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28/08/2019

Inside Out: Sustainability Communication Begins in the Workplace

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 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.

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.

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." 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.

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.

Source: https://www.greenbiz.com/news/2005/07/31/inside-out-sustainability-communication-begins-workplace

21/08/2019

The Nobel Prize for Climate Catastrophe

The economist William Nordhaus will receive his profession’s highest honor for research on global warming that’s been hugely influential—and entirely misguided.
By Jason Hickel - December 6, 2018

Many people were thrilled when they heard that the Nobel Memorial Prize in Economics this year went to William Nordhaus of Yale University, a man known for his work on climate change. Finally, the economics profession is giving climate the attention it deserves, just as the world is waking up to the severity of our ecological emergency. Media outlets have taken this positive narrative and run with it.

But while Nordhaus may be revered among economists, climate scientists and ecologists have a very different opinion of his legacy. In fact, many believe that the failure of the world’s governments to pursue aggressive climate action over the past few decades is in large part due to arguments that Nordhaus has advanced.

It’s a blazing controversy that hinges on the single most consequential issue in climate economics: the question of growth. The stakes couldn’t be higher. After all, this isn’t just a matter of abstract academic debate; the future of human civilization hangs in the balance.

In the 1990s, Nordhaus invented the first integrated assessment models to explore how economic growth affects carbon emissions, and how climate change in turn affects economic growth. The basic mechanisms that Nordhaus described continue to inform the models that the Intergovernmental Panel on Climate Change (IPCC) uses today. No one disputes that this qualifies as a significant contribution to the field. The question, rather, has to do with how Nordhaus has used his models to argue for a particular policy agenda.

The models showed that if we were to rapidly reduce carbon emissions in line with what scientists say is necessary to avoid climate breakdown – by putting a high tax on carbon, for instance – it would significantly slow down the rate of economic growth. As far as scientists are concerned, that’s not a problem; we should obviously do whatever it takes to avoid climate catastrophe. But for economists like Nordhaus, this is not acceptable. After all, the whole point of neoclassical economics is to do whatever it takes to grow economic output.

So, Nordhaus’ career has been devoted to finding what he calls a “balance” between climate mitigation and GDP growth. In a famous 1991 paper titled “To slow or not to slow,” he argued firmly for the latter option: Let’s not be too eager to slow down global warming, because we don’t want to jeopardize growth.

To justify this conclusion, Nordhaus manipulates what is known as the “discount rate,” which is how economists value the costs of climate breakdown in the present as compared to the future. It might sound arcane, but it’s really quite straightforward. A discount rate of zero means that future generations are valued equally to the present; a high discount rate means that future generations are valued less, or “discounted,” compared with nearer generations.

Nordhaus prefers a high discount rate—very high. Discounting the future allows him to argue that we shouldn’t reduce emissions too quickly, because the economic cost to people today will be higher than the benefit of protecting people in the future. Instead, we should do the opposite: Focus on GDP growth now even if it means locking in future climate catastrophe. This is justifiable, he says, because future generations will then be much richer than we are and therefore better able to manage the problem.

Using this logic, Nordhaus long claimed that from the standpoint of “economic rationality” it is “optimal” to keep warming the planet to about 3.5 degrees Celsius over preindustrial levels—vastly in excess of the 1.5 degrees Celsius threshold that the IPCC insists on.

It sounds morally problematic and flies in the face of scientists’ warnings, but economists and policymakers have lined up behind Nordhaus’s argument. They like it because it gives them license to carry on with the status quo and delay difficult decisions. President Trump, for instance, has been aggressive in his preference for growth over climate action. This is in large part what explains the fact that nearly 30 years after the first IPCC report was published, global emissions are still going up. It also helps explain why even with the Paris climate agreement in place, and with all of the plans promised by the world’s governments, we’re still headed for about 3.3 degrees Celsius of warming. It’s all eerily similar to the Nordhaus trajectory.

So how do economists get away with believing that these extreme temperatures are somehow okay? Because the Nordhaus model tells us that even the worst catastrophes will not really hurt the global economy all that much. Maybe a percentage point or two at the most, by the end of the century—much less than the cost of immediate action.

