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Head of Sustainability,
FORMULABeing authentic sou...
2 3
To ad-man Julian Borra,
we’re now living in an era
of ‘scratch-card’ brands when
“the ave...
4 5
So what’s going on? Different
methodologies, for a start. Some test
perceptions, some eva...
6 7
We identified five dimensions of
authenticity: credibi...
8 9
Both Interbrand and Corporate Knights
have identified technology companies
10 11
Head of Nordic Office, Salterbaxter
Vice President, Corpora...
12 13
14 15
Search iPad
MatthewYeomans@Custom Communication
We need to see more companies actually
16 17
18 19
London Business School, www.ioannou.us
business as usual. A substantive action
would be that the company al...
22 23
purchasing decision, the large majority
does not. Certification schemes are in
reality r...
Head of Sustainability, Salterbaxter
General Manager, Corporate Co...
26 27
market a hybrid like a conventional
vehicle. The sales process is also
different. And y...
28 29
Founder, Positive Luxury
Sustainability and luxury may
sound like oppos...
30 31
Chief Executive of Ashridge Business School
What’s the connection
between per...
32 33
and biological processes, but through
internal reflection and insight, and
the rate of c...
Aligned strategy: is your
sustainability strategy fully
integrated into your b...
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Directions 2013: Why Being Consistent Matters - Salterbaxter
Directions 2013: Why Being Consistent Matters - Salterbaxter
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Directions 2013: Why Being Consistent Matters - Salterbaxter

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As businesses and brands compete ever harder on sustainability, being joined-up and convincing in what they say and do about it has never mattered more. But setting out a consistent story for investors, regulators, staff, consumers, stakeholders or competitors is not easy. Differentiated brand and corporate stories, different market places, and different time frames seem to require such different responses that a simple core story can quickly fragment. As social media lay the inconsistencies bare for all to see, companies can end up leaving the impression they don’t have much conviction about what’s really important.

Publié dans : Business, Économie & finance
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Directions 2013: Why Being Consistent Matters - Salterbaxter

  1. 1. 1 NIGELSALTER Director, Salterbaxter BENTUXWORTH Head of Sustainability, Salterbaxter THEGOLDEN FORMULABeing authentic sounds like a basic for a modern business or brand, but it’s surprisingly hard to achieve. As stakeholder expectations mount, and the business environment becomes ever more complex, is there a simple formula for getting the action right, and getting the message across? THEGOLDEN FORMULA I MEETTHE AUTHENTICS 4 GOODPHARMA I0 #AUTHENTIC I2 COREVALUES I6 MAKESOME NOISE 20 PLUGIN,TURN ON,STANDOUT 24 STYLEWITH SUBSTANCE 28 INNER STRENGTH 30 HOWAUTHENTIC AREYOU? 34 From horsemeat in burgers, to unpaid corporation tax, to the Bangladesh factory collapse, 2013 has been the year in which the gulf widened between the increasingly ambitious positions companies are adopting on social purpose and sustainability, and the all too prosaicfailingsthatkeeptrippingthemup. What could ethical fashion mean if mainstream brands are sourcing goods from lethal sweatshops? Why should anyone believe a company is responsible if it fails to pay a credible amount of tax? How plausible could claims about livestock chain of custody be, when the final goods contain the wrong animal? In commercial terms, these were not idle questions: horsemeat fears drove down Tesco’sprofitsinnineoftheir11global markets. With the death toll at Rana Plaza at over 1,000, many of the high street brands that sourced clothes there are being drawn into expensive remedial action. The discovery that Starbucks had paid only £8.6 million in UK corporation tax since launching in 1998 and none since 2009, while not being illegal, didn’t match customer expectations. Bowing to consumer pressure, in June 2013 Starbucks acknowledged the need to “do more to maintain and further build public trust,” and paid £5 million in tax. These big events made the news, but also built the momentum of change already underway in the relationship between consumers, companies and brands, driven by five years of financial crisis, the impact of social media, hypertransparency and declining trust. The consequences for companies and brands are dramatic – challenging some long-held beliefs about the disconnection between the actions of companies and the value of brands. As businesses and brands compete ever harder on sustainability, being joined-up and convincing in what they say and do about it has never mattered more. But setting out a consistent story for investors, regulators, staff, consumers, stakeholders or competitors is not easy. Differentiated brand and corporate stories, different market places, and different time frames seem to require such different responses that a simple core story can quickly fragment. As social media lay the inconsistencies bare for all to see, companies can end up leaving the impression they don’t have much conviction about what’s really important. Can a company really have a singular, authentic approach to sustainable business? And what happens when it does? Directions 13: Authentic? takes the temperature of this debate with companies and commentators at the frontline of the quest for authenticity. We launch new research on how the top companies perform against a new definition of authentic, and get fresh insight on the bottom-line impact of both actions and words. And for those looking for an action plan, we map the path to authenticity in five steps. Being authentic may not be easy, and we’re not setting out to point the finger at inauthenticity because we know that’s just too simplistic. But we do believe that attempts to be joined-up and authentic are a feature of the businesses that are getting closer to their customers, becoming the go-to partners for collaboration and innovation, and most likely to succeed in the transition to sustainability. For more on the authenticity challenge visit: salterbaxter.com As ever, we welcome your feedback. Let us know what you think at: btuxworth@salterbaxter.com DIRECTIONSI3: WHYBEING CONSISTENT MATTERS DIRECTIONS2013TEAM NIGELSALTER Director BENTUXWORTH Head of Sustainability OLIVIASTANDISH Sustainability Team RICHARDWILSON Design Director PETECUTLER Senior Designer JEFFSUTTON Business Development Director ANGELACONFEGGI Account Manager GARYMcCALL Head of Production LOUISEMOYNA Production Manager
