Corporate Greening Strategically Important to Chief Communicators in American C-Suites
Three American events in the first decade of the 21st century turned a lengthy discussion about climate change into an all-out war effort. A catastrophic storm ended a science debate. National elections put green activists back in charge of Congress. And the communications skill of an ex-Vice President of the United States won public attention, a Hollywood Oscar and a Nobel Prize. By 2007, with hurricane Katrina providing the push for scientific rationales, a Democratic Congress taking up federal legislative reins, and Al Gore providing the arousing message of global warming peril, a warring drive to constrain carbon emissions was well under way. Congress has begun enacting laws to limit sources of airborne carbon dioxide emissions, beginning with a law aimed at automobiles made in America, and to encourage lower-impact technology, energy use and fuel sources.
The unfolding carbon war story now involves American business reactions and interactions. It is about how companies get involved in sociopolitical issues, how they become allies of one another in a common cause, how they relate to their respective stakeholders, with government at many levels and with those who in previous and different circumstances have been adversaries. In short, the business-side story and the focus of Corporate Greening 2.0 is how C-suite executives are managing and communicating their climate change and corporate sustainability commitments and strategies.
This is an intriguing story as well as familiar territory for me, plugged into my counseling on environmental, energy and sustainability issues at the corporate level. My interest in going green which is now going sustainable goes back many years, beginning with my work with chemical industry executives in response to Rachel Carsons Silent Spring. That was in 1962. My job as vice president/public affairs at Freeport Sulphur Company in New York (now Freeport-McMoran in New Orleans) subsequently kept environmental issues on my plate both in Washington, DC and in our mining and chemical operations. That was followed by a counseling career focused on environmental and energy issues, working inside more than 50 corporations with senior environmental and engineering people as well as with CEOs and public relations officers. By founding EnviroComm International in 1992, I was able to expand my work and that of my very capable, green-specialized team to Europe, South America, Asia and Scandinavia. A somewhat rigorous learning experience, working out strategies and solutions alongside the finest minds in the business community, continues and gives me a real-world, reliably informed perspective to approach climate change and sustainability communications.
Much has happened since I went with a business delegation to the Rio earth summit in 1992, came back and wrote Going Green. Environmental and energy management is operational in most companies. Green issues remain but progress is quantifiable. Despite any rhetoric to the contrary, the American business community has over the past two decades led the world in innovations that deal with green challenges in an advanced economy. In 2005, on a 14-day corporate environmental group visit to China, where we met with government, university and business leaders, I understood very clearly how far nations with growing economies and unresolved environmental and energy challenges will have to go to get to the place American corporations are now in managing such challenges.
Now, the involvement of American business in the sociopolitical, socioeconomic test of climate change is under way and business leaders are rising to meet it. If the past is any guide, our nations business executives and senior level communicators will influence favorable, win-win outcomes, handling challenges to society and to business in ways that will instruct their counterparts as well as policy makers in other countries. The corporate sustainability goal will be economic and social compatibility. The strategies must be worked out within each company, mindful of respective markets, stakeholders and business plans. All this has stimulated my rethinking of green accountability, and resulted in this book. Here are my observations at this stage:
The need for a concept such as corporate sustainability derives from the interaction of environmental and energy performance with financial performance.
Sustainability started in the 1980s as a national policy idea. It meant keeping environmental and economic options open for future generations in all countries. At the 1992 United Nations Earth Summit, in which I participated as part of the American business delegation, sustainable development was the key topic. Nature and environment were the key drivers. Now its moved to the top of corporate agendas and energy has made it the hot topic. Climate change— essentially, public awareness and government action on global warming— has added carbon constraint to managements obligations in pollution control and has changed the energy equation.
Arguably, this is the most potent sociopolitical fusion confronting corporate America. It drives the question from stakeholders: is this business, adjusted for climate change, sustainable? For some companies, the climate-change-carbon-war dynamics set up potentially depleting financial implications; for others, lucrative opportunities. For all companies, the concept of sustainability and the necessary adjustment to the reality of constraining carbon emissions are requiring management to give serious thought to a comprehensive strategy on climate change, to minimize risks and to zero in on ways to beat competitors.
A company faces several levels of risk in the focus on climate change and sustainability.
The successful company now has to deal with the prospect of new cost and requirement factors that adversely affect financial performance, implications that are adverse to the companys employee and external stakeholder relationships, and — running through all of these in an important, high-level manner — corporate communications factors that are different from whats gone on before.
On the other side of the coin are potential rewards.
Thats the business-critical side of the story for any company operating in the U.S. or anywhere else in the world — the gold or economic benefit in this new level of socially sensitive greening. Companies are and should be moving into sales mode because of new demands and the support or underwriting provided by government as it encourages less carbon use and more energy inefficiency. For example, government money is helping to make hybrid transportation, energy-efficient buildings, alternative fuel and energy generation more affordable to customers, some of whom are under pressure from their customers or local citizens to move into sustainable products and methods.
