Capitalism – Needing Reinventing? Is Corporate Sustainability / Responsibility / Citizenship’s Focus on ESG Part of the Mix of Reinvention?

by Hank Boerner – Chair & Chief Strategist – G&A Institute

There are many voices raised now, joining in the public dialogues on corporate sustainability, corporate citizenship, corporate responsibility, ethics, good governance…and more.

The perspectives offered fit into the commentary stream on the future of capitalism — and how to make it work for everyone.

There are rigorous companion dialogues going on – and rapidly growing in number — related to the role of sustainable investing as more asset owners and their internal and external managers adopt new approaches, many focused on the analysis of corporate ESG performance and related outcomes.  We see this as further reinventing of capitalism. Do you?

On Corporate Purpose – How, What, Why and more – another public dialogue dramatically expanding since the release of The Business Roundtable’s revised mission statement in summer.

There are more voices being added to the expanding public dialogues on all of the above and more, which is what our newsletter’s Top Story focuses on.

A fascinating range of voices will be raised by Fast Company as the publishers spotlight “15 voices” working at the forefront of trying to reinvent our economic system…and together, the pursuit of important structural reforms and ideas to bring about “fairness” (much needed, we can argue, in 2019!).

The first voice “raised” by Fast Company is that of Darren Walker, Ford Foundation president who says in his essay “capitalism is in crisis” and explains why in his essay — “How to Save Capitalism From Itself”. 

As the editors of Fast Company explain, the voices to be raised in the future (that you will want to follow via Fast Company essays) include:

Zeynep Ton, MIT b-school prof who sounded the Good Jobs Institute;

Josh Silverman, CEO of Etsy (the artisanal marketplace) whose company’s social-impact initiatives are held to the same standard as financial reporting;

Fashion icon Eileen Fisher (champion of the B Corp movement);

Barry Lynn, founder of Open Markets Institute (who favors more regulation to address today’s monopolies);

Rachel Lauter, ED of Fair Work Center..and others!

Keep in mind Fast Company is a must-read for many GenExers and Millennials – and so you will want to keep up with the publication’s voices no matter what generation you belong to.

The Ford Foundation’s CEO essay is at: https://www.fastcompany.com/90411391/ford-foundations-darren-walker-how-to-save-capitalism-from-itself

Top Stories

Capitalism is dead. Long live capitalism
Source: Fast Company – For capitalism to thrive, the system needs to evolve to be fair, inclusive, and sustainable. Fast Company highlights companies and innovators leading the change.

And of importance, the public dialogue – and action! – on the SDGs:

Protecting Our Future: Moving from Talk to Action on The Sustainable Development Goals
Source: Forbes 

How an Italian Energy Company Revolutionized Sustainable and Impact Investing in Structured Credit
Source: Forbes 

First SDG-linked bond in the European market raises 2.5 billion euros
Source: UN Global Compact 

Fashion, Style, Brand and Sustainability Are Today’s Coupling Terms Now for a Growing Number of Consumers…

by Hank Boerner – Chair & Chief Strategist, G&A Institute

We’re all consumers of one type or another.

We buy a variety of food and beverages, the latest electronic products, and an assortment of apparel and footwear products as needed — or desired!. 

So the questions come to mind…

What are you wearing?  Is it fashionable?  Stylish? And sustainable (as a product you want or need)?  Sustainably and responsibly produced?  In a global (mostly invisible) supply chain that you could say with certainty is “well supervised and responsibly managed”?

Do you identify yourself with the brand’s culture, ethos and sustainability and the praiseworthy efforts of the maker or the retailer in their declarations to the marketplace? 

Do you make sustainability a conscious buying decision?

A growing number of apparel & footwear brand producers/marketers are counting on “yes” answers to these questions.

In our monitoring of news and feature content from around the world and many prominent and not-so-prominent sources, we have been seeing a significant amount of content related to “fashion” and “sustainability” being coupled (as it, taken together as a given, like human nature (human + nature – a natural coupling).

