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The Triple Bottom Line
Cultivating Sustainable Business
Practices in Corporate America
Prabhudev Konana, associate professor of information,
risk, and operations management, suggests that companies
can also act responsibly and support the global
communities they affect by increasing their spending in
rural towns and villages where they market their
products.
“The goal should be to create wealth at the bottom of the pyramid, so they will spend money on the company’s products in the future,” he says. “Big companies can promote cooperative societies that are self-sustaining. They also reduce dependency on the government for social change.”
Konana recommends finding innovative ways to spread the wealth—for example, taking company getaways to rural communities or buying handmade goods from local artisans as corporate gifts.
Educating the youth of developing countries is another easy way to increase productivity, the size of the labor pool and disposable income in these areas.
“We need to move beyond giving money. We need to help others become self-sustaining and economically well off,” he says. “I think that’s much more strong and powerful. If they are economically self-dependent, they will start contributing to the economy.”
Merging and Diverging Opinions
While many companies have become more progressive in their CSR practices, some employees and consultants who work in CSR say they still meet opposition from people who believe that spending money on sustainability efforts means the company has to give up something else.
“People who don’t understand the business case for CSR think it’s either-or,” says Ivey. “Either you are performing well for your shareholders or you are being corporately responsible.”
Larry Rogero, FedEx Kinko’s director of environmental affairs, agrees. “When people hear the word, ‘environmental initiative,’ they think it’s going to cost more and it’s not going to be as good as what they’re used to having,” says Rogero. “If it costs more and it doesn’t work as well, it’s not—by definition—sustainable. Sometimes you have to go into the market and be a leader and pay a little more to make things happen.”
Ivey sites the acquisitions of socially responsible companies such as The Body Shop (by L’Oréal) and Tom’s of Maine (by Colgate-Palmolive) as evidence that CSR practices are, in fact, profitable in the long run. But, she believes the acquisitions can have both positive and negative consequences.
“It might be difficult for the companies to maintain their own values after being acquired,” she explains. “But it could be a good thing if the parent companies want to learn from and incorporate the acquired company’s sustainability practices and expand them—or at least let them run as they have been.”
After L’Oréal’s $1.14 billion purchase of cosmetics retailer The Body Shop March 16, Anita Roddick, the founder of The Body Shop, said L’Oréal wanted her company to teach them about community trade.
But according to BrandIndex—a daily measure of public perception for more than 1,100 consumer brands—The Body Shop’s “buzz” rating dropped 10 points to –4 by the end of March. Also, the public’s “general impression” of The Body Shop fell three points and “satisfaction” decreased 11 points.
Many customers who oppose animal testing have depended on the company’s ethical products for years, and some are not happy to see The Body Shop acquired by a company that does not share its values.
Campaigners against animal testing called for a boycott of The Body Shop and the Swiss multinational company Nestlé, which owns a 26 percent share in L’Oréal. Despite the fact that in early May The Body Shop reported a 5 percent growth in like-for-like same-store sales, it remains to be seen how the company will fare in the next year.
The question being raised is: How far up or down the corporate “food chain” should a company consider its responsibility? If The Body Shop is still producing its products using ethical methods, should it also be concerned about its parent company’s actions? Likewise, should Nike be responsible for the actions of the company that manufactures the rubber in its shoes?
Establishing the Yardstick
What are the universal standards for measuring these actions? While CSR reports can be helpful, the available standards are conflicting. Most companies use the Global Reporting Initiative (GRI) as their guideline for reporting and measuring CSR practices. But GRI is one of an additional two dozen national, international and freelance standards.
The International Organization for Standardization (ISO) is trying to remedy this problem by developing ISO 26000, a voluntary social responsibility benchmark intended to assist organizations in addressing and measuring their CSR approaches while respecting cultural, societal, environmental and legal differences and economic development conditions. The ISO Technical Management Board hopes ISO 26000 will give companies practical CSR guidance, while helping to increase customer confidence and satisfaction in organizations.
According to the current GRI reporting standard, Ivey says Ford Motor Co. is the first corporation that could be considered fully compliant. From Ford’s commitment to creating new emissions technology to its refurbishing of manufacturing plants to reduce hazardous materials, the company has proved to be a leader in environmental conservation and preservation.
Ford also is at the forefront of work-life balance issues with the establishment of its Family Service & Learning Centers, which offer Ford employees high-quality child care services. The company also invests in other important social issues, such as teen driving research and global education initiatives, and is well known for its funding and grant programs.
“When you talk about companies having good CSR practices, it could mean a lot of different things,” Ivey adds. “There’s no perfect company.”
In the long run, companies must think strategically about how they can best serve their stakeholders and bring the most value to both the community and the company. They’ll face tough decisions—like whether to help preserve their workforce with workplace HIV programs or fund initiatives to create energy-efficient trucks used in their supply chain. And while the benefits won’t necessarily be seen by the next quarterly earnings report, it’s clear that a company’s CSR practices are, indeed, an investment in its future.