The company must communicate both economic accountability and social accountability.
Management always must do what it takes to sustain its economic viability. Financial performance and engagement with the financial community are job one because without it, nothing else, including social performance is achievable. First-order work for companies is a communications strategy that has a strong focus on investor relations, government relations, and all the communications that not only assure compliance with disclosure reporting rules but also assure the company is as rationally and agreeably aligned as possible with the stakeholders who are continually deciding whether or not to affirm company management.
Social accountability is similarly important and now, with global warming as a massive central issue, it cries out for expert corporate communications.
Sustainability deals with emotional and social matters that may or may not be focused on investment return. This has been cast for a long time as the soft side of company attention. Im not sure now how soft it is. The hard fact is that because of extremely high public awareness, concern and even potential outrage thats being generated by climate change or global warming (and Id have to say because of an unresolved confusion about carbon emissions causes and effects) corporate communicators are into, and headed for more, challenges in the companys ongoing dialogue with stakeholders. Customers, people in the supply chain, local communities and, very importantly, investors are going to look at the company in a new light and listen to company messages with a new intensity.
Stakeholders are looking at their companies, whether they work for them or invest in them, and they want reassurance and evidence.
Arthur W. Page said the formula for getting public support must start with truth-telling, backed up with proof. Colin Powell has talked about military strategies to deal with uncommon change, something fairly sudden that gets ahead of the normal course of inevitable or expected changes. The ramp-up of climate change is an uncommon change that dramatically shakes up the traditional and established company-stakeholder deal across the board. Market adjustments, reduced-carbon resource management, expectations are shaken or questioned in both economic and social accountability. Stakeholders will look and listen for information that proves the company is sustainable, that its with the program, that it has the competence to deal with uncommon change, that it can manage the risks, that it can beat its competitors and— bottom line—that this company cares about each stakeholder groups interests and is doing the right things for the right reasons.
The company must communicate with its stakeholders the benefits of its climate change or sustainability strategies.
Strategies are ways to reach goals and the goals are sound financial and social performance. Jim Collins has written about companies going from good to great, companies managed or built to last. Corporate sustainability is—literally, by definition,—about that kind of thinking and management. Looking at current business contexts and focusing on a future that will be adjusted and influenced by this uncommon change in fundamentals starting with less reliance on carbon— call it carbonomics——driven increasingly by a stakeholder base that is convinced that global warming is a personal threat and a business responsibility.
My view is that there are three threshold choices for a companys climate-change or sustainability strategy: join the leaders, take a middle wait-and-see position, or fight the system. Id assume very few companies, certainly no public companies, will find it tenable to deny or resist the reasons to form a climate change strategy that deals with risks and goes for returns. Communicators who are in the C-suite as counselors to top management can help other senior executives form the strategy by bringing in the stakeholder interests and impacts.
This is a chance for a company to build trust and chief communications officers are also chief trust officers.
Concerned stakeholders look to the company for answers. General Powell made the point that authentic leaders are made in times of uncommon change, when trust is on the line. I like the ad by Perot Systems that says trust is earned in challenging environments. Id look for the communications opportunity. Move toward the confusion. Carbonomics — that is to say, the change in market economics because there will be a price on carbon emissions and costs that are factored into production and products, global warming concern, concerns of any kind that tie back to the company can open the trust dialogue.
Leading companies are trailblazing the corporate sustainability path that your company can consider.
It starts with a clear business case for sustainable performance and communication, making the case thats relevant to the company. You then need buy-in from top management and business operations. This is also a substantial corporate governance issue. When top management is convinced that the sustainability plan is rational and achievable, it will help to get board endorsement. Reports that Im getting say that boards are approving the first levels of sustainability such as extraordinary commitments to paying for studies and implementation of carbon or energy efficiency measures. Corporate communications can help get internal company alignment. Information flow needs to be adjusted so the whole company is aimed at sustainable performance. The goal here is workforce involvement, operational accountability, and could mean a culture change. It would be a mistake to neglect this part of communications strategy. You need to get the right kind of commitment, getting the right people on this bus, to borrow Jim Collins Good to Great analogy as you start down this sustainability path. That starts in the house.
Each stakeholder group— investors, employees, customers, suppliers, government— needs to understand, and in the best case be engaged in, the companys strategies.
Investor and government relations interactions are particularly important, because the opinions of stakeholders in these arenas can make or break managements resolve. The leading companies are getting allies. I note the value of partnerships with interest groups, government organizations, customers and retailers, understanding their needs, moving toward sustainability goals that they can agree on. The U. S. Climate Action Partnership was the primary broad coalition to get business involved and comparatively successful in the 2007 energy bill. Collaborations in most business sectors are active in expectation of congressional and regulatory attention.