The big bold industry and brand marketing names are part of the conversation: Victoria Beckham, Stella McCartney, Tommy Hilfiger, Gucci, and H&M are focused on sustainability and delivering the fashion + sustainability sales message in the coupling efforts (details in our story selections).

We’re presenting our “capture” of fashion and consumer-buying content this week in our Top Stories in the newsletter. 

In our constant monitoring we are seeing the trend in other consumer-facing areas of industry – in autos, toys, and a variety of food products and ingredients (palm oil, coffee beans, seafood/harvests of the seas).

The good news for society is that many more corporate leaders recognize the timely opportunity for their company to demonstrate that their company’s strategies and processes, and products & services offered in both consumer and B-to-B markets are “sustainable & responsible” … as now more frequently explained in the company’s sustainability report, in the 10-k, proxy statement, on its web pages…and on their products’ labeling. 

In this week’s Highlights newsletter we bring you a selection of the many news and feature stories focused on consumer marketing with a sustainability theme.

The range of coupled content (our product + sustainability) is growing by leaps and bounds and we try to select the most topical and informative content for you.

On coupling:  the best-selling author Malcolm Gladwells’s newest book is “Talking to Strangers”, a great read, we recommend. 

He explains why we are so overwhelmingly trusting of others (the strangers) as a basic human default and the concept of “coupling” — certain circumstances that can make certain assumptions, assertions and claims ring true for us.  

This comes to mind the acceptance of apparel, footwear and other brand marketers’ claims about “sustainability” in product and/or production. 

We are eager to invest belief in the claims. But do the facts support the claim?

Gladwell’s insights are terrific to contemplate as we receive the messages about sustainability from some brand marketers.

Top Stories

Fashion Brands Take Sustainability Further for Spring 2020
Source: Forbes 

Exclusive Q&A: Why Retailers Should Embrace Sustainable Supply Chains
Source: Retail Touch Points 

Why Sustainability Should Be Top of Mind for Retailers This Holiday Season
Source: Yahoo

Consumers want to buy sustainably—they just don’t know how
Source: Fast Company 

How Sustainability Became the Future of Retail
Source: Footwear News

Consumers Want to Buy Sustainably, but They Often Don’t
Source: Architectural Digest 

The Best 11 Brands for Sustainable Vegan Sneakers
Source: Love Kindly 

How can shoppers make sense of sustainable fish labels?
Source: The Guardian 

Dramatic Change Of Direction For The Business Roundtable With Issuance Of “Purpose Statement” Signed By The CEOs Of America’s Largest Companies

The Business Roundtable is an organization of CEOs of the largest companies in the U.S.A. — firms that generate a combined US$7 trillion in revenues, employ 15 million people, invest $147 billion annually in R&D, and provide healthcare and retirements benefits for tens of millions of Americans.

Member companies operate in every one of the 50 states and through the organization top business leaders work to influence major societal issues (tax policy, infrastructure needs, trade and other issues).

This is where many institutional and retail investors place their bets on the economic future and enjoy some of the fruits of the efforts of the enterprises they invest in.  Investors provide much of the capital that make the wheels go ‘round for the BRT companies.  And, investors in the BRT member companies received almost $300 billion in dividends.

And so investors have been a priority concern for the CEO members for the almost half-century existence of the Business Roundtable.  The guiding philosophy traces back to the period four decades ago when influential economists such as Milton Friedman of the University of Chicago advised the CEOs that their duty was to look out for the shareholders…and all else would fall in place.

In 1997, the Business Roundtable issued its statement of the purpose of the corporation:  “The paramount duty of management and of boards of directors is to the corporation’s stockholders.”

No more.  This week, the Business Roundtable moved beyond the long-term “shareholder primacy” operating principle, releasing its revised “Statement on the Purpose of a Corporation” — a dramatic course change in the principle operating philosophy of this powerful, CEO-led organization.

The almost 200 CEO signatories pledged to: invest in employees; deliver value to customers; deal fairly and ethically with suppliers; support communities in which they work; and, generate long-term value for shareholders.