  2. 2. DIRECTIONS 2013 SALTERBAXTER 2 3 To ad-man Julian Borra, we’re now living in an era of ‘scratch-card’ brands when “the average Jane and Joe can now easily scrape the shiny surface of a brand to reveal all manner of things beneath – either the gold of product and service experiences, rewards, community and a purposeful and authentic conscience at work to mutual benefit, or toxic shockers, rights abuses, dodgy ingredients, shabby operational impacts, abdication of responsibility or, worst of all, corporate indifference to the suffering or injustices ofothersinvolvedintheirpursuitofprofit”. The consensus is that consumers, despite wanting to trust companies and especially brands, now struggle to do so in the face of a steady flow of damaging revelations about corporate behaviour – and need more reassurance than ever. Ford, one of the companies performing strongly in our survey of authenticity (see page 4), has recognised the game changing effect: “Increasingly, consumers are looking beyond the traditional benefits of a brand. These impulses have created ‘forensic consumers’ who, with a few clicks on a computer or smartphone, investigate whether a company shares their values.” Get it right, and the commercial benefits can be significant. Clothing brand Patagonia’s famous ‘don’t buy this jacket’ campaign may have seemedanoble butuncommercial gesture – true to the company’s ethos but not a credible business approach. But in fact, Patagonia’s sales increased almost a third during 2012, nine months of which featured their buy less marketing, offering hope that there is a way to engage consumers on some of the less palatable issues facing us all, and still win. Not surprisingly, lots of people are trying to pin down the rules of success in this new world. Indices abound – tracking either the real sustainability performance of companies, or the way that different stakeholders perceive them, or some combination of the two – identifying the criteria that might define the deeds and appearance of winning businesses. Though they yield wildly different results, what these surveys drive at in different ways is the authenticity of the sustainability work of the companies concerned – the quality that somehow brings together both action and its appearance. Authenticity sounds good, and everyone wants to be authentic, but what are the rules? How will you know when you get there? ‘Authentic’, from Greek ‘authentikós’ meaning ‘original’, is variously associated with being transparent, consistent, trustworthy, genuine, real, honest, true, sincere, and having credibility. We believe authentic companies are credible in their actions, transparent in their communications, open to challenge and engagement, consistent in what they say, and have something unique to offer the world in the social purpose they pursue: a definition which yields the ‘Golden Formula’ we explore in different ways throughout this report. In ‘Meet the Authentics’ on page 4, we put our thoughts about authenticity to the test in a new survey – looking at how some of the world’s leading companies manage the challenge. It’s a challenge that comes at companies in different ways. For pharmaceutical company Novo Nordisk, the big question is how to be authentic in claiming to be looking for a cure for diabetes when the big commercial opportunity seems to come from managing it. Troels Børrild explores this question with Novo’s Susanne Stormer on page 10. For drinks company innocent, authenticity starts with values – as a filter on the people they employ, and a hard-edged measure of performance, as Tansy Drake explains on page 16. SALTERBAXTER’S GOLDENFORMULA AUTHENTICITY= CREDIBILITY+ TRANSPARENCY+ OPENNESS+ CONSISTENCY+ UNIQUENESS CONSUMERSARELOOKING BEYONDTHETRADITIONAL BENEFITSOFABRAND. THESEIMPULSESHAVE CREATED‘FORENSIC CONSUMERS’WHO,WITH AFEWCLICKSONA COMPUTERORSMARTPHONE, INVESTIGATEWHETHER ACOMPANYSHARES THEIRVALUES Authenticityisalsoa long-termproject,and forToyotacomesfrom beingtruetoavision,and thenlivinguptoitwhenahero product–thePrius–makesyouthe world’sgreenestbrand.Weexplorethe challengesthisbringswithToyotaMotor Europe’sJean-YvesJaultonpage24. Meanwhile, the business schools are also tuning into the authenticity debate, and we showcase two new takes on the field: Ashridge’s Kai Peters wonders what makes authentic leaders, on page 30, and LBS’s Ioannis Ioannou has some surprising observations on when to act, and when to talk about it for best commercial effect, on page 20. And for those companies whose forays into social media make them feel like an embarrassing dad dancing at a teenage disco, Gemma Dodd and Matthew Yeomans have some thoughts about what it means to be authentically sustainable online on page 12. Ultimately, these different perspectives confirm our view that authenticity depends on a finely balanced mix of strategic relevance, good action and strong communication. For any company wanting to stay in the front rank of sustainability leaders, and gain the commercial advantages that go with it, a focus on being authentic seems to be a simple but effective strategy. If you are wondering where this debate leaves your business, why not take our authenticity test on page 34, where we offer five steps to authenticity based on our golden formula. And if you’d like to learn more about building an authentic approach, visit salterbaxter.com
  3. 3. DIRECTIONS 2013 SALTERBAXTER 4 5 So what’s going on? Different methodologies, for a start. Some test perceptions, some evaluate performance, some do both, and all in different ways. The differences and the volatility that result are enough to make some companies question the value of engaging. But it’s also true that some companies manage to perform pretty well across the board in these surveys. Unilever, for example, continues to be ranked highly across a number of surveys for their ‘Sustainable Living Plan’. This includes a no.3 ranking within the Globescan/SustainAbility Sustainable Leaders for the third consecutive year, and recognition as an industry leader by Dow Jones in 2012. Whilst any such recognition is positive, the truth is that many companies manage to present a convincing case for their sustainability credentials to some audiences, but not others. Whether companies try to be consistent across these audiences – and how well they do – is not something the current slew of lists and indices test. Some look at certain stakeholder perceptions of company or brand sustainability performance (Havas’ Meaningful Brands, and Globescan for example), and Interbrand use such perceptions to explore one dimension of authenticity: ‘the perceived credibility of the brand’s environmental claims’. But we believe that authenticity is a more complex proposition, built out of action and communication with all of a company’s stakeholders. THE AUTHENTICS SURVEY So just how authentic do ‘sustainability leaders’ appear through their communications? That’s the question the Salterbaxter Authentics Survey set out to answer. Using five dimensions that make up our golden formula for authenticity and we believe apply to every company or brand: credibility, transparency, openness, consistency and uniqueness, we looked at the top 15 performers from Corporate Knights’ ‘Global 100 Most Sustainable Corporations in the World’ list OLIVIASTANDISH Sustainability Team, Salterbaxter BENTUXWORTH Head of Sustainability, Salterbaxter Lots of lists rank companies for their sustainability creds, but which companies manage to tell a consistent story through all their channels? The Salterbaxter Authentics Survey offers some fresh insights. The annual crop of sustainability rankings yields some odd results. Toyota tops the Interbrand green brand rankings, but is nowhere to be found on Globescan and SustainAbility’s Sustainability Leaders’ survey. Floor coverings company Interface, ever the stakeholders’ darling and at no.3 on the Globescan list, is nowhere to be found amongst the Corporate Knights most sustainable corporations in the world. And Dow Jones Supersector Leaders Air France don’t make it into the top 50 anywhere else. for 2013, and the top 15 performers identified by Interbrand’s ‘Best Global