5 Imperatives for a Sustainability Program

Many entrepreneurs have deliberately started “green businesses” to capitalize on the demand for goods
or services that are seen to be environmentally-preferable. However, many CEOs and leaders of small,
growing businesses regard Sustainability something that would be nice to do – some day. Here are five
drivers that make Sustainability a business imperative for any company.

1. It’s the law. Sustainability’s three focus areas are environmental, social/ stakeholder, and a broad
array of economic parameters – the origins of the “triple bottom line” reporting concept for
Sustainability. Most companies are subject to regulatory requirements for some aspects of
Sustainability, including safety (OSHA), environmental regulations (EPA or state counterparts) and
privacy (HIPPA). The U.S. EPA and has embarked on a program to regulate greenhouse gas (GHG)
emissions; even if Congressional challenges postpone or derail these regulations, California is going
ahead with it. Dodd-Frank Conflict Minerals (DFCM) addresses sourcing of four metals critical in
electronics, toys, packaging and other products. This new rule is a component of a financial reform
bill, and requires publicly-traded companies to investigate the origin of these metals and make
certain disclosures accompanying their financial filings. Many cities have ordinances for green
buildings, reducing water consumption, landscaping, access to public transportation, living wages,
and other matters that require compliance programs and/or reporting. Several European countries
require publicly-traded companies to submit Sustainability reports. The trend is certain to continue;
it is difficult to find any regulation removed from the books, but it is easy to cite dozens that have
been added.

2. Industry standards require it. Most industries have developed their own codes of conduct,
standards, or programs. These standards have been developed to avoid or reduce the impact of
regulation, to inspire confidence in the industry, or in response to high-profile incidents. The
Electronic Industry Citizenship Coalition has established the EICC Code of Conduct as operating
principles for their companies and suppliers. Responsible Care was developed by the American
Chemistry Council and has been adopted by the International Council of Chemical Associations. The
Toy Industry Association has developed a Member Code of Conduct that addresses product safety,
ethical manufacturing, environmental protection, non-discrimination, and other factors.
Manufacturers of video game consoles are affected by all three of these – and likely more.

3. Customers demand it. Customers are expanding contractual provisions into more areas that go
beyond product quality and price. U.S. automakers began requiring their suppliers to have a
certified Environmental Management System in the early 2000s. Nike, the Gap and Apple are
among companies that have raised the bar in their supply chains after well-publicized incidents.
Wal-Mart has a sustainable supplier initiative; their performance standards may appear “voluntary”,
but they wield their clout to induce improvements in their supply chain. The recent tragic fire at an
apparel manufacturer in Bangladesh will focus attention on supply chain working conditions again.

4. Your peers are doing it. Sustainability programs that go beyond basic regulatory compliance are
now commonplace. Motion-sensor light switches, programmable thermostats, recycling of paper,
ink cartridges and beverage containers are standard fare. The most engaged and innovative talent is
interested in Sustainability; your program is a factor in appealing to this talent. It is also common to
incorporate Sustainability concepts into design, manufacture, and marketing of products and
services. As of December 2012, there are over 400 eco-labels in nearly 200 countries and 25
industry sectors.

5. Your business is more efficient and effective. There may be different departments or people
responsible for compliance, industry standards, and customer relations. Sustainability issues are
often not the primary driver, and therefore, are not their primary concern. Sustainability activities
often arise from individuals’ ideas. While this can be motivating to some employees, it can result in
some employees focusing on their pet issues without regard to feasibility or relevance to the
organization. Sustainability’s three focus areas are broad, such that the relevant aspects of it vary
from company to company. Managing Sustainability as a business issue can identify commonalities,
gaps, trends, and opportunities across the organization. It also builds Sustainability competence in
designated individual(s) and leverages other functional groups (Operations, Marketing, etc.) to
concentrate on what they do best.

These imperatives for a Sustainability program apply to organizations large and small, mature and
growing. Applying business principles to Sustainability issues can reduce confusion and risks, and can
help contribute to your success.

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