Each of stakeholders is essential, the Purpose Statement reads.  We commit to deliver value to all of them, for the future success of our companies, our communities, and our country.

Jamie Dimon, CEO of JPMorgan Chase is current head of the BRT and played an important role in the dramatic shift of attitude in the official stance of the organization.  He sees this as “an acknowledgement that business can do more to help the average American.”

Adding to this critical public re-positioning:  “Society gives each of us a license to operate. It’s a question of whether society trusts you or not,” Ginni Rometty, CEO of IBM told Fortune.

On its web site, the organization states “as leaders of America’s largest corporations, BRT CEOs believe we have a responsibility to help build a strong and sustainable economic future in the United States.”

ESG and Sustainability basic principles are now “officially recognized” by the members of the CEO association and enshrined in the declaration of the purpose of the U.S. large corporation.

The Purpose Statement does touch on numerous concerns of the sustainable investor – a good step forward for this powerhouse organization.

Our Top Story is the excellent Fortune feature on all of this by veteran business writer Alan Murray. It’s a great summary of the dramatic move by the CEO signatories this week.

Click here to read the Business Roundtable’s “Statement on the Purpose of a Corporation” and see the list of corporate CEO signatories. 

The Top Story

America’s CEOs Seek a New Purpose for the Corporation
Source: Fortune – For more than two decades, the influential Business Roundtable has explicitly put shareholders first. In an atmosphere of widening economic inequality and deepening distrust of business, the powerful group has redefined its mission…

About Those Assembled “Best Of” Lists of Companies – What Lessons Are There For The Managers Of Other Firms…Not On The List Of The Chosen?

There are a number of “best of” lists that corporate managers and investment professionals scour to see what companies are judged to be doing well (by the list makers)…whether they be industry peers & competitors, or possible acquisitions or partners, and for investors, whether the listed firms might be the right choices for investment portfolios.

One annual list that we do follow is the one produced by Corporate Knights – the “Global 100 Most Sustainable Corporations”, published for the 15th year in 2019.  This list begins with around 7,500 possible inclusions in the top 100, all firms generating $1 billion or more in revenues.  Analysts devote 5,000 hours scouring almost 4 million data points to narrow the field to the chosen 100.

Examining the results, Holly Johnson of The CEO Magazine shared her perspectives with her readers.  There were top takeaways she learned from examining the work of Corporate Knights analysts:

  1. The top companies “live longer” (average age for the top 10 was 87 years!).
  2. They are better governed than peers, with lower CEO-to-worker pay ratio. They pay more in taxes.
  3. They’re “greener,” generating more revenues from clean (positive green or social impact) goods and services.
  4. More women are found in their ranks, and in the board room; there’s bound to be found a link between exec compensation and sustainability measures.
  5. Revenue is “cleaner” – generated through sustainable products. The Top Company is Chr. Hansen, generating 80% of revenues from development of natural solutions for food preservation and crop protection, as well as alternatives to using antibiotics for food animals.
  6. Investors are happier with these firms. 

You can find the details from each of these findings in our Top Story. There’s a link to the Top 100 Corporate Knights list in The CEO Magazine post.

The company names you’ll find in the Top 10 of the Top 100 firms include Prologis (USA); GlaxoSmithKline Plc (UK); Banco do Brasil S.A. (Brazil); Taiwan Semiconductor (Taiwan).

Author Holly Johnson is staff writer and digital producer with The CEO Magazine, in Australia, where “she now delves into the world of leading business executives.”  The magazine is Australia’s leading business publication.

Top Story

Green leaders: The world’s most sustainable companies in 2019
(Tuesday – July 02, 2019) Source: CEO Magazine – According to Corporate Knights’ list of the 2019 Global 100 Most Sustainable Corporations, it encompasses carbon and waste reduction, gender equality in leadership and even revenues derived from clean products. 

Do Consumer Favor Sustainable Brands for Their Products and Services Needs? NYU Stern School Research Dives Deep into the Data For Answers

by Hank Boerner – Chair and Chief Strategist, G&A Institute

Many people in consumer marketing are wondering about consumer preferences for “sustainable” products! In our weekly newsletter the G&A Institute team offers media and experts’ shared perspectives on various issues and matters related to corporate sustainability, responsibility; and, sustainable, responsible and impact investing.