The company going sustainable needs to rethink corporate contributions.
Management certainly needs to ask some questions. What community or regional needs will call for attention as the result of climate change? How can the company get ahead of the curve and make a difference, rather than wait to be asked but to show a leader responsibility? What in-kind goods or services can be provided? How can employees be involved, as they look for assurance that the company cares and is acting toward sustainability? Id urge attention to localized philanthropy — very strategic, higher impact attention — even while the company is moving globally in its business. Back to the point that sustainability is the combination of economic accountability and social accountability and that contributions are a trust-building opportunity.
Collaboration with activists is not collaborating with an enemy.
The USCAP collaboration includes Environmental Defense, NRDC, and National Wildlife alongside the major manufacturers. The Prince of Wales climate change group put something like 150 global corporations on the same side of the table with NGOs asking for a legally binding UN agreement to cut greenhouse gas emissions and scale up investment in low-carbon technologies. Environmental Defense is working with Wal-Mart in the very potent influence in green supply chains. The World Wildlife Funds as well USEPA joined Intel, Google, IBM, HP, Dell, EDS, Lenovo and Microsoft to form the Climate Savers Computing Initiative to set targets for energy efficiency in electronics, and to promote global adoption of energy-efficient computers and power management tools.
Climate change is providing a share-the-pie experience for environmental groups who understand the economic realities of business and cooperate to put both their green goals and company financials into alignment. The TXU coal-power utility deal provides early and extraordinary proof that this pays off for all involved parties. Environment/energy issues were clearly accepted as having financial materiality, and the environmental community was part of the answer for the financial interests. As the new energy law rolls out, these collaborations will be tested, but its not the polarized us-versus-them condition of the old days of going green. Companies need to choose their partners in sustainability plans and Id have to say the NGOs are looking your way and are making their choices.
Companies need to examine the value of community or local partners.
Cities are becoming very aggressive on climate change. Officials and politicians have to show local constituencies they are with the program. Companies located in, or even selling products in, any large American city already know the pressure will be on them at the local level to show their green credentials, prove their carbon constraint and otherwise help the city fight global warming. Companies will also be able to look at cities as partners in profitable carbonomics. An unusual opportunity may be in store.
The Toledo, Ohio, story is instructive. Here is a city thats been in an extended economic slide, leveraging its past in the glass business to benefit from the alternative energy demand. Business people see these older industrial cities in a new light, offering clean-tech capability and capacity with the added advantage of community or potential stakeholder support for new plants employing local people and contributing to the economy. This trend, by the way, will mean corporate communications growth, engaging with stakeholders that will be created for some companies in a positive sense by climate change.
The game of winners and losers in sustainability is foolish; the company will win some and lose some.
The list of potential winners is long: agriculture, forestry, construction, housing, and finance, consumer goods of all kinds, distribution, and transportation — have I left anything out? The point is that every company will look for its own way to win, to adjust to uncommon change and get ahead of competitors. If youre in the alternative or renewable energy business — biofuels, wind power, even (I would hope) nuclear — you know there are obvious, fairly near term opportunities. Ethanol shows the potential of a fuel source never previously produced commercially. This means hundreds of new factories and facilities, estimates of around a billion pounds of plant material to be raised and hauled around the country, involving trains, trucks and pipelines. Estimates of investments start in the tens of billions of dollars. Talk about carbonomics! The sustainable corporations will rise or fall on it. Companies like GE with turbines, Duke Energy, DuPont, oil companies into biofuels, automotives into hybrids and flex fuel are placing big bets and some are already seeing ROIs that can help seal the trust deal with stakeholders.
Are coal and oil the losers? Not really. Well need both and more. Companies in these industries have moved into the policy leadership to come up with workable answers and regulatory certainty. They are developing the technologies of the future—alternative sources, carbon reduction, CO2 capture—and working with their stakeholders to meet their energy use needs. Of course, the big situation to watch is coal burning, which this nation and the rest of the world will and must continue to use as an energy source. This situation is perhaps the most problematical. Coal is a huge American asset. Technologies to cut emissions or to capture them can be developed with government incentives, but uncertainty clouds the outlook. The FutureGen consortium of big coal producers and users was a highly promising initiative toward coal-fired plants that capture and store its carbon emissions. Like the TXU situation, FutureGen is a test case in the way that carbonomics and hard-to-predict, or manage, external factors affect corporate sustainability. If government okays the first effort at an Illinois site, we might learn better how to move through government bureaucracy and other frictions that slow down good business decisions and how a company gains some degree of certainty about regulations, location, costs. At this writing, the initiative is on hold because of government objections.
