biological diversity. The three aspects of the triple bottom
line are intertwined and should be addressed in an integrated manner—environmental
protection improves quality of life, which supports economic development,
and so forth. But how does sustainability create business value?
Recently the Global Environmental Management Initiative (GEMI)
developed a "Value Flow" model that supports the development of
a value proposition. The model, illustrated in Figure 1, identifies
three main pathways for sustainability to add shareholder value:
- Contribute directly to improved economic performance, e.g.,
by generating revenues from waste materials, increasing worker
productivity, improving business continuity, increasing asset
utilization or enabling access to new markets.
- Contribute directly to key intangible value drivers that that
do not appear on financial statements. Examples include improving
the customer experience, reducing cost of ownership, enhancing
brand equity and reputation, supporting supply chain partnerships
and stimulating innovation.
- Contribute indirectly to shareholder value by creating value
for external stakeholders, including communities, public interest
groups and regulatory agencies. Positive stakeholder perceptions
influence intangibles such as company reputation, relationships
and license to operate.
| Figure 1: The GEMI Value Flow Model |
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One example of a carefully crafted value proposition that combines
these pathways is found in Motorola's 2003 Global Corporate Citizenship
Report. It begins with a statement about how the company creates
business value for customers and shareholders, and then continues
to address value for other stakeholders and society at large:
"As a global corporate citizen, Motorola creates products and
technologies that benefit society by making things smarter and life
better for people around the world. We are dedicated to operating
ethically, protecting the environment and supporting the communities
in which we do business. We are guided by our Code of Business Conduct,
which is based on our key beliefs of uncompromising integrity and
constant respect for people."
Herman Miller, Inc., a leading office furniture manufacturer,
has found that one of the greatest benefits of a well-conceived
sustainability program is improvement in employees' pride and well-being,
which translates into reduced turnover, increased productivity and
more effective recruitment. According to Paul Murray, corporate
environmental affairs manager, "Herman Miller engages over 400 employee-owners
in daily efforts to reduce and ultimately eliminate the company's
environmental footprint by 2020. Our dual commitment to business
and environmental performance, supported with effective communications,
enhances our market position, enables us to attract and retain caring
and talented employees, and ensures our ability to positively and
profitably impact the environment."
Rethinking Sustainability Communications: Inside Out
So why are internal communications often neglected? Perhaps because
most of the pressure for sustainability comes from the outside.
A 2002 PricewaterhouseCoopers survey of 140 large U.S. companies
revealed that 75 percent had either issued a sustainability report
or were planning to do so, largely because they wished to enhance
their reputations and gain advantage in the marketplace. The proliferation
of non-financial reporting—from a handful of environmental
reports in the early 1990s to thousands today with diverse agendas—has
been due largely to external drivers. These include the rising number
of socially responsible funds, indexes and analyst services; an
increase in investor activism and shareholder resolutions; targeted
attacks by NGOs; and the persistence of controversial global issues,
such as global warming and business ethics.
This outward focus may be diverting attention and resources from
what is arguably the most important audience—employees. "Human
capital" has been identified as one of the top 10 factors driving
the market valuation of corporations around the world. Yet the sustainability
messaging directed at employees often has much lower priority than
the development of a public report. As a result, many employees
might not understand sustainability and might be cynical about its
benefits and authenticity. Naysayers might view it as a distraction
from job one, which is to maintain profitability. And external observers
may view the company's public statements as "greenwashing."
Getting one's internal "communications house" in order before investing
heavily in external communications offers many benefits:
- Greater impact by channeling communication through employees
who have established credibility with key internal and external
stakeholders.
- Clearer understanding by all stakeholders due to consistent
messaging.
- Cost effectiveness of integrating sustainability messaging
into existing communications budgets, channels and vehicles.
- Greater internal understanding and commitment, thus leveraging
the entire workforce in the pursuit of strategic value creation.
Of course, the success of any communications campaign depends
on the intended audience's interest in the subject. Do employees
really care whether their companies practice sustainability? There
are good indications that they do. For example, a 2004 Workplace
Index Survey of US office workers under 55 years old, conducted
for Steelcase by Opinion Research, found that 77 percent would prefer
that their employers purchase environmentally responsible products.
How can a company engage its employees in realizing the value-creation
opportunities it has identified in its sustainability value proposition?
It all begins with a strategic communications approach and a cross-functional
core team that includes corporate communications, environmental
health and safety (EHS), human resources, investor relations and
others. The core team should create a specific value proposition
as a "strawman" and disseminate it throughout the company for discussion
and refinement.
Five Key Principles
The following principles are fundamental to an effective internal-communications
program.
1. Find the linguistic common ground
One of the first barriers many companies encounter is the lack
of a shared understanding. What does "sustainability" mean? The
term has become ambiguous and is often confounded with other buzzwords
such as "citizenship" and "responsibility." Basing a communications
strategy on a poorly defined or overly broad concept can confuse
the audience and create unrealistic expectations.
So how can one find the linguistic common ground? Search for language
that resonates with employees, define it clearly, and above all,
use frequent and consistent messaging. Be certain that the language
chosen is interwoven with the company's branding messages and business
objectives so that employees see it as an integral business commitment
and not just a pasted-on, short-lived initiative.
