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How to Move From “Bolt-On” to Embedded Sustainability

| Monday June 13th, 2011 | 4 Comments

Switching over to recycled paper, adding solar panels to the roof or increasing philanthropy are all a good start for a company jumping in to the sustainability pool, but they are not going to generate actual progress on climate change or other global issues.

The “bolt-on” just doesn’t cut it as a sustainability strategy anymore.

Chris Laszlo, author of Embedded Sustainability: The Next Big Competitive Advantage (along with Nadya Zhexembayeva), shared a few examples of companies that are doing a great job on embedded sustainability and those that still have work to do in his presentation at Sustainable Brands 11. Laszlo compared Chrysler, which has chosen to make incremental MPG improvements to Nissan with its big hairy audacious goal of an all-electric car. Which one do you perceive to be more sustainable? Which one are you likely to buy stock in? Nissan is demonstrating innovation and leadership in sustainability – something that will quickly transform into financial wins.

It wasn’t very long ago that accomplishments like Chrysler’s would be lauded in blogs like ours. However, the sustainability landscape is crowded enough that incremental change no longer makes the cut.

Creating Value with CSR

Laszlo takes a fresh look at the value chain and lays out three ways that sustainability initiatives build value for the firm:

  1. Declining Resources-as energy and other inputs get more expensive, it makes financial sense to conserve them.
  2. Increasing Expectations- customers, investors, regulators and employees expect more (as I mentioned above) and therefore a company has to deliver more in order to remain competitive.
  3. Radical Transparency, often associated with CSR reporting, puts NGOs, unions, and government officials on the outside looking in with no secrets. A company has to do good things, otherwise their reputation and brand value will quickly suffer.

Notice that 2/3 of those have to do with how your company is perceived by the outside world?

Embedded sustainability represents a tremendous opportunity to build brand value– loyal customers– beyond any incremental financial benefits your company might receive from targeting efficiency projects.

Laszlo has figured out a way to display that value visually:

 

My attempt to recreate the graph shown onstage at Sustainable Brands

 

Embedding CSR, Strategically
Given the nature of the corporation these days, embedded sustainability means a huge increase in brand value over what can be gained from an incremental approach.

As you brainstorm new initiatives for your company, think about where they fit on Laszlo’s chart. The more up and to the right they are, the more opportunity they give your company to make a big win in the court of public opinion which will lead directly to many a return customer.

Share your ideas for big company innovations in the comments- these companies are reading and they might even take some of your ideas!

[Image Credit: ThereIFixedIt]


▼▼▼      4 Comments     ▼▼▼

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  • Del Ray

    So a few thousand electric cars helps the environment more than hundreds of thousand more fuel efficient cars?

  • Jonathan Byron

    I see your point, Del Ray. IMO, incremental changes are still important. Electric cars represent a potential big transformation of how we move around, while improving fuel efficiency is an important interim measure.

  • Nadya Zhexembayeva

    Hi Jen and all,

    so great to see you picking up this topic – and getting behind the idea of embedded sustainability. It seems that the three BIG trends we speak about in this new book – decreasing resources, increasing expectations, and radical transparency – are resonating with all of us struggling with translating sustainability to an average manager. Time and again we see that these three big market pressures are literally changing the rules of the game for business – offering a huge opportunity to create value with sustainability. And happy to add a bit more of ideas to this post: if embedded, sustainability creates value for a company in at least 7 ways:

    1. Better risk management
    2. Better efficiency
    3. Product differentiation
    4. Creation of new uncontested markets
    5. Creating a highly-engaged culture and strengthening the brand
    6. Changing the rules of the entire business context
    7. Driving radical innovation

    The European Financial Review recently requested an article from Chris and I, and you can see these 7 levels of value creation and much more there: http://www.europeanfinancialreview.com/?p=2868

    Look forward to more dialogue!

  • http://www.embeddedsustainability.com Nadya Zhexembayeva

    Hi Jen and all,

    great to see the idea of embedded sustainability catching on! Clearly, the three big trends that are reshaping business reality – declining resources, increasing expectations, and radical transparency – are resonating with many of us. For Chris Laszlo and I, speaking about these three trends have been the best way of making sense of sustainability to an average manager. And also happy to share that these trends create a reality where business has more opportunities that ever to create value with sustainability. We have discovered at least 7 ways to create such value:

    1. better RISK management
    2. better EFFICIENCY
    3. PRODUCT differentiation
    4. creation of new uncontested MARKETS
    5. better BRAND and CULTURE
    6. changed and improved BUSINESS CONTEXT
    7. driving RADICAL INNOVATION

    If you are looking for mere, the European Financial Review asked us for a piece recently, which also gives much more detail about the difference between bolt-on and embedded sustainability. Here it is: http://www.europeanfinancialreview.com/?p=2868

    Look forward to more dialogue!