Green Brands’ for 2013. For these 30 companies and brands, we carried out a qualitative review of publicly available information, including company statements about strategy, their sustainability/CR report, thought leadership activity, and social media presence. We focused on the global websites and global profiles for each company, rather than regional sources, and we deliberately chose sources from different parts of the business as a means of checking consistency. Though our survey was inevitably subjective, it has thrown up some surprising gaps on the authenticity spectrum for some of the world’s leading corporations. MEET THE AUTHENTICS Theeighttopscorers,thosewithascoreof 26ormoreoutofapossible30,included threeautomotive;onefoodindustry;one pharmaceutical;onetechnology;one beautyproducts;andoneenergy managementcompany.Soitseems authenticitybythismeasureatleastis notconfinedtoanyparticularindustry. As you’d expect, integrating sustainability into broader strategy and having a clear purpose are becoming the norm for companies that take sustainability seriously, so almost all the companies we surveyed scored well for ‘credibility’. But for the other dimensions – ‘transparency’, ‘openness’, and particularly ‘consistency’ and ‘uniqueness’ – results are much more variable. Despite having done much of the work to align their business with sustainability many companies struggle to convince across all their communications. Some fail to engage with stakeholders – or at least don’t evidence it within their reporting. Others can’t find a way of presenting their approach that’s in any way memorable or different. Others still have completely different accounts in different channels,
  4. 4. DIRECTIONS 2013 SALTERBAXTER 6 7 THE SALTERBAXTER AUTHENTICITY SURVEY We identified five dimensions of authenticity: credibility, transparency, openness, consistency, and uniqueness, and two components for each dimension: The dimensions and components were weighted equally, and each component was allocated a score from 1-3 (1 – vague information/no alignment; 2 – some detail included and some alignment; and 3 – significant information/ complete alignment.) To generate scores we reviewed publicly available information for each company: • Company statements about strategy • Sustainability web pages • The sustainability/CR report • Thought leadership • Social media presence We looked only at activity that could be found via global company web pages, reports and social media as a starting point. Manycompanieshaveseparatesocial mediaaccountsforsustainability.Where linksortagsdirectedustotheappropriate accounts,ortheaccountwasnamedafter thesustainabilitystrategy,weincluded themwithinresearch.Ifaccountswere notobviouslylinkedtothebrand,these werenotincluded. making it difficult to determine where the commitment really lies. This kind of authenticity clearly isn’t easy. We’ve taken a closer look at results for three sectors and consider what the scores mean for some of the companies featured, and what kind of changes would make a positive difference. Automotive Withhighlyvisibleeco-productsin themarketplace,andambitious commitmentsaroundeco-efficient production,it’sperhapsnotsurprising thatautomotivecompaniesoften performwellingreenbrandassessments. Butreviewingthesesamecompanies withourapproachtoauthenticity producedsomeinterestingresults. Though Honda, Toyota, Ford and BMW may have unique stories to tell about their sustainability ambitions, we struggled to find it on their global websites and in their reports. They all want to develop mobility opportunities, add value to society or become ‘society’s choice’ – but we found little to choose between their claims on these channels. So for defined ambition, they lost points in our analysis’. Turning to thought leadership activity, Ford, Volkswagen and BMW are all working hard to differentiate themselves. For ‘beyond reporting’ they were all awarded full marks. BMW’s ‘Activate the Future’, Volkswagen’s ‘Think Blue’ and Ford’s ‘Greentopia’ campaigns have an environmental focus, consistent with their sustainability ambitions. But Ford lead another campaign focused on ‘Trust’ which stands out for giving a different, broader platform for engagement. There’s also a sense that ‘more is more’ amongst the automotives: all producing huge amounts of detail about their sustainability work, making it harder to determine what they think is important – and affecting the ‘transparency’ and ‘openness’ scores in our research. Honda for example present their actions in a huge amount of detail in their five reports, but don’t say much about targets and their performance, or about how they’ve engaged stakeholders, or their approach to leadership, all of which reduced their scores for transparency and openness in our survey. Toyota, Honda, Nissan and Volkswagen also missed marks for ‘aligned strategy’ because we felt their messages got lost within extensive discussion. BMW gave more detail on targets, and their presentation of ‘open leadership’ seems to us an example of best practice online. Each pillar to their sustainability strategy touts a relevant employee video statement, drilling into how sustainability is being practised at a different level of the company and building the sense that employees have a voice and a clear sense of their role in the delivery of sustainability action. Ford Ford came 2nd in Interbrand’s 2013 ranking and top in our authenticity survey, with full marks for all but one of our criteria. They made a clear case for their open leadership, stakeholder engagement, credible targets and detailed plan of action seen throughout publications. Sustainability is well integrated into Ford’s broader strategy which itself responds clearly to the external risks and trends associated with the industry. But what makes Ford stand out are their thought leadership campaigns and use of social media. For example the recent #FordTrust/ ‘Trust is the New Black’ and #FordGreen/ ‘Greentopia’ campaigns consisted of thought- provoking panel discussion and talks focusing on the changing business environment and consumer expectations. Ford used the campaigns to demonstrate their interest in wider issues affecting global business and society, and remind consumers of their values in the process, with their Twitter feeds supporting further debate online, taking their approach well ‘beyond reporting’ in our survey. Ford 28 6 6 6 6 4 2 Nestlé 27 5 5 6 6 5 14 Schneider Electric SA 26 6 5 4 5 6 13 Natura Cosmeticos SA 26 6 6 4 6 4 2 HP 26 6 5 6 5 4 12 Novo Nordisk A/S 26 6 4 4 6 6 5 Volkswagen 26 6 5 5 4 6 7 Nissan 26 5 6 5 5 5 5 Dell 25 6 5 4 5 5 10 BMW 25 5 4 6 5 5 13 Panasonic 24 6 4 3 5 6 4 Johnson & Johnson 24 5 5 4 5 5 6 adidas 24 6 6 4 4 4 15 Konijke Phillips Electronics NV 24 6 5 4 4 5 7 Nokia 23 6 4 4 4 5 9 Neste Oil OYJ 23 6 4 5 4 4 4 Sony 23 6 5 2 5 5 11 Umicore SA 22 6 5 4 3 4 1 Danone 22 5 3 3 6 5 8 Toyota 21 5 4 6 3 3 1 Intel Corp 21 5 4 4 5 3 14 Westpac Banking Corp 20 6 4 5 3 2 10 Outotec OYJ 20 6 5 4 3 2 12 Biogen IDEC 19 6 3 3 4 3 8 Statoil ASA 19 6 2 3 5 3 3 ASML Holding NV 18 6 4 5 2 1 11 Sims Metal Management Ltd 17 6 2 2 4 3 15 Storebrand ASA 15 4 4 2 3 2 6 Dassault Systemes SA 14 3 2 4 2 3 9 Honda 12 2 4 2 2 2 2 Brand/Company Credibility Consistency AuthenticityScore Openness Transparency Uniqueness CorporateKnights/ InterbrandRanking Being Authentic Index Aligned strategy Clear purpose Honest conversation Aligned statements Open leadership Engagement Credible targets Tangible action Defined ambition Beyond reporting Credibility Consistency Openness Transparency Uniqueness Corporate Knights Global 100 Most Sustainable Corporations in the World 2013 Interbrand Best Global Green Brands 2013 MANYCOMPANIESMANAGE TOPRESENTACONVINCING CASEFORTHEIR SUSTAINABILITY CREDENTIALSTOSOME AUDIENCES,BUTNOTOTHERS
