Monthly Archives: January 2015

Attention Boards & CEOs: The Conference Board Has Important Insights to Share To Help Your Company…Survive and Succeed!

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by Hank Boerner – Chairman, G&A Institute

The Conference Board is one of the most prestigious and important (for corporate managements) of our membership business associations, as well as credible research think tank on management issues and topics. The Board has long had corporate governance in focus and has been a major factor in helping to advance effective, responsive, accountable governance in the USA.

The Conference Board was one of the early organizations serving boards, C-suite and key functional managers to expand the governance research and advisory services to include social and environmental issues & topics: ESG is on the of the agenda for many aspects of Board operations.

Members of boards and CEOs and C-suite-ers receive Director Notes on key topics and issues with practical advice needed to improve performance and better serve society.

Today’s issue of Director Notes is worthy of close reading — and re-reading — by sustainability professionals: “Navigating the Sustainability Transformation.” The introduction is bold:

“CEOs and Directors making key business decisions regarding the company’s strategy for the year ahead and beyond would be well-advised to change the current boardroom conversation. Driven by factors tied to sustainability, over the next 15 years, every company in every industry sector will need to transform itself to survive and succeed. Board members, CEOs and he executives advising them need to ask: “How should we plan for this major transformation?” (emphasis mine)

The report describes a four-stage model for companies to progress from engaging initially with sustainability to accelerating, leading, and ultimately transforming their business.”

Addressing the practical aspects of corporate sustainability (board style), the report focuses attention on a host of corporations that are embracing sustainable strategies, actions, programs, engagements.  These include “new brands” such as Airbnb, Google, Tesla, and Uber — all of which have disrupted old business models and achieved leadership – fast! — in their categories (Airbnb vs. the hotel business, Tesla vs. old line auto manufacturers, etc.).

Established companies — some dating back a century or more — are featured in the report, with explanations of how they have achieved success (and frankly, heartily survived) in a business environment (and investment mindset) where disruption is prized over proven models.  These old-line companies have succeeded by being transformation, often disrupting their own cash cows!

Examples include:  3M; General Electric (with its Eco-magination); BMW; DuPont; Dow; Unilever; Michelin; HP; SC Johnson; Nike; Kimberly Clark; McDonalds; Wal-mart Stores; Starbucks; NRG Energy; Newmont Mining; Coca-Cola Company; IKEA; Interface; Sony; BT; Tesco; Azko Nobel; Xcel Energy; and Waste Management;.

Waste Management’s transformation from a traditional waste hauler to strategy and service provider to corporate customers is one highlight of the report.

Sustainability professionals will want to read The Conference Board report’ views on the 4 stages of progression for companies. I think this could become a top-of-agenda discussion in board rooms and C-suites in the weeks ahead.

The stages are (1) engagement with sustainability; (2) accelerating progress; (3) leading (sector, industry, peers, etc); (4) transforming.  There are many companies at stages 1 and 2, a few moving on to 3, and very few to point to as stage 4 (yet).  Many companies exhibit characteristics of stages 1 and 2 — these are examples in the report.

Moving into the transformation stage is challenging, of course. Given the dramatic upheaval in so many businesses, in such a short period of time, will make looking ahead 10 or 15 years to the critical period to 2030 and beyond…daunting, for sure.

But there are practical, realistic things going on in our world that make such exercise ( closely examining where your company is in the 4 stages of sustainability) necessary.  Natural resources (“natural capital to many) grows more scarce in many parts of the world.  It looks like there will be stranded assets on many corporate balance sheets (and in investment portfolios) as we shift away from fossil fuels. (We won’t always have plentiful, easy-to-access USD$48 crude oil available!)

The Conference Board report found a few examples of what could pass for stage 4 companies: “Few companies today are solidly at 4, but a growing number of leaders have one or more stage 4 attributes.  Airbnb, Google and Uber are ‘sharing economy’ companies; DuPont, Novelis, Unilever, and Waste Management are examples of long-established enterprises…”:

The 4-Stage Model is explained in the report.  We can see this having a powerful impact, similar to Professor Michael Porter’s work with Mark Kramer: “Creating Shared Value” (Harvard Business Review, January 2011).

the Conference Board makes the report(s) available for your reading — information is at:  https://www.conference-board.org/publications/publicationdetail.cfm?publicationid=2885

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The Director Notes are a series of publications the Board engages experts from various disciplines to contribute to, including experts in leadership, corporate governance, risk oversight, and sustainability.

The current issue was authored by Gilbert (Gib) Hedstrom, principal of Hedstrom Associates.  Content includes excerpts from his coming book, “The Sustainability Scorecard TM Handbook/”  Hedstrom is director of the Conference Board’s Sustainability Council.  He invited me to be guest presenter on corporate sustainability reporting and related topics at a recent Council meeting in Washington, D.C.

Matteo Tonello is managing director for corporate governance at The Conference Board; he is editor of the Director Notes series.