In recent months the content shared frequently has focused on trends in the consumer market — to help answer the question of whether or not consumers reacting to brand-facing companies positioning themselves as sustainability leaders.

Is this type of brand marketing a successful strategy?  Worth the effort? 

So the important question in all of this “wondering” is: Are consumers now favoring sustainable or green (or pick your term of definition) for their products & services at retail? 

In our ongoing monitoring of news, feature and research results — such as for the fashion and footwear industries, the auto industry, food & beverages, and certain other categories — the results tell us brand leaders are now often introducing sustainable products alongside their usual cash cows. We included several items for you in this week’s newsletter along these lines. This was our top story:

Writing in the Harvard Business Review, Tensie Whelan, professor at New York University Stern School of Business, and leader of the NYU Stern Center for Sustainable Business, and Randi Kronthal-Sacco, director of Corporate Outreach for the Center (and formerly with Johnson & Johnson) describe the results of their recent in-depth research project. 

This research centered on trying to answer the question — do U.S. consumers actually purchase sustainably marketed products?  (Spoiler alert: yes – you must read the HBR article to find out more.) 

Whelan and Kronthal-Sacco used volumes of data sets from bar scan codes at retail for food, drug, dollar, and mass merchandisers, looking at 36 categories and 71,000+ SKUs, accounting for 40% of consumer products goods (CPG) sales over a 5-year period.

So, what did they find to be the largest share of sustainability-marketed products? 

Almost $1-in-$5 purchases at retail are for toilet tissue, facial tissue (think: forest products); milk, yogurt (the yield of countless dairy farmers); coffee (lots of attention on the global coffee-growing belt circling the Earth, and worker conditions therein); salty snacks (really?); and bottled juices (you’ll notice that Coke and Pepsi and other beverage marketers are advertising their shift away from sugary drinks). 

At the bottom of market share:  laundry care, floor cleaners and chocolate candy (accounting for a 5% share).

Say Tensie and Randi:  Pay attention, marketers and those all along the retail value chain, from grower field and factory floor to shelf space.  Consumers are voting with their dollars, for sustainable and against un-sustainable brands. 

Winners in the corporate sector include PepsiCo and Unilever; laggards include Kraft Heinz. (For the leader, Unilever:  think of the company’s sustainable labels like Seventh Generation, Sundial Brands and Pukka Herbs.)

And we are seeing in the many stories we bring you each week about consumers and sustainability, the future for sustainable CPG at retail is looking bright – look at the apparel industry.for examples  The agora is alive and well with many more sustainably-branded products on the shelves.  That’s the good news for sustainability professionals.

The NYU researchers used data from IRi (the research house for CGP, retail and health and beauty – information at: https://www.iriworldwide.com/en-US/Insights)

Congratulations to our colleagues Tensie Whelan and Randi Kronthal-Sacco at NYU Stern Center for Sustainable Business for sharing their insights and perspectives.

This Week’s Top Story

Research: Actually, Consumers Do Buy Sustainable Products
(Thursday – June 20, 2019) Source: Harvard Business Review – NYU Stern’s Center for Sustainable Business just completed extensive research into U.S. consumers’ actual purchasing of consumer packaged goods (CPG), using data contributed by IRI, and found that 50% of CPG growth from 2013 to… 

Today, We Have Corporate ESG Comparisons Galore – The Institutional Investor Has Access to Volumes of ESG Data Sets & Information – Where Can Others Find Scores, Rankings and Ratings of Public Companies?

by Hank Boerner – Chair and Chief Strategist, G&A Institute

These days the comparisons of companies ESG strategies and performance in sectors and industries and among investment peers (those companies chasing similar sources of capital) are continuing to gain momentum. 

There is a sizable universe of third party players — ESG raters, rankers, scorers — busily analyzing, measuring and charting company ESG performance.