  5. 5. DIRECTIONS 2013 SALTERBAXTER 8 9 Technology Both Interbrand and Corporate Knights have identified technology companies positively for their development of sustainable manufacture and design, and generally they do well in both lists. We also found several technology companies doing well, but for different reasons. One is their competence and visibility online. One impressive example is Intel’s sustainability Twitter account, @intelinvolved, which boasts a following of 275,000 (and growing) and which they’ve used to raise the profile and engage on issues from forced marriage to water scarcity. Though Intel seem to have the edge, all the other technology companies in our survey are strengthening their social media presence, reminding people of their company values and promoting their achievements, but also showing they are more open to engagement. All of the technology brands also appear to have understood the importance of tangible and visible action, with five out of the nine companies scoring five out of six for transparency. They’re also good at defining their ambition and communicating it beyond their reports, with most doing well in our ‘beyond reporting’ category. Panasonic, Intel and Sony all present their vision for the future as part of their thought leadership. Sony’s social media presence showcases their ‘FutureScapes’ project, exploring how technology could be part of sustainable living in the future, and helping to position them as an ambitious player in the changes ahead, but Sony’s global website doesn’t provide a link to the venture, which seems a missed opportunity. The technology companies surveyed tell a good story about contributing to social good by harnessing their innovation capacity. For example Nokia have donated technology to field workers in the Amazon so they can track Dengue Fever breeding hot spots and curb numbers affected by the disease. In doing so they are capitalising on their strengths, leveraging what the business does well to do good, and making their efforts more authentic in the process. Panasonic Panasonic are differentiating themselves from their competitors through thought leadership. Panasonic’s development of ‘Smart Towns’ showcase their innovative safety and environmentally friendly technologies: from LED street lights, to invisible security, to solar systems for homes. The buzz around Panasonic’s plans for Fujisawa Smart Town, and plans for public housing with the government of Singapore, has helped them connect with stakeholders and make their Smart Town agenda seem action-oriented and different. As a result they perform well though they have yet to do much to integrate sustainability into their online profile and social media presence. But Panasonic’s report doesn’t say much about their targets, how they approach leadership and stakeholder engagement, and the voices of either staff and external are largely absent. We felt Panasonic could do more to demonstrate their sustainability commitment by simply adapting the content of reporting, and increase coverage of sustainability reporting, achievements and debate, via social media. ExtractiveandMaterials Corporate Knights awarded many of its top positions to corporations from the extractive and materials industries. By their criteria, these corporations have clear, purpose-driven sustainability strategies. They clearly understood the benefits of using their corporate websites to show how sustainability is integrated in the business, giving an immediate sense that sustainability is a part of their broader strategy, and helping them score well for credibility in our research. But from there the scores decline. On ‘transparency’, Sims Metal Management lost marks as their website and integrated report list achievements for water use, waste generation and energy and carbon, but give no future targets or reflect on previous successes and failures. Statoil’s website and reporting is inconsistent in the way it deals with progress on environmental and other targets, giving the impression of wavering commitment. Four of the six extractive companies had weaker scores for ‘openness’, failing to offer much evidence of open leadership and stakeholder engagement. Even Schneider Electric, third overall in our list, lost marks for stakeholder engagement, consistently stating its importance, but offering little supportive detail. Lower scores for consistency in the sector were mainly a result of underdeveloped social media presence. Umicore and Neste Oil have tweeted some sustainability updates but, with limited followings (both around 900), the companies aren’t reaching a significant audience. Other companies in the sector have done little, perhaps feeling there is less pressure to be present than for consumer brands. We believe the growing scrutiny of all corporations in social media – driven in part by their performance in league tables such as Interbrand and Corporate Knights – will make this omission increasingly risky. Sims Metal Management It ought to be easy to talk a good sustainability story if your main business is recycling. So Sims Metal Management’s score of 17 is surprising. We found that Sims provided little for stakeholders to get hold of: within the sustainability web pages and the integrated annual report, there’s not much on targets, stakeholder engagement or leadership approach. Social media presence is negligible: sustainability tweets aren’t regular and the small following limits the reach of Sims’ sustainability message. Finding a way to define and articulate their strategy and become more transparent and open about their progress could be good starting points for Sims to engage more people and manage stakeholder risk in the coming years. THECOMPANIESDOINGWELL INOURSURVEYSEEMTO HAVEFOUNDAWAYTOBE CONSISTENTINTHEIR ACTIONSANDHOWTHEY COMMUNICATETHEM–TOA WIDERANGEOFAUDIENCES GETTING TO AUTHENTIC This qualitative assessment of some of ‘sustainability leaders’ picked out by Interbrand and Corporate Knights has identified some of the reasons why their sustainability commitments and achievements are not coming across consistently. Those scoring well in our survey get the basics right, but they also understand the added value of ‘uniqueness’ and are making the most of digital media. The best performers are evidencing relevant thought leadership, and building a vibrant social media presence – though we also found that in general social media is still an underdeveloped means for brands and companies to engage their stakeholders. Though high positions in sustainability leadership rankings are no bad thing, the value of being authentic is not about moving up the league table. The companies doing well in our survey seem to have found a way to be consistent in their actions and how they communicate them to a wide range of audiences. What benefit do they get from authenticity? As the boundaries between different stakeholder groups, and between brands and the companies behind them are eroded by digital and social media, one advantage is that it’s simpler to have one approach and one story – that’s as true and relevant for investors as it is for consumers. It may sound obvious, but it’s a demanding path and one that few companies yet follow. Those that do, look well positioned to reap the benefits that looking – and being – authentic can bring. How authentic is your business? Take our test on page 34. IT’SSIMPLERTOHAVEONE APPROACHANDONESTORY –THAT’SASTRUEAND RELEVANTFORINVESTORSAS ITISFORCONSUMERS
