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December 28, 2011
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Home » 3 Ways to Prove Sustainability's Relevance in Tough Times

CROs should help companies 'prune, plant and preserve'

By Chris Park

Some Corporate Responsibility Officers (CROs) have a big problem. In the best of times, many are treated as spin doctors with little authority to make strategic change within their organizations. And now that the economy has headed south, corporate responsibility and sustainability (CR&S) can appear more marginal than ever. After all, who needs to worry about social issues or the environment when the company’s immediate problem is to protect earnings, cut costs and hit the numbers?

Who else but you! We don’t buy the idea that CR&S--and, by extension, the CRO--has no place at a company trying to perform in a tough economy. In fact, this downturn could be the chance to establish social and environmental considerations as a truly strategic source of competitive advantage for your company.

To help understand our position, we describe the evolving CRO role as one of helping the company “prune, plant and preserve.” “Prune” refers to executing methodical, carefully considered cost reductions to keep margins in line–a natural focus during a downturn and one greatly enhanced through many sustainability investments available today. “Plant” speaks to making well-thought-out investments to maintain market share and/or grow the business–another area ripe for investment, as consumers and value-chain participants continue to demand “greener” products and services. And “preserve” means the ongoing process of managing, maintaining and reporting on the business to manage risk and support value.

Many companies now are in “prune” mode, which is an excellent place to begin your campaign to raise CR&S’s profile. There are dozens of changes that the typical company could make that would raise cash flow and cut structural costs. Executives at your company may have already put together a cost-reduction team and identified a list of possible projects. Your role as CRO is twofold: first, to identify which ones have a sustainability benefit and to persuade the cost-reduction team to give higher priority to the projects that, all other things being equal, have the greater positive impact on sustainability; and second, to bring forward innovative ideas for cost reduction that might otherwise escape the attention of the “traditional” cost cutters.

Because many cost-reduction projects focus on reducing waste, finding projects that support sustainability as well as reduce costs isn’t all that difficult. For example, an initiative to improve management reporting efficiency might include a plan to replace paper-based reports with an electronic dashboard. Or, in the retail industry, a project to cut energy costs by centrally controlling in-store temperatures would reduce greenhouse gas emissions as well as costs. These are just two examples of the increasing number of potential investments that make sense to consider from both a cost and a sustainability perspective.

It’s important to take careful measurements of before-and-after spend patterns so that you can point to specific, concrete savings for each sustainability-related initiative. If possible, you should also track the sustainability benefits of each project--“this big a reduction in greenhouse gas emissions,” “that many tons of paper not used or recycled,” and so on. While you shouldn’t claim that the purpose of the project was to achieve those benefits, we believe it would be entirely appropriate to bring them to leadership’s attention as an important ancillary result of approaching cost reduction with CR&S in mind. If a cost-reduction effort also reduces environmental impact, there is no excuse not to measure, report and take credit for the change.

Once you can report specific, tangible results in the “prune” space, you’ll be on your way to establishing the additional credibility you need to become involved in “plant” decisions. Position yourself as the go-to person to help the company identify and evaluate marketplace opportunities related to CR&S--researching and building greener products or line extensions, acquiring businesses that have sustainable operations or offer sustainable products etc. One U.S. bank’s retail arm, for example, found an opportunity to pursue sustainability-related revenues by collaborating with other retailers to allow consumers to purchase environmentally friendly products using debit card rewards points--even over some initial skepticism on the part of several members of the retail banking management team.

Finally, “preserve,” which is the CRO’s bread and butter, will be easier to accomplish once you have a track record in effectively managing both expenditures and investments. Having gained the confidence of your C-suite peers, you’ll be better able to develop and advocate for a corporate CR&S strategy and push through specific investments to support it. When doing this, remember that the CR&S strategy should reinforce your organization’s long-term vision and goals. Invest in programs that leverage the company’s core competencies, thereby showcasing its business strengths as well as its corporate goodwill. The large bank that extends low-cost business loans to farmers and female entrepreneurs, and the cosmetic company that hosts free beauty seminars for various groups of disadvantaged people, are two good examples to keep in mind.

Your increased organizational stature may also give you the chance to take your “preserve” role beyond overseeing the company’s CR&S activities. Your knowledge in areas such as energy conservation, emerging markets risk, and potential environmental legislation can give you valuable insight into strategic issues, including what products to sell, what markets to pursue or avoid, and what risks the company may face in the future. What will be the cost of energy over the next few quarters or years? How will that affect your expenses and the demand for your goods or services? Which key suppliers in what countries are most vulnerable to disruption from political unrest or natural disaster? To effectively plan long-term strategy, business leaders need to think about all these questions and more--and the responsibility for much of that thinking could rest with you.

Sure, some may view the CRO as a spin doctor. But you know better. Here’s your chance to prune, plant, and preserve your way into a leading strategic role--and to prove CR&S’s relevance to your company once and for all.

Chris Park is a principal with Deloitte Consulting, Park leads the Sustainability, Corporate Responsibility and Climate Change practice in the United States and is a member of its Global Enterprise Sustainability Group.

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