These organizations assign proprietary scores, rankings, ratings and various kinds of comparisons (company-to-company, company to industry etc) for their investor-clients. (The institutional asset owners and their asset management firms.)

Companies typically get to see how they are doing when they inspect their ESG service provider profiles…but those data and information sets are not always publicly available. They are the secret sauce provided to investors — institutions holding equity or bonds or researching candidates for investment.

So how should the person without access to the major ESG service providers’ confidential output understand where the public company sits in the views of the analysts (at least the highlights, such as scores assigned)? 

Slowly but steadily some of the volumes of information provided to investor clients by the major ESG ratings agencies are making their way into public view. 

For example, you can see a public company’s Sustainalytics highlights on Yahoo Finance. For Apple Inc. / NASDAQ: AAPL “ESG Total Score” information, click here.

Our colleagues at CSR Hub® share a number of Ratings & Rankings and other CSR and ESG highlights on their web site and their “ESG Hub” information (which is available on the Bloomberg Terminal®)  CSR Hub is at: https://www.csrhub.com/

Now a neat presentation comes our way from Visual Capital, authored by Jenna Ross.  This is a mapping of “The Countries with the Most Sustainable Corporate Giants”. 

Remember BlackRock CEO Larry Fink’s letter to corporate CEOs urging them to serve a social purpose to deliver not only financial performance but also show how it makes a positive contribution to society? 

Following on that theme, Corporate Knights “2019 Global 100 Report” data and ranking of the “most sustainable corporations in the world” is presented in visualization format.

Corporate Knights scores companies on a mix of metrics after screening for those with at least US$1 billion in revenues and sufficient sustainability reporting:  resource management; employee (or human capital) management; financial management; “clean” revenue; supplier performance. 

The United States comes out at the top of the charting with 22 of the 100 companies on the list, followed by France (11), Japan (8), Finland and United Kingdom 7), and Canada (6).  No company in China or India made the list.

Of the “Top 10-star players” only one is from the USA – the REIT Prologis Inc.  Denmark has two companies; the rest are one-off listings from other countries.

Author Jenna Ross sums up: “It’s clear that sustainability is a strong differentiator in the business community.  The world’s largest – and smartest – companies are leading the charge towards a greener, more equitable future.” 

We think you’ll find the charting of this Global 100 fascinating and very useful – and there are many other clever and useful visual presentations on the web site.  Check out our Top Story for this week.

This Week’s Top Stories

Mapped: The Countries With the Most Sustainable Corporate Giants   
(Wednesday – May 08, 2019) Source: Visual Capitalist – Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. 

Corporate Supply Chain Sustainability Strategies & Programs: Count as a Cost or Strategic Investment? Consultant to Large-Cap Companies Provides Some Helpful Answers for Corporate Managers

by Hank Boerner – Chair and Chief Strategist – G&A Institute

Question:  Does a corporate sustainability program “cost” (and thus shows up on the “expense” side of the ledger) or are there measurable “returns” on the investments that companies are making to develop or adjust strategies, assemble teams and launch sustainability programs? (Especially those that have set goals and where progress is measured and then publicly reported.)

We frequently hear this kind of discussion in the meetings and phone calls we have with corporate managers, especially those at companies where management is now considering what to do or perhaps just starting out on their sustainability journey. 

Senior managements often begin internal discussions with the questions for their managers:

Who is asking for this? What will this cost to respond? 
And where is the ROI for our efforts?

Working with client organizations we see the firms’ customers and clients asking their supply chain partners about their respective sustainability efforts and requesting extensive ESG information, directly of the firms (with detailed questionnaires) and through third parties such as EcoVadis and CDP Supply Chains.

The questions are coming faster and more detailed than in previous years.

The important customer with a range of sustainability-themed “asks” of course considers their supply partners to be part of their (the customer’s) overall sustainability footprint – and so the questions.   

Corporate sustainability leaders understand the importance of the “ask” and provide detailed answers to their valued customers.

