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Building Sustainability Into Your Operations: The Importance of Governance

| Friday September 4th, 2009 | 0 Comments

stick figures pictureDriving sustainability into the operations of a company is an oft-stated goal for sustainability departments. How many times have you heard (or said!): “My vision is that one day our department will go away…and sustainability will be just part of everyday business, and the sustainability department will be out of a job.”  But how do we actually make that happen? How do we ramp up a sustainability program from a departmental focus to an organization-wide set of capabilities? And how do we move from many disparate efforts to a cohesive set of coordinated initiatives? The answer is an effective sustainability governance solution.

So what to do?

To solve these challenges, a “governance” solution is required that addresses both the diffusion of sustainability into the organization (from the sustainability department into general operations) and sustainability collaboration across the organization (to establish synergies such as the sharing of best practices, resources, tools, etc.).

Let’s back up a bit – what is governance?

From the Corporate Governance site at CorpGov.net, corporate governance is defined as a framework that creates: “the balance between economic and social goals and between individual and communal goals. The corporate governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society.” (Sir Adrian Cadbury in ‘Global Corporate Governance Forum’, World Bank, 2000)

Does governance need to be different for sustainability?

Such general definitions of governance don’t take into account the collaborative, participatory nature of governance that sustainability requires. I like Bob Doppelt‘s definition in “Leading Change towards Sustainability”, that governance is “the way any organization distributes power and authority though its information, decision-making and resource allocation mechanisms.”  As he rightly points out, governance of sustainability — in contrast to traditional, hierarchy-based governance — means involving and valuing everyone’s contribution to the organization, including both its internal and external stakeholders.

For sustainability to be fully integrated into the organization, we want people across all operations to embrace sustainability. We want them to generate new ideas and ways of doing things, and we want them to be the primary actors in implementing these changes. This calls for a governance model that is more inclusive and consensus-based, rather than hierarchy-based.  At the same time, sustainability needs to integrate into the rest of the business – and therefore needs to also be part of the existing governance structures.

So how do you make it happen?

Many times managers want to dive straight into building the organization structure (“drawing the lines and boxes”). That’s putting the cart ahead of the horse. To implement a governance solution that promotes both the diffusion of and collaboration around sustainability, you must include all the components of a sound sustainability management infrastructure: strategy, market positioning, measurement, process, people and organization:

  • Sustainability governance should be driven by your strategy:  Do you have a shared corporate vision for sustainability? And do all the business units, functions and regions support and align around this strategy?
  • Sustainability governance should be informed by your market positioning: Do you desire a unified corporate brand message, product level or ingredient brands? Will your brand experience be consistent across all business units?
  • Sustainability governance frameworks should be designed for each of these key management system components in mind:
  1. Measurement:
    • What are the key goals, metrics and targets that you want to achieve with your sustainability program?
    • What level of formalized reporting and support tools do you want to have in place?
  2. Process:
    • What key governance processes are required around Oversight & Direction, Strategy Coordination & Policy, Program Management, and Execution & Reporting?
  3. People:
    • How do you engage your key stakeholders (customers, employees, partners, suppliers, NGOs and management)?
    • What rewards & recognition programs do you put in place to support the decision making structure?
  4. Organization:
    • What structure, roles and responsibilities are required?
    • How should the key governance processes be organized: Centralized, Decentralized, or a Hybrid?

By answering these questions, you will be well on your way to creating a governance structure to drive sustainability into the operations – with a coordinated and cohesive approach.  And maybe one day, your governance model will be so successful, that the sustainability department is out of a job…

***

FairRidge Group is a team of management, strategy, and change experts focused on business transformation through the practical application of sustainability for operational improvement and strategic innovation. FairRidge Group brings a new framework for sustainability management that integrates strategy, operations, branding, measurement and organizational development to drive profitable business transformation.

Scott Johnson is a Principal at FairRidge Group, with over 20 years of management consulting experience, working at Andersen Consulting, Axiom Management Consulting and Cambridge Technology Partners. He has worked with clients such as Caterpillar, CSAA, Levi Strauss & Co., and Motorola. Scott holds an MBA in Operations Management from Purdue University.


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