“The goal should be to create wealth at the bottom of the pyramid, so they will spend money on the company’s products in the future,” he says. “Big companies can promote cooperative societies that are self-sustaining. They also reduce dependency on the government for social change.”
Konana recommends finding innovative ways to spread the wealth—for example, taking company getaways to rural communities or buying handmade goods from local artisans as corporate gifts.
Educating the youth of developing countries is another easy way to increase productivity, the size of the labor pool and disposable income in these areas.
“We need to move beyond giving money. We need to help others become self-sustaining and economically well off,” he says. “I think that’s much more strong and powerful. If they are economically self-dependent, they will start contributing to the economy.”
Merging and Diverging Opinions
While many companies have become more progressive in their CSR practices, some employees and consultants who work in CSR say they still meet opposition from people who believe that spending money on sustainability efforts means the company has to give up something else.
“People who don’t understand the business case for CSR think it’s either-or,” says Ivey. “Either you are performing well for your shareholders or you are being corporately responsible.”
Larry Rogero, FedEx Kinko’s director of environmental affairs, agrees. “When people hear the word, ‘environmental initiative,’ they think it’s going to cost more and it’s not going to be as good as what they’re used to having,” says Rogero. “If it costs more and it doesn’t work as well, it’s not—by definition—sustainable. Sometimes you have to go into the market and be a leader and pay a little more to make things happen.”
Ivey sites the acquisitions of socially responsible companies such as The Body Shop (by L’Oréal) and Tom’s of Maine (by Colgate-Palmolive) as evidence that CSR practices are, in fact, profitable in the long run. But, she believes the acquisitions can have both positive and negative consequences.
“It might be difficult for the companies to maintain their own values after being acquired,” she explains. “But it could be a good thing if the parent companies want to learn from and incorporate the acquired company’s sustainability practices and expand them—or at least let them run as they have been.”
After L’Oréal’s $1.14 billion purchase of cosmetics retailer The Body Shop March 16, Anita Roddick, the founder of The Body Shop, said L’Oréal wanted her company to teach them about community trade.
But according to BrandIndex—a daily measure of public perception for more than 1,100 consumer brands—The Body Shop’s “buzz” rating dropped 10 points to –4 by the end of March. Also, the public’s “general impression” of The Body Shop fell three points and “satisfaction” decreased 11 points.
Many customers who oppose animal testing have depended on the company’s ethical products for years, and some are not happy to see The Body Shop acquired by a company that does not share its values.
Campaigners against animal testing called for a boycott of The Body Shop and the Swiss multinational company Nestlé, which owns a 26 percent share in L’Oréal. Despite the fact that in early May The Body Shop reported a 5 percent growth in like-for-like same-store sales, it remains to be seen how the company will fare in the next year.
The question being raised is: How far up or down the corporate “food chain” should a company consider its responsibility? If The Body Shop is still producing its products using ethical methods, should it also be concerned about its parent company’s actions? Likewise, should Nike be responsible for the actions of the company that manufactures the rubber in its shoes?
Establishing the Yardstick
What are the universal standards for measuring these actions? While CSR reports can be helpful, the available standards are conflicting. Most companies use the Global Reporting Initiative (GRI) as their guideline for reporting and measuring CSR practices. But GRI is one of an additional two dozen national, international and freelance standards.
The International Organization for Standardization (ISO) is trying to remedy this problem by developing ISO 26000, a voluntary social responsibility benchmark intended to assist organizations in addressing and measuring their CSR approaches while respecting cultural, societal, environmental and legal differences and economic development conditions. The ISO Technical Management Board hopes ISO 26000 will give companies practical CSR guidance, while helping to increase customer confidence and satisfaction in organizations.
According to the current GRI reporting standard, Ivey says Ford Motor Co. is the first corporation that could be considered fully compliant. From Ford’s commitment to creating new emissions technology to its refurbishing of manufacturing plants to reduce hazardous materials, the company has proved to be a leader in environmental conservation and preservation.
Ford also is at the forefront of work-life balance issues with the establishment of its Family Service & Learning Centers, which offer Ford employees high-quality child care services. The company also invests in other important social issues, such as teen driving research and global education initiatives, and is well known for its funding and grant programs.
“When you talk about companies having good CSR practices, it could mean a lot of different things,” Ivey adds. “There’s no perfect company.”
In the long run, companies must think strategically about how they can best serve their stakeholders and bring the most value to both the community and the company. They’ll face tough decisions—like whether to help preserve their workforce with workplace HIV programs or fund initiatives to create energy-efficient trucks used in their supply chain. And while the benefits won’t necessarily be seen by the next quarterly earnings report, it’s clear that a company’s CSR practices are, indeed, an investment in its future.