If the questions internally at the supplier company are along the lines of: “why” or “who is asking” and “what will this cost us” or “what is the return”…consider: 

“Economic longevity and social and environmental responsibility are increasingly two sides of the same coin. Consumer surveys show that many favored brands are focused on sustainability.  And, removing waste and emissions from the supply chain goes hand-in-hand with efficiency…both boost the corporate bottom line.”

That’s some of the essence of a timely report – “Sustainability: The Missing Link” – that was authored by the Economist Intelligence Unit and sponsored by LLamasoft, an Ann Arbor, Michigan-based supply chain management software provider serving such clients as Ford Motor, 3M, Intel, Bayer, and Kellogg’s.

Highlights of the report and important background come to us this week from Supply Chain & Demand Executive magazine, with an interview with Dr. Madhav Durbha, Group VP at LLamsoft. 

The interviewer explores how sustainability considerations cause companies to think differently about their supply chains and examples of global companies are managing the triple bottom line.

The questions asked of Dr. Durbha by the magazine’s Amy Wunderlin

Why are many supply chains still doomed to inefficiency and environmental waste?  What are the top mistakes companies often make when trying to make their supply chain green? How many organizations strike a balance between profitability and sustainability despite current economic uncertainty? Why are addressing sustainability needs through the entire supply chain important? (There are more questions and more answers in the interview.)

An important take away from the interview: 

“As long as organizations think of cost reduction [efforts] and sustainability being at odds, they may be missing out opportunities to accomplish these dual objectives.”

There are numerous helpful hints for you in this week’s Top Story. 
SDC/Supply Chain & Demand Executive magazine, published by b-to-b media & intelligence company AC Business Media, covers warehousing, transport, procurement and sustainability, among many topics. Subscriptions to SDCExec.com are free. 

This Week’s Top Story

Profitability or Sustainability? It Doesn’t Have to be a Choice
(Wednesday – March 27, 2019) Source: Supply and Demand Chain Executive – Dr. Madhav Durbha of LLamasoft offers insight into why–with the proper tools–organizations don’t need to choose between profitability and sustainability, despite current economic uncertainty. 

Here is the link to the report: http://www2.llamasoft.com/Sustainability:TheMissingLink-NA

Question for Corporate Leaders: Is Your Company’s Sustainability Journey Based on Key Strategies? Is There Clear Alignment of Foundational Strategies with Sustainability?

by Hank Boerner – Chair & Chief Strategist, G&A Institute

HBR Authors Share Some Research Findings Of Importance to Corporate Leaders and Asset Managers…

Strategy – the familiar word comes down to us over the eons from the language of ancient Greece. The roots of the original word (translated to the more modern “stratagem”) mean “the work of the generals, or generalship” which is to clearly say:  to lead from the front..or the top!

In 2019, “strategy” and “sustainability” should be clearly linked, right?  In the corporate sector, setting strategies is at the heart of the work of the men and women at the top, in the board room and in the C-suite.  So what does that mean to us in terms of the intensive focus today on corporate sustainability and ESG performance? (And, the impacts positive and negative in the capital markets?)

The corporate enterprise that is seeking to excel among its peers, and clearly demonstrates leadership in sustainability matters (that encompasses a broadening range of ESG issues today) surely has the leaders at the top crafting, innovating and sharpening the leadership strategy…and driving the foundational elements down into the depth and breadth of the enterprise.  Typically, universal understanding helps to drive competitive advantage and creates a moat more difficult for peers to cross.

And so in this context, what about the “corporate sustainability laggards”?  Often in our ongoing conversations with a wide range of corporate managers – and with investment managers evaluating corporate ESG performance – the companies not yet well along in the journey or perhaps not even started on the journey, lack of sustainability strategy sends a signal of “silence” from the top ranks.

What this says to stakeholders:  ESG and strategy = not connected yet, there is a lack of quality in our management and board.  Don’t look to our firm for signals of sustainability leadership.

We find that most large-caps “get it” and it is the resource-challenged small-cap and mid-cap firms that are not yet started or not far into the sustainability journey.