  6. 6. DIRECTIONS 2013 SALTERBAXTER 10 11 TROELSBØRRILD Head of Nordic Office, Salterbaxter SUSANNESTORMER Vice President, Corporate Sustainability, Novo Nordisk GOOD PHARMANovo Nordisk has been amongst the sustainability stakeholders’ favourite companies for 20 years or more, with countless accolades including Corporate Knights’ ‘the world’s most sustainable corporation’ in 2012. No small achievement when it’s part of an industry regularly rocked by scandal and allegations of corrupt practice. So how does Novo Nordisk stay true to its mission of ultimately ‘defeating diabetes’ in the midst of a lucrative global diabetes epidemic and eroding trust in Big Pharma? Troels Børrild talks to Novo Nordisk’s Susanne Stormer, Vice President, Corporate Sustainability. TB: Novo Nordisk’s mission is nothing short of ‘changing’ and ultimately ‘defeating’ diabetes. What do you mean by this brand promise? SS:Forourpart,thereisnodoubt:we’re genuinelycommittedto‘Changing Diabetes’asagloballeaderindiabetes care,butit’simportanttounderstandthat there’salong-andshort-termperspective tothis.Forthelongtermwe’reworkingon acurefordiabetes–probablytheonly pharmacompanyintheworldthat’sdoing so–andfortheshortterm‘Changing Diabetes’meansmakinglifewithdiabetes manageableforthosepeoplewhoget diagnosedandmustlivewiththis conditionfortherestoftheirlives.Italso meansprovidingbetteraccesstocarefor thosewhoneeditandcurrentlydon’thave it,anditmeansadvocatingforhealthier lifestylestopreventdiabetes. TB: How do you prove to the world that your commitment is authentic? SS:Ourmissionisevidentasadeep-felt commitmentandfrequentdiscussion topicinourglobalorganisation.Givenour globalpresence,howthatmission translatesintoabrandpromisetakes differentformsindifferentmarketplaces, buttheessenceiswhatinspiresand motivatesuseverywherewework.It’sthe startingpointforeverythingwedo,butour missionalsohelpsustotakea long-termapproachtovaluecreation. Ifweweretosimplymaximiseshort-term profits,weprobablywouldn’tinvestas muchinresearchanddevelopmentaswe do,butratherfocusonsellingasmany unitsofwhatwe’vealreadygotinstore.Our missionandourbrandpromisechallenges ustoalwaysaimhigherthanthat. When we ask our customers what the best thing we could do for them would be, their first priority is a cure for diabetes, so it can’t affect their families. But they also ask us to make it easier for them to live with diabetes, which is why we’re always looking for ways to make treatment more convenient, such as aiming to develop insulin medicine in tablet form. We know injections are a key factor deterring patients from getting started on effective diabetes treatment, so it would have a massive impact if we manage to successfully develop a tablet treatment. When we first set out on that research investment we expected that it could take decades to develop, which would scare off some companies, but for Novo Nordisk this is part of our brand promise. It’s also an integral part of our strategy to remain a global leader. So it’s not just about doing good, but about staying in business for the long term. And the interesting part about that kind of blue-skies research is that it doesn’t just follow a linear and predictable trajectory; with our latest advances we may be able to develop the treatment in just 20-25 years. That would be a real game changer. TB: Some stakeholders claim that you and your peers are not doing enough to ensure access to medicines for people in low-income groups and countries. How do you address this concern? SS: Access to medicines is the key question that we and the industry are faced with. Often the debate is about affordable pricing, but it also has to do with market strategy for entry to, and expansion in, low-income countries. On the issue of pricing, medical treatment for diabetes is in fact not expensive – on the contrary, it is much more costly to not treat it. We completely understand stakeholder concerns and appreciate that it can be difficult to accept at first glance that we have a gross margin at around 80 per cent. But our sales prices need to reflect the huge R&D investments made in getting the treatments developed and ready for the market. This investment needs to be recovered at a later stage if we are to remain in business and help patients not just in the short term. On the second issue, we’ve for years followed a strategy to expand access to effective treatments that can address unmet medical needs, also for people in low-income countries. It’s one of the reasons why we maintain a preferential pricing policy and have a portfolio of products. However, we wanted to take up the challenge and set ourselves an ambitious target to show our commitment to patients and other stakeholders to this important issue. So, last year we announced our target to reach 40 million patients a year by 2020, almost doubling our current reach. This can only be achieved by reaching out to more people in those parts of the world where diabetes is growing at epidemic rates. We’re confident that we’ll meet the target, because when we set out towards a goal, our entire organisation is behind it. TB: How have the critical voices responded to your new, big target? SS: They’ve actually responded very positively. The stakeholders who have been most vocal about the need to close this gap appreciate a commitment with concrete and measurable targets with a deadline. They can then name and shame you if you fail to deliver on the target. Some stakeholders will always want you to do more and aim higher, but the most important ones have been very positive. TB: A recent challenge to Novo Nordisk’s position as the stakeholders’ friend came when the public healthcare sector in Greece announced that it was no longer able to pay your bills due to the debt crisis in the country. You replied that you would then not be able to supply your most effective treatments any more. How did this go down with stakeholders – and how do you balance your brand promise with profitability? SS:Yes,thatwasseentoconflictwithour brandpromisebysomestakeholders.But notinourview.Inthespecificcasewe madesurethattherewasalwaysan effectivetreatmentavailabletopatients whilenegotiatingwiththepublic authoritiesinGreece.Wehadtowithdraw ournewesttreatmentsforawhile.We needtocareforpatientsintheshortterm, butwealsoneedtomakesurewemake enoughprofitstobeabletoinvestinthe researchanddevelopmentthatwillallow ustohopefullymeetthediabetes challengesofthefutureandnotjustthe present.AndourCEOveryclearly explainedthispositioninthemedia andwhywedidwhatwedid.Peopleare freetodisagreewithus,butwehaveto standourground. Overall, I think we’re actually quite consistent in our messaging from different parts of the organisation – and I agree with you that it is key to be – and be seen – as a company with an authentic social purpose. But I’d prefer to earn it rather than claim it. And if we were to come across as not being true to our purpose, I am certain that our stakeholders would hold us to account and voice their expectations. That, in fact, is an obligation, but also a great motivation.