Melissa Aguilar is a researcher in the corporate leadership department of the board and is executive editor of the series.

Conference Board information is at: http://www.conference-board.org/

Imagine the Power to Address Climate Change As the Pope & Roman Catholic Church Focuses on Sustainability

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by Hank Boerner – Chairman, G&A Institute

Imagine the impact — the power of the organizational resources directed at climate change issues — as the global Roman Catholic Church focuses on the issues. In 2915, the new year, the global church could become the major “game changer” on the issue.

There is a new Holy Father in place — Pope Francis, who took office in a little bit less than two years ago. He has shaken things up in the Roman Curia (the important headquarters infrastructure in Rome/Vatican City) and is sending strong signals to the faithful on all continents.

Among those messages:  we are the stewards of the natural world and have moral and spiritual responsibilities in that regard.

The buzz is that a powerful message will be coming from Pope Francis this spring, in the form of an encyclical, the traditional way that important and “highest” teachings are communicated to the faithful worldwide.

Photo: USCCB

The resources of the church are immense and global: 1.2 million faithful around the world, 75 million alone in the United States; 5,000 bishops; 400,000 priests; newspapers; radio and TV stations; web sites; hundreds of orders; universities & colleges…and more.

Thinking of impact in capital markets:  Many Roman Catholic orders are members of a powerful institutional investor activist coalition — Interfaith Center on Corporate Responsibility (ICCR), which engages with public companies to address issues of concern.  Including uppermost in mind, climate change.

If these and other resources are brought to bear on climate change issues, think of this as the game changer for the global discussion on the subject.

We have strong hints now at the direction to be taken by Pope Francis and the church he leads.  Here are some things to consider as we enter 2015.

In late December, Amy Goodman of Democracy Now, shared her views on the church’s anticipated moves. “Pope Francis,” she posited, “is about to make history by issuing the first-ever comprehensive Vatican teachings on climate change, which will urge 1.2 billion worldwide to take action…”

Ms. Goodman interviewed author and Vatican expert Austin Ivereigh (co-founder of Catholic Voices), who has just published the biography, “The Great Reformer: Francis and the Making of a Radical Pope.”  Mr. Ivereigh said that the encyclical will address the science underlying arguments for policy changes and actions to be taken.

As backdrop, in May 2014, two “Pontifical academies” that are part of the Vatican mechanisms — The Academy of Sciences, and the Academy of Social Sciences — conducted a joint workshop and in effect convened a summit in Rome to discuss “Sustainability Humanity, Sustainable Nature”  Our Responsibility;”

The gathering explored economic growth and the impact on natural resources (“natural capital”).  And, the gap between rich and poor and the impact of economic growth on emerging economies, urban pollution, the growth of poverty, and other issues. (Among participants:  Jeffrey Sachs of Columbia University Earth Institute.)

The intent of the workshop was to view “Humanity’s interchanges with Nature through a triplet of fundamental, inter-related Human needs — Food, Health, Energy.\

The Papacy is a powerful bully pulpit for addressing societal issues and bringing the considerable resources of the Roman Catholic resources (spiritual, economic, diplomatic, persuasive) to bear. And Pope Francis is a logical messenger on the issue. Thank about his background and personal resources.

He was trained as a chemical technician in his homeland, Argentina. He chose the priesthood, entering the Society of Jesus (the Jesuits, who run universities worldwide). Ordained in 1969, he continued his studies, on to the doctorate in Germany. He taught philosophy in university.

His personal motto is miserando atque eligendo, chosen when he was first a bishop — meaning “lowly but chosen;” in Latin. He was appointed archbishop, then cardinal, and in March 2013 Jorge Mario Bergoglio was elected Pope — the first from the Americas.

As priest – bishop – archbishop – parish priest – teacher – cardinal — Francis has been focused on serving the poor, social justice, the authenticity of the church in matters of faith and morals, and the need for humankind to be stewards of nature. He took the name Francis noting the inspiration of St. Francis of Assisi, the great spiritual leader and protector of nature.

Biographer Ivereigh, who presumably has his necessary contacts in the Curia, predicts Pope Francis will issue his “climate change” encyclical in March.  The Holy Father is scheduled to visit Sri Lanka and The Philippines — both of which suffered great damage and human loss in recent storms that many experts attributed (the intensity) to climate change..

Topics to be included may be deforestation (a system that encourages to much inequality), And “consumerism,” which encourages damage to the environment.

Consider this:  the foundation of the document is predicted to be [that] the scientific consensus is that climate change is real…and momentum if needed to bring about action to address the challenges.

And then we should consider the impact / outcome of the enormous resources of the global Roman Catholic Church and all of its communication organs (including parish pulpits) are brought to bear on climate change issues.  With Pope Francis on point, corralling other religious, governmental and NGO communities to join his 21st Century crusade.

We’ll be watching – this will be a game changer, for sure.

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To see Amy Goodman report:  http://m.democracynow.org/stories/14898