How do they figure this? Because if climate breakdown ends up starving and displacing a few hundred million impoverished Africans and Asians, that will register as only a tiny blip in GDP. After all, poor people don’t add much “value” to the global economy. The same goes for things like insects and birds and wildlife, so it doesn’t matter if global warming continues to accelerate mass extinction. From the perspective of capital, what most of us see as tremendous ethical and even existential problems literally don’t count.

What is more, Nordhaus reasons that the sectors most vulnerable to global warming—agricultural, forestry, and fishing—contribute relatively little to global GDP, only about 4 percent. So even if the entire global agricultural system were to collapse in the future, the costs, in terms of world GDP, would be minimal.

These arguments obviously offend common sense. And indeed, scientists have been quick to critique them. It’s absurd to believe that the global economy would just keep chugging along despite a collapse in the world’s food supply. And mass extinction of species poses a very real threat to the web of life itself, on which all of human civilization depends. Plus, Nordhaus doesn’t factor in the possibility of feedback loops that could kick in—Arctic methane release, ice-albedo feedback, and others we can’t yet predict—pushing us way beyond 3.5 degrees. No amount of wealth would be enough to help future generations navigate such a total system collapse.

So, what if Nordhaus turns out to be wrong? What if extreme global warming destabilizes our civilization and collapses the economy? The Stern Review, for instance, predicts annual GDP losses could be up to 20% per year. If this happens, then we’ll get the worst of both worlds: Future generations will be poorer, and they’ll end up locked in a hothouse Earth. It’s a dangerous gamble with the future of humanity— and the risks are so deadly as to be beyond the power of imagination.

Strangely, in what seems a bizarre coincidence, Nordhaus was announced as the winner of the Nobel Prize on the very same October day that the IPCC published its latest report on climate change. The report is the United Nations’ most urgent yet: It calls for the world to cut emissions in half by 2030, and get to net zero by the middle of the century. While Nordhaus has spent most of the past four decades calling for gradualism to preserve the conditions for economic growth, the IPCC calls for radical and immediate action in order to preserve the conditions for life. Growth versus life. The conflict between economics and science has never been clearer.

In recent years Nordhaus has softened his views somewhat, arguing for a higher carbon tax than he has in the past, even if still much lower than what the IPCC calls for. But his overall position in this debate remains clear. When news of his prize was announced, he admonished his students: “Don’t let anyone distract you from the work at hand, which is economic growth.”

Can’t we have it both ways? Can’t we have economic growth and stay under 1.5 degrees Celsius? Well, that might have been possible a few decades ago, but it’s too late now—we put off the energy transition for far too long, thanks to Nordhaus and the prophets of postponement. The IPCC is clear that we need to completely decarbonize the global economy by the middle of the century. If we continue growing on our present trajectory, the economy will nearly triple in size during that same period. It will be difficult enough to decarbonize the existing global economy so quickly—it’s virtually impossible to imagine doing it three times over.

We need to throw everything we have at the problem. We need massive mobilization, reminiscent of the wholesale industrial retooling that took place during World War II, to churn out solar panels and wind turbines at an unprecedented rate. Right now, the United States installs about 16 gigawatts of clean power each year. That rate needs to increase more than twelvefold, and it needs to happen immediately. Other countries face a similar challenge.

It is certainly possible. But we’re nowhere near on track—not even close. So why would we make this challenge three times harder for ourselves? Why would we choose to fight this battle facing uphill?

All of this leads us back to a more fundamental question. Economists such as Nordhaus insist that perpetual GDP growth is necessary for human welfare. Three decades of delaying climate action have been justified on this principle. But is it even true? Is GDP growth really our only option?

Remarkably, Nordhaus—like most orthodox economists—has never bothered to consider this question. The growth-is-good mantra is so baked into our consciousness that to question it seems almost crazy. Indeed, growthism is hegemonic to the point of transcending ideology. Politicians on the left and right alike hold it up as the single most important policy objective; they may quarrel about how to make growth happen, and how to distribute its yields, but on the question of growth itself there’s no daylight between them.

This is starting to change. In recent years, ecological economists have been staking out an alternative vision. We will have a much better chance of accomplishing our climate goals, they say, if rich countries abandon their pursuit of GDP growth. And if we do it right, we can not only protect human well-being but even improve it. Liberating ourselves from the growth imperative may be our best shot at flourishing through the 21st century.