  7. 7. DIRECTIONS 2013 SALTERBAXTER 12 13 GemmaDodd@SalterbaxterLotsofcompaniesareplayinginthesocial mediaspacewiththeirsustainability messages,andafairproportionofthem seemlessthanclearwhatitisthey’re doingthere.Soasimplequestiontostart with:whyissocialmediasuchan importantpartofsustainability communications? MatthewYeomans@Custom Communication Socialmediaandsustainabilitymake perfectbedfellows.Whenyoustripthem down,authenticityiscentraltoboth sustainabilityandworthwhilesocial media.Whensocialmediafirstarrivedit changedtherulesontransparency– demandingauthenticactionandholding companiestoaccountveryquicklyforany perceivedfailures.Inthesameway,that’s whatsustainabilityismeanttotest–how authenticcompaniesareinpursuingtheir socialandenvironmentalgoals.GemmaDodd@SalterbaxterSowhatdoesthatmeanforcompanies moreusedtobrandcommunicationinthe socialspace?Cantheysimplyadapthow theycommunicate? MatthewYeomans@Custom Communication Transparencyhasbecomeabitofacliché, butbothsocialmediaandthe sustainabilityagendadrivecompanies towardsit.Theycutthroughtheway companieshavetraditionallylookedat brandmarketingandbrandcommunicationsandasksomemuch deeperquestionsaboutwhatthe businessisactuallydoing–andso transparencybecomesveryimportant.Communityalsobecomesvital.While previouslycompaniesandbrands preacheddownatpeople,thatkindof messagingdoesn’tworkanymore– becausethecompaniesarenolongerup onthehill,theareactuallydownamong theregularpeople,andtheyarehavingto buildcommunitywiththeverypeople fromwhom,formanyyears,theysoughtto distancethemselves. Andfinallycreativityandcollaboration becomeessential,becausewhenyou lookattheamountofnoiseoutthere, theamountofcontentbeinggenerated,findingawaytocut throughiscruciallyimportant.GemmaDodd@SalterbaxterCreativityfeelsalongwayofffromthe ‘pressreleasefeedonTwitter’approach thatalotofcompaniestaketotheir sustainabilityeffortsonsocialchannels. MatthewYeomans@Custom Communication That’strue,butitseemstomeamassive missedopportunity.What’sreally interestingaboutsustainabilitywhen broughttogetherwithsocialmediaisthat itgivesyoutheopportunityforvery powerfulcreativecontentandstory telling.Socombinetransparency, authenticity,community,collaboration andcreativityandI’darguethatyou probablyhavetheperfectcombinationfor successfulsocialmedia.GemmaDodd@SalterbaxterSodoesitmakesenseforcompaniesto treattheirsocialmediapresencefor sustainabilityseparatelyfromtheirother conversations?Orshouldtheybelooking forintegrationintothesocialmainstream? MatthewYeomans@Custom Communication Idon’tthinkthere’sarightorwronganswer tothat.Ithinkit’sgoodthatsustainability istakenseriouslyenoughbycompanies thattheyarededicatingsomeresourceto communicatingitviadedicatedsocial mediaplatforms. Search iPad #AUTHENTICIf it’s not just about likes and retweets, how do you do sustainability in the social world? And how do you get some real return for your efforts? Salterbaxter’s Gemma Dodd talks to Matthew Yeomans. GemmaDoddis Head of Digital at Salterbaxter MatthewYeomans is Founder of Custom Communication and lead author of the SMI-Wizness Social Media Sustainability Index AccountAccount
  8. 8. DIRECTIONS 2013 SALTERBAXTER 14 15 Search iPad MatthewYeomans@Custom Communication We need to see more companies actually getting out there and producing the sustainable work and products that give them the stories to tell. It’s those stories that will be the basis of more compelling conversations, for any kind of audience – whether that’s academics looking for case studies or the Facebook and Twitter audiences who want to get sneak peeks and insights without a deep dive on sustainability. If you’re actually doing something good then it’s much easier to use creativity to tell different stories to different stakeholders. GemmaDodd@Salterbaxter Agreed – but I do think there is a role for social media to be used to involve people on their sustainability journey. But also there’s an opportunity and a need to be transparent about the journey itself. Nobody has completely cracked it yet and to an extent we are all learning how we can get there. So to my mind it isn’t just about creating social platforms, which showcase the stories and the achievements. Of course, there is a role for that, especially to engage consumers and drive brand equity and perception around the sustainable merits of products. However, there is also a crucial role for corporates to create social platforms which invite collaboration with subject specific communities so that they can generate new insights and avenues which they couldn’t otherwise do alone. Some of our clients are working with us in this way and it is creating huge opportunity for them. Social media seems the very best place for that kind of engagement and collaboration. MatthewYeomans@Custom Communication We’re talking about major corporations that have built their DNA to make money first and worry about everything else second. So turning that super tanker around – into companies that want to be profitable but understand that profitability comes from being energy efficient, sustainable resource users, good to their employees and communities – it’s a big job. There is no company that has really achieved it yet – I’d say even the best companies are only 15 per cent along that journey, and that makes the kind of open engagement you’re describing very challenging for them. GemmaDodd@Salterbaxter Exactly, it’s about looking at the different ways that we can use social platforms. Sure there is an essential role for social to act as another communications channel, providing you get your storytelling approach right and create the right exchange with your audience. But I think there are other roles that social can play for corporates – not least as a collaboration tool, and a place to engage with different communities and make change happen. We are just beginning to understand these different roles for social – and tapping that potential is going to be a big part of the coming years. The SMI-Wizness Social Media Sustainability Index is available at socialmediainfluence.com/SMI-Wizness/ Talk to us about activating your online community via salterbaxter.com “If you’re actually doing something good then it’s much easier to use creativity to tell different stories to different stakeholders.” AccountAccount Search iPad their chosen issue and they use a very different language to the sustainability generalists. We’re trying to find ways to unlock these micro-communities – to open up corporate teams to different people and different perspectives, and to find ways of engaging that will deliver change. MatthewYeomans@Custom Communication To me, the bottom line to do that is that you have to be useful. So the question is: are you actually saying something that conveys value to the people you want to connect with. Beyond the jargon and the buzzwords, what content can you create? And how can you use it to connect with real communities that are interested in specific issues? GemmaDodd@Salterbaxter Are there any companies doing this really well yet, in your opinion? MatthewYeomans@Custom Communication It’s changing fast – three years ago there were just a handful of companies who even understood the importance of communicating sustainability via social media, and realised it was more than a limited set of issues for a niche group of stakeholders. Now there are lots of them – realising that sustainability could become a brand proposition if it can be done in the right, authentic, transparent way. But the telling thing is that there are very few companies who are actually doing what they say they would like to do. The 15 companies that head the SMI index stand out largely because they’re talking about things they actually do, rather than things they would like or hope to be doing. GemmaDodd@Salterbaxter So the action has to come before the conversation? GemmaDodd@Salterbaxter Your recent SMI report cites a lot of organisations for their efforts to engage consumers on sustainability issues. Engaging consumers is crucially important but there is also a role for corporates to engage different audiences as well, don’t you think? Sustainability- aware stakeholders, opinion formers, academics and so on, all have interesting roles to play with corporates too – especially given the innovation challenge that many companies need collaborators to tackle. These people are just as important as consumers but they might need a very different kind of conversation and community. MatthewYeomans@Custom Communication Well it’s worth pointing out that social media isn’t just about consumers or any particular big audience, it’s about the ability to reach niche audiences, to cherry pick, to create communications and interactions based on what people care about. Social media have blown away the idea that only particular stakeholders care about sustainability – and opened companies’ eyes to the fact that – guess what? – there are regular folk out there who wanted to know about it as well. GemmaDodd@Salterbaxter Yes, and we have found lots of evidence to prove that the sustainability audiences on social platforms are made up of lots of different micro-communities. There are of course your sustainability generalists who are crucially important people for consulting with corporates and evangelising on issues. But we’re finding really interesting data on very active communities centred on specific issues – like building skills in communities or water. They are subject-specific, and involved in making change happen on AccountAccount
  9. 9. DIRECTIONS 2013 SALTERBAXTER 16 17 CORE VALUES TANSYDRAKE innocent innocentisoftencitedasanexemplarfor itscommitmenttosustainability.Andwhile it’ssomethingwe’vebeenhotonsincewe startedwearefarfromperfect,justatthe startofourjourneyinfact.Whatweare proudofhowever,isthatitisaninbuilt considerationofallthatwedo–beitinthe office,thesupplychainorthefinaldrinkon theshelf.We’dliketogettoaplacewhere it’snotcelebratedasananomalyinthe industry,butcommontoallbusinesses andtheiremployees’attitudes. VALUES FROM THE START To ensure that’s the case at Fruit Towers we ensure everyone joining the team shares the innocent values. We have five, which are at the core of the business. We’ve structured our recruitment around them and our first round interviews are purely to filter out those who might not prioritise the same things we do. As Apple’s head of hiring once put it, By focusing on sustainability from the start, innocent has made authenticity part of its culture and its offer to consumers. It’s a good place to be, argues innocent’s Tansy Drake.