The topic of corporate sustainability strategy gets a good overview in the pages of the Harvard Business Review by the outstanding ESG / sustainability experts, George Serafeim and Ioannis Ioannou.  Their post is based on their new 45-page paper (“Corporate Sustainability: A Strategy?”) and their co-authored HBR management brief is the topic of our Top Story for you.

They recently published the paper using data from MSCI ESG Ratings for 2012-to-2017 (looking at 3,802 companies); among the approaches was to separate “common practices” (across many companies) and “strategic” (those not so common to most companies).

Your key takeaway from their work:  “Our exploratory results confirm that the adoption of strategic sustainability practices is significantly and positively associated with both return on capital and market valuation multiples, even after accounting for the focal firm’s past financial performance.”

And…”the adoption of common sustainability practices is not associated with return-on-capital, but is positively associated with market valuation multiples.” There’s more for your reading in the Top Story below.

You could share these findings upward in your organization if your firm’s executives are not quite tuned in yet to the importance of having a clear strategy that factors ESG factors and sustainability into account.

Notes:  George Serafeim is Professor of Business Administration at Harvard B-School and Ioannis Ioannou is Associate Professor of Strategy and Entrepreneurship at London Business School.  They frequently collaborate and both write extensively on topics related to corporate sustainability and sustainable investment. And both are frequent speakers and panelists at trade and industry conferences and workshops.

This Week’s Top Story

Yes, Sustainability Can Be a Strategy
(February 11, 2019) Source: Harvard Business Review – In recent years, a growing number of companies around the world have voluntarily adopted and implemented a broad range of sustainability practices. The accelerating rate of adoption of these practices has also provoked a debate about the nature of sustainability and its long-term implications for organizations. Is the adoption of sustainability practices a form of strategic differentiation that can lead to superior financial performance?

Or, is it a strategic necessity that can ensure corporate survival but not necessarily outperformance?

The Ethical and Sustainable Supply Chain – Some Thoughts on This For You From Forbes

by Hank Boerner – Chair & Chief Strategist, G&A Institute

Ethical sourcing” — we see that term used a lot by companies that are systematically addressing issues in their sourcing and supply chain management to better understand and address (and better manage!) the various issues that their investors, customers, employees, business partners, and other stakeholders care about.

What is “ethical” behavior, to be found in the layers-upon-layers of suppliers in the usual  corporate globalized sourcing effort?  How do we define this?

As we sometimes hear in the poetic notion, little things can have substantial impact; think of the the butterfly wings’ flapping and fluttering in Brazil that can have effects all the way north as expressed through the hurricane winds hitting Mexico and in the tornado whirlings on the American Gulf coast.

This “butterfly effect” (part of the chaos theory portfolio) has counterparts in the supply chains of companies sourcing from near and far lands.

An example shared:  Poor working conditions in the Bangladesh factories have been brought to consumer attention by United Kingdom news reports; the Asian-produced goods (such as T-shirts) end up on retailer shelves with “Spice Girl” branding.  Irony:  the shirts were part of the Comic Relief Event campaign staged to raise money for “gender justice” – and the Bangladesh female workers made 30 cents an hour under hostile working conditions (details are in our Top Story).

Writing for Forbes (brands), contributor Richard Howell’s shares his thoughts in our Top Story.  “Social, economic and environmental sustainability should be at the heart of every supply chain…” he writes.

He posits that consumers are looking to buy from companies that have a preferable design, sourcing, manufacturing, delivery of goods & services…and that operate assets and equipment in an energy-efficient, safe environment (for team members and the environment).  Howell spells these out in his commentary.

So – what is ethical?  Among other things, fair wages, better working conditions and gender equality in the global supply chain that is sustainable as well.

This week’s Forbes commentary is by contributor Richard Howells, a 25-year veteran of supply chain management and manufacturing who describes himself as “responsible for driving market direction and positioning of SAP’s Supply Chain Management and IOT solutions.”  He’s worked on systems for such brand-facing companies as Nestle, Gillette, and others.