An example of an effective definition that speaks the corporate
language comes from Abbott Laboratories, one of the world's largest
pharmaceutical companies. Abbott terms its commitment "Global Citizenship,"
and describes it as reflecting "how we make a productive contribution
to society in the way we advance our business objectives, engage
our stakeholders, implement our policies, apply our social investment
and philanthropy, and exercise our influence." Reeta Roy, Abbott's
divisional vice president for global citizenship and policy, lends
some perspective to this definition: "After numerous internal conversations
and considerable external benchmarking, we ultimately arrived at
a business-driven definition of what global citizenship means at
our company. It's not an add-on, but a dimension of management that
helps us make a fundamental impact on society through the practice
of our core business."
2. Take your position
Once a suitable definition has been chosen, it's time to borrow
a page from the marketing department and create a "positioning statement"
that describes how you wish to be perceived—"the core message
you want to deliver in every medium, including elevators and airport
waiting areas, to influence the perceptions of your service." The
positioning statement is an extension of the value proposition and
formalizes the language around key principles such as what the commitment
is, who should be concerned with it, the advantages of sustainability
over conventional business practices, and what benefits will accrue
to society, the company and the individual.
Think of the positioning statement as the "DNA" for an organization's
communications efforts, around which a consensus for communications
can be reached. It is capable of evolving to fit training programs,
publications, marketing brochures or Web sites. Getting it right
can pay huge dividends in keeping sustainability messaging consistent
and on point. One example of an effective and thorough positioning
effort is the internal communication campaign developed by the environmental,
safety, health and security group at Wrigley. The campaign includes
expressions of the positioning statement both graphically and verbally,
in terms aligned with the company's overall branding and strategy.
(See inset: Strategic Internal Communication at Wrigley.)
3. Become "multilingual"
Starting from the linguistic common ground, become conversant
in the "languages" of other functions: human resources, purchasing,
investor relations, sales and marketing, governmental relations,
etc. Translate the general messaging into the discourses familiar
to each function, thus conveying the value proposition to those
who will take ownership and continuously improve corporate performance.
The concept of multilingualism can help the company as a whole
better translate the value to both internal and external stakeholders.
For example, the investor relations person who interfaces with various
rating firms and indices can be a valuable translator for executives
or shareholders. She can relate how the company's commitment to
sustainability helped earn a Triple-A rating from Innovest, which
in turn attracted the interest and praise of a number of socially
responsible financial analysts and investors.
4. Leverage the "multiplier effect"
At the core of the inside-out approach is the "communications
multiplier effect" (see Figure 2). Sustainability efforts are typically
spearheaded by a relatively small corporate team whose reach, credibility
and influence are limited. The "silo mentality" persists in many
companies, with organizational units remaining territorial and highly
focused on their specific missions. They may be skeptical of messages
emanating directly from the corporate sustainability team.
| Figure 2: The "multiplier effect" in sustainability communications |
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Instead, it is more appropriate for sustainability communications
to flow through internal gatekeepers who are familiar and credible
to the intended internal and external audiences. In this way, the
core team can spread the message seamlessly and cost-effectively,
using existing and trusted communication channels.
Another example of the multiplier effect is the environment, health
and safety communication program at 3M, which uses newsletters,
award programs and continuous messaging to maintain employee awareness.
The company's perennial 3P (Pollution Prevention Pays) program,
launched in 1975, encourages employees to devise hundreds of value
creation projects that have yielded over $1 billion in first year
savings. According to Keith Miller, Manager of Environmental Initiatives
and Sustainability, 3M views it 67,000 worldwide employees as ambassadors
to external communities and recently launched a Six Sigma project
to improve facility stakeholder engagement practices globally.
Thus, by leveraging existing communication networks, a company
can achieve organic growth in the understanding and acceptance of
sustainability. This not only helps to instill a sustainability
mindset and foster effective external communications, but also empowers
employees to incorporate the sustainability value proposition into
every facet of the company's operations.
Finally, the multiplier effect makes communications efforts highly
cost-effective. Most corporate sustainability teams do not command
sufficient communications budgets to reach all critical stakeholders.
By focusing on strategic internal gatekeeper communications, the
team will have far more impact per dollar than by trying to communicate
directly with each of the target audiences.
5. Plan for the long haul
In applying the above concepts, the core team should draft a flexible
strategy that can evolve over the years to both support and improve
the sustainability value proposition. Too often, companies engage
in ad hoc, fragmented communications practices that can not only
squander resources, but also send harmful mixed messages. Every
plan should follow some common steps.
- Make sure the objective of the program is clearly defined at
the start.
- Perform due diligence by gaining an understanding of your audience's
knowledge of and receptivity to your topic and how the value proposition
applies to them.
- Refine your general objective into measurable communications
goals.
- Consider what communications vehicles already exist or can
be cultivated in order to pursue specific tactics, such as training
programs, presentations, brochures, reports, etc.
- Measure the results of the tactics employed, and continuously
refine the strategy.
Conclusion
No company can claim that it has reached sustainability—it
is a journey toward distant aspirations that requires patience and
a commitment to continuous improvement. For a sustainability program
to be credible and successful, the alignment, engagement and enthusiasm
of employees—both managers and the workforce—are absolutely
essential. An internal-communications initiative should be designed
to present the value proposition clearly at many levels—the
individual, the department, the business and the enterprise. Once
employees become energized and engaged, companies can realize the
business value of sustainability and the power of the communications
multiplier effect.
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