  10. 10. DIRECTIONS 2013 SALTERBAXTER 18 19 ‘We’dratherhaveaholethananarsehole workinghere’.Weagreewholeheartedly andsoifwecan’tfindacandidatewiththe rightinitialattitudethenwe’llwaituntilwe do.Appropriateskillscomesecond. innocent’s values were written by the company when it stood at 45 people and there was a fear we were growing too big to guarantee we were all pulling in the same direction. But while there was some finessing, they came pretty easily and are genuinely something everyone buys into. As well as coming naturally (having been recruited against them) they are upheld with both carrot and stick. They are empowering – giving every one of us permission to improve things (leaving things a little better than you find them is our shorthand), but we also know we will be measured twice a year against how well we are ‘living the values’. So alongside our personal objectives, staying true to innocent’s values affects performance- related pay. We believe this three-pronged attention on our values – recruiting the right people, empowering employees to go beyond their day-to-day remit to improve things and placing an emotional as well as financial expectation to work to them – has gone a long way to ensuring our business intentions are genuine. We also believe it’s an important part of why they are also seen as authentic by our customers and consumers. Careful recruitment and a focus on values take us a long way towards a sustainability culture, but they aren’t enough on their own. So on top of our company-wide commitment to responsibility, we have a team of three committed to driving longer-term projects and strategy. They are supported by champions planted in each bit of the business who have a fifth of their role devoted to sustainability – from the way we source our fruit to the way we pack presents for consumers. All in all, our commitment to making things a little better than we found them is strong at innocent. It flows from left to right, bottom to top. ENGAGING THE CONSUMER We’vealwaysbeenopen,honestand transparentaboutwhatwe’reupto. FromourrPET(recycledpolyethylene terephtalate)journeytogeneralstories aboutsustainabilitywehavenotshied awayfromsharingourthoughtsor worryingthatitdidn’tinterestourdrinkers. Butlikeourvalues,thishascomenaturally tous.Wesetthebusinessupmaking thingsthatwewantedtodrink.Sowe spoketopeoplelikewe’dspeaktoour friends.OrMum.Orthemaninthe newsagent.Wetalkedaboutthethingswe wereuptoandwhatwasimportanttous. And that included our impact on the world. We want to tread as lightly as we can. The consistency of that message and that it flows through everything we do has helped make what we say credible, I think. It’s not a campaign or a bit of greenwash designed to ingratiate ourselves with ethically-aware consumers (which rarely works – gladly people are pretty savvy and can see through ‘marketing’ quickly). Instead it is part of our DNA; we are spiritually aligned as innocent Founder Richard Reed would say. STAYING INNOCENT WITH COKE In May we sold the majority of our shares to the Coca-Cola Company. As expected, our drinkers and the press picked up on the story and some began to question whether we would lose our distinctive values and approach as a result. But nothing has changed at Fruit Towers. We don’t plan to alter our commitment to sustainability – we’re pleased that, as promised, Coke trust us to run our company and brand in the way that makes it a success. And having the best people, which to us means folks that live our values and champion being responsible, remains the cornerstone. In fact we have bigger ambitions for projectssincewejoinedtheCokeportfolio. They have helped to enhance our sustainabilityworkbysupportinguson two major agriculture projects in Europe. And in turn, we’re already sharing our expertise with them. We see it as a great opportunitytomakeabiggerimpactrather than working in silos. Two sustainability heads are better than one as they say. We still have a long way to go until we will be satisfied with our efforts – in fact I don’t think that journey will ever end. There are always things that can be bettered. But that being responsible is a central commitment, backed up with passion and resource, is something that fills me with confidence that we will continue to reduce our impact on the planet as we grow as a company. And with scale, you hope we might be able to trigger some industry-wide focus and commitments. For 10 years innocent has run its big knit campaign – with woolly hats knitted by the public raising money for Age UK (and their European equivalents). So far over four million hats have been popped on bottles and £1 million raised.
  11. 11. IOANNISIOANNOU London Business School, www.ioannou.us business as usual. A substantive action would be that the company also trains their managers on using the Code of Conduct in their day-to-day decisions, or has a certain percentage of women on the Board of Directors, or actually uses renewable energy rather than setting a target to use it, or that the company pursues third-party auditing of their sustainability report. To assess the different impact of those two types of actions on business Greenwash has become a byword for the worst kind of sustainability strategy – all talk and no action. But have we thrown the baby out with the green bathwater? There may be some commercial value in talking up your sustainability plans, as long as the real action follows, argues Ioannis Ioannou. One of the most common complaints I hear from sustainability teams in business is how frustrating it is to see a competitor getting lots of credit for their sustainability programme, despite having done little in practice – and certainly less than they have. The accusations of greenwash fly, but at the same time, the frustration is in part a realisation that these competitors are getting some real value from their better profile – perhaps a positive reputational hit that can have all sorts of knock-on effects, both inside and outside the business, including more momentum for some real action. CANITBEAMOREEFFECTIVE INVESTMENTTOTALKABOUT WHATYOURSUSTAINABILITY PROGRAMMEMIGHTDO, THANTOACTUALLYDO SOMETHING? All of which raises the question – can it be a more effective investment to talk about what your sustainability programme might do, than to actually do something? I’ve been exploring this question with my colleague Professor Olga Hawn of Boston University, through the lens of what we term ‘symbolic’ and ‘substantive’ action. It sounds complex, but in fact it’s quite simple. A lot of companies out there pursue what we call symbolic sustainability action. Mostly that consists of public reporting of intent to do something. For instance, company X might report that they favour promotion from within, or that they have a CSR committee, or even that they now have a Code of Conduct. These are symbolic actions in that they create the sense and perception of action predominantly in external audiences, despite the fact that – generally – not much changes from performance, we developed a new empirical methodology that characterises a firm’s market value as a function of its existing tangible assets and intangible resources in combination with its current CSR actions, whether symbolic or substantive. We then identified two sets of policies – one symbolic and the other substantive, and checked the impact on the market value for companies that undertake symbolic, substantive or both types of actions conditional on the level of their existing intangible resources. We looked at 2,261 firms in 43 countries over seven years (2002 to 2008). REPUTATION CREATES MOMENTUM What we found is that if you are a company that has already established a high level of intangible resources in terms of sustainability – for example, a good reputation – then chances are that the symbolic action will be more beneficial because it is a lower cost way of maintaining the underlying resources – by confirming and re-enforcing existing expectations. The larger the stock of existing resources, then the higher the DIRECTIONS 2013 SALTERBAXTER 20 21