This Week’s Top Story

Tell Me What You Want, What You Really, Really Want: A Sustainable Supply Chain
(Thursday – January 31, 2019) Source: Forbes – Social, economic, and environmental sustainability should be at the heart of every supply chain

From Sustainable Brands: A Prominent IT Professional’s Outlook on 2019 -– “Year of Sustainability” Empowered by Technology & Innovation

Is 2019 going to be “The Year of Sustainability”?  Greatly empowered by technology?  With exciting innovation on the business front?  One European-based writer (Carmen Ene, CEO of 3 STEP IT in Helsinki, Finland) thinks so. Writing for Sustainable Brands® SB/The Bridge to Better Brands, she outlines what she sees as the top sustainability issues for corporate leaders in 2019 — and offers advice on how to address them.

Consider her view: Companies can take better control of their sustainability strategies and publicly acknowledge the top issues they could be facing in this year.  Data-driven metrics can help here (“Big Data” analytics help in planning and strategy-setting at the top, for example).  The rate of adoption of sustainable practices has been picking up in recent years but in 2019, we can expect to see significant change in business leaders’ behavior toward sustainability efforts.

As the universe of third party ESG data and analytics providers continue to expand their efforts to tell a story about the ESG activities of public companies, without active control of the narration, corporate executives may see various independent narratives (presented by the third parties) that are not favorable portrayals of the company and its ESG activities.
Innovation in technology is empowering businesses to utilize tech solutions to keep up with society’s changing demand (think about the Internet of Things and Blockchain examples).

Artificial intelligence and blockchain are some approaches to be explored, says the writer. Naturally, as a seasoned IT professional, Carmen Ene sees innovation in tech as important means for leaders to keep up with meeting investor, customer and stakeholder needs.

Consumer behavior is something smart businesses always deal with.  And so, dealing with the prevalent “throwaway culture” for producers of IT hardware — think about the waste and need for recycling of electronic goods — will certainly present growing challenges. (China recently curtailed treatment of E waste from other nations, presenting real challenges for civil government leaders in the USA at the community level.)

As the “digital world” continues to expand (think: ever-increasing access to information via newly-acquired hardware), the cast-off waste and E-detritus continues to build worldwide.

That requires smart approaches by electronics manufacturers and others to develop more effective waste and recycling efforts — which for industry players means (the author advises) better management of hardware, improved purchasing decisions and focus on reduction.

More effective IT lifecycle management is one approach being adopted by companies, says Carmen Ene — and that is the focus of her company’s efforts.

Changing regulations will pose challenges for businesses — worldwide, more regulations are being put in place to address environmental issues such as those posed by plastic waste and increasing GHG emissions. Local and national governments are putting sustainability goals in place (the UN SDGs are a driver) with both voluntary and mandatory guidelines. The almost 200 nations signing on to the Paris Agreement are busily coming up with “solutions” to environmental issues at home.

A key takeaway from her commentary:  business has a real need to act responsibly as a key aspect of corporate strategy.  Technology does help to drive change (sometimes very rapidly and causing disruption in many instances), and technology properly deployed can help to drive sustainability practices — creating still more innovation in sustainability strategy and efforts.  Business offerings can be made more sustainable and ethical for the future – with the help of technology.

We’re presenting interesting reading for you from this author in our Top Story this week.  Carmen Ene joined 3 STEP IT as CEO in 2015; the company’s mission is “to enable the most advanced IT life cycle management while striving to make the circular economy a reality.”  She previously held senior management positions at IBM.

The publication is from Sustainable Brands (SB), the premier global community of brand innovators “shaping the future of commerce worldwide.”  SB positions itself as a bridge between brand innovators across all circles, acting as a catalyst for intelligent discourse.  G&A Institute collaborates with SB in sharing information of value to our connections and promoting visibility for the fabulous Sustainable Brands conferences.

Top Story

3 Top Sustainability Issues in 2019 and How to Address Them
(Monday – January 14, 2019)  Source: Sustainable Brands – Once seen as a ‘nice to have’ for businesses, sustainability has become a vital component of many global organisations’ social and economic strategies.