Last week the Social Innovation Summit took place in New York. While many of the discussions at the summit focused on social challenges, innovation approaches and how to build “lasting partnerships to implement positive social change,” a few panels also explored sustainability in business. The most interesting one was hosted by Jeffrey Hollender and included Jeff Seabright, Chief Environmental Officer of Coca-Cola, James Gowen, Chief Sustainability Officer of Verizon and Michael Jacobson, Director, Corporate Responsibility Office of Intel.
I’ve heard Hollender speak a couple times before, but I’ve never seen him moderate a panel. I was to see what it would be when he is asking the questions, especially when he asked them of executives from corporate America. Actually, it went pretty well and either because the panelists felt comfortable with Hollender or because of the general positive atmosphere of the summit, this panel managed to generate one of the most sincere discussions I have heard lately on CSR challenges of big corporations.
Are companies doing enough?
Hollender started the discussion by asking the panelists if business is providing adequate leadership on sustainability. Seabright of Coca-Cola said the answer is no. He went on to explain that sustainability is shifting from being just about green to also include social issues and moving from being driven by reputation considerations to be driven by the value it generates for business overall. Nevertheless, he added, when we look at what is needed in terms of fighting climate change and where we’re standing right now, we’re clearly failing on this particular issue.
One of the reasons he is the challenge of balancing short-term costs and long-term benefits. We need to look at sustainability as a long term investment, he said, just like we address innovation. Apparently, we’re not there yet.
Jacobson of Intel agreed, saying one of the problems is that business doesn’t tell its sustainability stories well enough – starting with the failure of CSR departments like his to communicate the value that sustainability creates for the company. You have to communicate effectively internally if you want the company to recognize this value.
Unlike the first two panelists, Gowen of Verizon, who is also managing the company’s global supply chain, said he sees the full half of the glass – there’s more to do, but business is already doing a lot. He also mentioned the challenge of sharing the story of what is already done in terms of sustainability. He added that the main obstacle that limits the company’s ability to discuss their challenges is the pressure to make short term gains.
Short term mentality vs. long run bets
Hollender asked if companies, given the short term mentality of the current business structure, can actually solve problems like climate change and hunger. Gowen replied first, saying the answer is “No” and added the solution might be innovation. Jacobson took it again to the direction of short-term vs. long-term thinking, offering his observation that it’s OK to spend shareholders’ money on building eco-systems as he calls it as long as they are focused on generating value. Basically, he added, CSR projects are similar to technology projects: the landscape is changing rapidly and companies in this business take bets for the long term. For example, he said, “We will invest $6.5 billion on building a new factory, when we don’t know exactly what products it will make.”
Seabright also focused on the tension between short-term and long-term, explaining that bleeding your company to death in the short-term just to show record profits is not a smart strategy. “Some companies,” he added, “don’t want investors that are too focused on the short-term value.” While Unilever is a great example for this approach, Seabright didn’t share with the audience if Coca Cola-has also adopted it.
Hollender moved on to ask the panelists which externalities their company are responsible for and which are of greatest concern. Jacobson mentioned conflict minerals and told the audience that in the company’s shareholder meeting just couple of weeks ago, their CEO asked to start the meeting with a video on conflict minerals. “Intel,” he said, “recognizes the problem and has the goal of sourcing conflict-free minerals from Congo by 2013.” – He went on to explain that it would be easier to get out of Congo, but the company decided it’s important to continue support legitimate sourcing of minerals in the country.
Seabright said that Coca-Cola’s main issue as a beverage company is water, which is a shared resource (with communities where the company operates) that is not properly valued and is not well regulated. He also added that water is not just a physical commodity, but also has social, cultural and religious significance and in general is a substance that has a lot of complexities and therefore finding ways to respect and value water is something that Coca Cola will increasingly need to focus on.
Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Department of Business Administration, CUNY and the New School, teaching courses in green business and new product development.