It’s a staggering idea—and could be a complete game-changer. But what would a post-growth economy look like?

The first step is to realize that high levels of GDP are in fact not necessary for high levels of human well-being. True, social indicators are generally correlated with GDP per capita, but it’s a saturation curve: Past a certain point, more GDP adds little to human well-being. Take the United States, for example. In 1975, America’s GDP per capita was only half its present levels, in real terms. And yet wages were higher, happiness levels were higher, and the poverty rate was lower.

Even more interestingly, some countries have high levels of human development with relatively low GDP per capita—and we the United States can learn a lot from them. Europe’s GDP per capita is 40 percent less than that of the United States, and yet it has better social indicators in virtually every category. Costa Rica has higher life expectancy than the United States and happiness levels that rival Scandinavia, with one-fifth of America’s GDP per capita.

How is this possible? It all comes down to distribution. In 1975, America gave a greater share of national income to workers than it does today. And Europe invests more in social goods like public health care and education than the United States does. This raises the question: If Europe can outperform the United States with significantly less income, then does the American economy really need to keep growing?

If human welfare is what we’re after, growth certainly isn’t the most efficient way to get there. Rich countries already have more than enough—the problem is that it’s all locked up at the top, where it contributes almost nothing to people’s well-being. There is another way. We can improve people’s lives right now, without any additional growth at all, simply by distributing existing income more fairly. In fact, there’s no a priori reason why the United States couldn’t scale down particularly destructive output (beef, McMansions, SUVs), reducing total energy demand and making the energy transition significantly easier, while at the same time outperforming Europe on social indicators.

If we think about the growth conundrum from this angle, then it comes down to a much more obvious choice: between living in a more equitable society, on the one hand, and risking climate catastrophe on the other. I imagine that most people would have little difficulty choosing between the two.

Of course, one might change tacks and argue that growth is the only way to mobilize the financial resources necessary for the energy transition, and the only way to get the technological innovation we need in order to make our economies more efficient. Indeed, this is a key part of Nordhaus’s argument.

But it doesn’t make sense to grow the GDP and just blindly hope that it will end up invested in solar panel factories. If that’s how the Allies had approached the need for tanks and aircraft during World War II, the N***s would be in charge of Europe right now. On the contrary, this kind of mobilization requires government policy to guide and direct existing financial resources.

And if the objective is to achieve specific kinds of technological innovation, it makes more sense to invest in those directly, or incentivize innovation with targeted policy measures, rather than to grow the whole economy indiscriminately and pray for a specific outcome. Think about it: Is it really reasonable to grow the plastics industry, the timber industry, and the advertising industry in order to get more efficient solar panels? Does it really make sense to grow dirty things in order to get clean things? We have to be smarter than that.

Over and over again, it turns out that economists’ insistence on the necessity of growth is strikingly under-justified. People like Nordhaus are ready to risk everything—literally—for the sake of something that we don’t really even need.

Would there be political support for a post-growth agenda? Most politicians assume the answer is no. They assume that people want growth, which is why that’s virtually all they ever talk about. But they haven’t looked at the data. A striking new poll from Yale’s Program on Climate Change Communication shows that 70 percent of Americans believe that environmental protection is more important than growth—and this is true even in deeply Republican states. Another poll has found that 70 percent of people in middle- and high-income nations believe that overconsumption is putting our planet and society at risk. Similar majorities also believe that we should strive to buy and own less, and that doing so would not compromise our well-being.

These are remarkable results. And they confirm what decades of research in anthropology and psychology has been telling us: that to most people what matters is having good health, intimate relationships, meaningful work, access to nature, time to spend doing what they love, and—increasingly—an ecology that is stable and safe for themselves and their children. The good news is that, at least in high-income countries, we don’t need growth to deliver these things.

We are at a crossroads. Nordhaus, and many world leaders, remain wedded to the obsolete dogmas of the last century. But scientists are clear that this is no longer good enough – and the rest of the world is ready for something better.

Source: https://foreignpolicy.com/2018/12/06/the-nobel-prize-for-climate-catastrophe/

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