Embracing the Future, the Next Big Step for Business

During the four-day break last month, many students missed the wonderful opportunity to participate in a landmark event just to our north at Dartmouth’s Tuck School of Business. It was there that the second annual Business Sustainability Initiative conference took place on February 27, 2004, which was co-hosted by Tuck and Dartmouth’s Thayer School of Engineering. Members of the business community, students from area schools and members of the non-profit sector participated in the landmark event. The purpose of the conference was to explore the many advantages of pursuing and promoting sustainable development (SD) practices in business.

The day started with a morning keynote address from Steve Percy, former Chairman and CEO of BP America. In his address, Mr. Percy discussed SD as a competitive advantage. He went into depth about how BP embraced sustainable practices, in particular with its Beyond Petroleum program. His address touched on the many important aspects of these practices.

SD is not just an attempt to research cleaner fuels in order to launch a public relations campaign, but instead to directly affect the all-important “triple-bottom line” of social, human and economic returns. This “triple-bottom line” is upon which businesses will, more and more, have to measure their success. This approach will mean addressing the issue of making globalization beneficial to all mankind, not just citizens of developing nations. It also means protecting biodiversity, maintaining fragile ecological systems, thinking of goods in more cyclical models and safeguarding scarce resources needed by all people.

He outlined the many advantages that accrue to a corporation which quickly addresses these issues, which the world is being increasingly forced to face. These advantages are being able to set the standard at what you already can do, generating trust with different parties and the public, being at the table when policy changes are discussed (BP participated in the Kyoto Protocol discussions), and getting a head-start on the next technology. BP’s pursuit of these advantages began in 1997 when it first launched its “Beyond Petroleum” initiative. In doing so, it took a bold move to admit that the product (fossil fuels) was part of the problems (pollution, climate change, etc.). Because BP took this landmark initiative, Perry stated that the company was in a better situation to seek the aforementioned advantages.

The next part of the day was split into panels. A total of five panels were organized for participants. The first pair were the “Microfinance” and the “Greening the Supply Chain” panels. HBS’s own Professor Michael Chu discussed the importance of microfinance to meet the financial needs of citizens in developing countries and how to invest in them and receive substantial returns. The remainder of the microfinance panel included David Satterthwaite of Prisma MicroFinance and Bernard Sheahan of the International Finance Corporation (IFC).

The “Greening the Supply Chain” panel involved discussion on how to promote SD practices throughout the supply chain. Linda Darveau of the Boston regional Environment Protection Agency (EPA) office discussed the EPA’s efforts to promote compliance among smaller suppliers in the beginning links of manufacturing supply chains. Paul Ligon of Waste Management discussed how his company was transforming from a waste disposal company to an efficiency and waste solution provider. Martin Brown of PriceWaterhouseCoopers discussed his firm’s SD practice and the challenges he has faced by being a member. Tom Votta of the Tellus Institute discussed how his firm is beginning the process of changing the way suppliers provide tools by going through a “dematerialization” process in which services, not hard assets are provided to the customers.

The next pair of panels was titled “Challenges to Sustainable Development” and Partnerships.” In the “Partnerships” panel, Ken Alston of GreenBlue (a company that provides intelligent design for sustainable systems), Gary Boyd of International Paper, Jason Coccia of the Conservation Fund and Harvard’s own Iqbal Quadir of the Kennedy School of Government, all discussed how partnerships can be created for SD promotion.

In the “Challenges” panel, Duncan Austin of the World Resources Institute started by discussing how business practice is starting to include the reporting of SD procedures in the company’s operations. This, of course, reflects the understood importance of the aforementioned “triple-bottom line.” To follow-up, Doug Cogan of the Investor Responsibility Research Center (an independent research firm) then discussed findings in his firm’s reports on the state of climate change and introduced a 14-point list against which companies can be measured. Allen White of the Tellus Institute continued the discussion by emphasizing the importance of this new reporting paradigm that businesses need to uphold and investors need to demand. Finally, the panel included Deborah Zemke, Ford’s Director of Corporate Governance, who went into deep detail on Ford’s SD practices and some of the pitfalls that the company has faced.

Each of the panel members echoed a few recurring themes: the situation is dire, the United States is behind many developed nations with respect to the implementation of cleaner technologies, and the consumer is as responsible for promoting cleaner technologies as is corporate America.

Each of the panelists discussed America’s desire for goods that harm the environment, such as gas-guzzling SUVs.

The afternoon keynote was delivered by Douglas Devries, Senior Vice-President at John Deere. Devries discussed some of the things that his company has done to promote SD and employee health. John Deere has developed equipment that uses soybean oil as fuel, has established a new state-of-the-art eco-friendly facility in India, has developed cross-teams consisting of hourly and salaried workers to form committees on workplace safety, recycles scraps at one facility to use at another, and has developed a hydroponic roof that treats rainwater for use at its facility in Germany. Devries mentioned how his company did not actually pursue these developments because of a sustainable strategy, but because it was “the right thing to do.”

The day ended with the final panel which discussed stakeholders’ views on sustainability. It featured the re-appearance of Professor Chu and Allen White and also included Ronald J. Alsop of the Wall Street Journal. The panelists summarized the discussions of the day by exploring how SD is paramount in the need of businesses to serve all stakeholders (not just shareholders).

Of course, the conference was a powerful statement for what we all know is obvious: sustainable development practices are necessary for businesses and their consumers in order to serve society effectively and show returns on the “triple-bottom line.” As future business leaders of the world, going forward, the students at Harvard Business School would be wise to strongly consider such practices. The effects of not doing so are too harsh (climate change, pollution, lack of fresh water, etc.). In addition to our roles as business leaders, we can also start proper practices as consumers. We as leaders should be the first to demand eco-friendly goods and to recycle, instead of waiting to follow others.