Global business implications of carbon-era sustainability are huge, a dimension considerably above what weve been through with pollution and greening.
The sociopolitical progression of the climate change issue is pitting nation versus nation, developing versus industrialized countries, competing for the right to emit carbon dioxide, which is an indicator of economic growth and viability. This will drive a world of business decisions. Where do you operate? Where is your competition? What does this do to your supply chain? Were already beginning to see impact in China where the enormous supply of goods for export to our country and others will be affected by carbon and environmental requirements. China will emit more CO2 than any other country, but it will also have to raise costs and limit or change production methods to satisfy world trade and quality requirements and that will affect companies worldwide that rely on their low-cost structures.
On the road ahead, every company will be affected in some way through rules on carbon controls, carbon pricing, possibly carbon storage.
We can already see the carbon war playing out along the typical U. S. sociopolitical scenario — science debates, activism, media interest, politicians or office holders getting involved, one or more crystallizing events (such as Katrina was, and such as Three Mile Island was in the nuclear power industry, and Love Canal and Bhopal in the chemical industry), leading to government action. What can you expect? The war on carbon will be institutionalized, embedded in government just as a great many other green and energy issues that have gone from origins, sometimes from the scientific community, sometime from protests and street advocacy, into government bureaucracy. Congress will construct rules of carbon containment and hand out incentives for achievements such as energy efficiencies. Companies will expand their government relations to work for certainties and reasonable terms of compliance with targets and timetables in new regulatory areas. Management, whether a major manufacturer or retailer, whether leading the pack or holding back, OEM or B2B supplier or both, will face operational, technology, product, financing and service questions unlike those of any previous time. Internal physical adjustments in energy use and CO2 emissions, internal culture adjustments (the caring and accountable company culture), will go on while the company responds to market and competitive conditions that are constantly being influenced by customer needs, competitors, citizen activists and concerned investors.
CEOs and CCOs are better prepared to tackle this than with previous iterations of greening.
Going green was hard to do, but its happened. Control of problems and market advantages tied to green and energy issues are institutionalized in most companies. Environmental managers can now get their arms around carbon constraint, and corporate boards are conditioned to approve strategic moves and justifiable investments. Going forward, the goal for companies is what its always been: to sustain success and gain competitive advantage under changed conditions. The CCO will help the CEO, CFO and business executives rethink green strategies by providing intelligence on stakeholder interests, connecting the dots and counseling on positioning the company as a winner in balancing the carbon wars economic, social and political factors — the road to corporate sustainability.
Walk green, open kimono, eyes ahead.
Three tips for carbon-era communicators in the C-suite:One: dont let the green talk get ahead of the green walk. The best PR advice I ever got, from a veteran in the chemicals business, is its better to be discovered having done something good, so beware the self-anointed green halo.
Two: transparency. Prove it with action, as Arthur Page counseled AT&T executives half a century ago. Tell your stakeholders to track you as a way toward trusting you, as the business leaders at Rio found workable. Report progress (or lack of progress) in achieving metrics: such as carbon footprint reductions. Open your electronic front doors, with everyone invited in, friends and critics. Validate your claims. Get third-party evaluation of both carbon-reducing processes and products.
Three: think ahead. Be aware of the future stakeholders of this uncommon change. Go ahead and target the next generation of customers and other stakeholders, recognizing that sustainability is aimed at long-term stakeholder benefits. So think tomorrow. Know that the kids — tomorrows customers and employee — are already there. They wont grow up with cars without power flex or turn on Edisons light bulbs. It seems like the right time to get involved in schools and public education about sustainability and the companys commitment to it.
Theres little or nothing Im suggesting here that management and corporate communications chiefs cant do or havent already done. Its all been proven to work reasonably well, helping management to do its number one job, which is to create stakeholders in the firms success. Its now a matter of putting this into the new contexts. Understand who your stakeholders are and who they could be, and get engaged in terms that they will understand and therefore support. And I could add an obvious footnote, which is maintenance or continuous improvement. This is not a flash in the pan sociopolitical issue. Its building a business that will last, with social and political acceptance. The company will need to create and use systems for internal and external feedback in the sustainability program, to keep it fresh, on track, moving forward in a way that is always relevant to the business and all the stakeholders. Communications people know this is a cardinal practice, and it will be appreciated by the business units.
Corporate Greening 2.0 offers business management teams and especially corporate chief communications officers perspectives and insights that I believe they can use in their work as advisors to top management and engagement with company stakeholders on the current sociopolitical issue of global warming and carbon constraint. I appreciate all the people who have let me in on their challenges and their wisdom. Thats what I drew on for the perspectives presented here, and I welcome any comments, corrections or chance for dialogue on the contents of Corporate Greening 2.0.
E. Bruce Harrison