  12. 12. DIRECTIONS 2013 SALTERBAXTER 22 23 purchasing decision, the large majority does not. Certification schemes are in reality relatively less significant for consumers than they are to the supply chain. If you certify you’ll probably have a more stable supply chain with less risk. It is not the communications of the certification to the consumer that generates the value but the reduction of the risk and the increase of the quality of the underlying product. Effectively, a certification scheme becomes a valuable engagement tool for companies through which to build long-term relationships, based on trust and collaboration, with their suppliers. So if telling the consumer about your certification is not likely to drive big shifts in purchases, why bother? The supply chain knows, so why communicate further if the benefit is more likely to be realised through a different key stakeholder? There may be more value in communicating product quality, or other CSR strategies that might resonate or deliver value to consumers more than a supply chain certification. The symbolic claim is not really adding any value to the substantive action. REACHING OUT TO INVESTORS Investors, on the other hand, need a different approach where alignment of symbol and substance is vital, but strategic relevance is the real test. Investors don’t only care if companies tell the truth. It’s important but it only matters if that truth actually makes sense in the broader strategic context and if it’s truly integrated in the company’s business model. And very often it isn’t. Investors are often grouped and discussed together as stakeholders, but not all investors are the same. Investors focused on sustainability are more likely to be looking for the things we know drive outperformance: transparency, impact that symbolic actions have on performance. And the reverse is also true – a company that has already established strong environmental capabilities for example, will likely generate less marginal return from undertaking additional environmental action than a firm that has yet to do much. But if you are a company still relatively new to sustainability, with little action under your belt (i.e. low levels of intangible resources), symbolic action is less effective because you have more to gain by undertaking substantive actions – by actually walking the walk. What’s also interesting is the effect of doing both. Both making and acting upon your declarations is the most beneficial strategy in terms of market value, and the more the two are linked the better the outcome. Markets are willing to reward you when you announce something and then reward you more when you follow up. The critical corollary is of course that if you declare something without later backing it up with actions, then risks open up from scrutiny and accountability. COMMUNICATING FOR ROI What does all this mean for companies wanting to get better at managing perceptions and finding a return from their sustainability work? Since CSR is such a broad and diverse area, and corporate communications resources are scarce, our work suggests that companies need to evaluate when it is worth communicating what they are doing, and to whom, in terms of the likely return. Ecolabels make an interesting example. We know from consumer research that ecolabels – certification on coffee or tea for example – have an effect on consumer purchasing behaviour, but only a small one. Lots of consumers say in surveys that they would buy a certified product but when it comes to the actual THEREISALOTOFNOISEIN THESYSTEM,ANDLOTSOF COMPANIESDOING SUBSTANTIVETHINGS BECAUSEOTHERCOMPANIES ARE,RATHERTHANFORANY SOLIDSTRATEGICREASON accountability, third party assurance and so on. As I found in another study with Professor Bob Eccles and George Serafeim, of Harvard Business School, such investors tend to have much more focused portfolios and they trade less often, whereas investors with diversified portfolios, trading more often, are more likely to be found in the investor base of more short-term oriented companies. So there is a growing percentage of investors who are strongly taking into account the long-term thinking of the company, their transparency, and their accountability. But there is of course a significant portion that are not. In the longer term, as more evidence accumulates around the outperformance of sustainable companies, the market will hopefully correct; with the help, of course, of institutional changes, and governmental policies. But we are in a transitional phase where investors are trying to make sense of all of this, with lots of companies making lots of disclosures, and no universal reporting or auditing standards. As a result, there is a lot of noise in the system, and lots of companies doing substantive things because other companies are, rather than for any solid strategic reason. They might be authentic in reporting what it is that they are doing, but true authenticity would also mean deep strategic understanding of the activities they are engaging in. Where does this leave companies trying to communicate a long-term view? From an investor perspective, the Unilever example is interesting. CEO Paul Polman actually discouraged hedge funds from having ownership of Unilever, and sure enough their share went from 15 per cent in 2009 to 5 per cent in 2012. Making such a choice inevitably requires trade-offs, but the trade-offs may not be as bad as you think. Short-term investors need share volatility to make money. By losing them the volatility reduces, giving the company a bit more of the flexibility needed for long-term strategy to work. BRINGING SUBSTANCE AND SYMBOL TOGETHER IN REPORTING There are lots of barriers to transparency: it’s both challenging and expensive to put the metrics in place for environmental and social performance, particularly with the quality and accuracy that is typical for financial data. In a downturn most companies revert to being focused on more traditional elements of financial performance. Sustainability is also something that companies are only beginning to understand and requires levels of transparency and accountability way beyond what they were used to in the past. That’s why I believe integrated reporting is going to become an increasingly significant test of how well companies are aligning strategy, substance and symbol, and an increasingly valuable tool in the hands of investors. Integrated reports represent a step change in transparency: cutting through the narrative and pictures of sustainability reporting with a much harder test of performance: disclosure that truly integrates a company’s financial performance with its environmental and social performance. A form of reporting that requires a deep understanding of the company’s strategy within the economic context but also within the social and environmental context, in a holistic way. This approach signals to an investor that the business really understands the risks and the potential opportunities that arise from ESG factors but also communicates the ways in which ESG factors are integrated into the business model. Together with a more rigorous approach to materiality, integrated reports set a much higher bar than sustainability reports. And if a firm aims to reach this bar, this is already a signal that there is a substance there. Ioannis Ioannou’s paper ‘Do Actions Speak Louder than Words? The Case of Corporate Social Responsibility (CSR)’ is available at papers.ssrn.com BOTHMAKINGANDACTING UPONYOURDECLARATIONSIS THEMOSTBENEFICIAL STRATEGYINTERMSOF MARKETVALUE,ANDTHE MORETHETWOARELINKED THEBETTERTHEOUTCOME
  13. 13. DIRECTIONS 2013 SALTERBAXTER BENTUXWORTH Head of Sustainability, Salterbaxter JEAN-YVESJAULT General Manager, Corporate Communication, Toyota Motor Europe PLUGIN,TURNON, STANDOUTOn the one hand, it means things can get tougher in theory. On the other, the more other brands communicate on hybrids and other green technology, the more customers become educated and attracted to this new mobility. In fact, the hybrid market in Europe grew by 45 per cent between 2012 and 2013. Last year, we had a 65 per cent share, and so far in 2013 our share has grown to 75 per cent. So, having more players doesn’t mean less business for Toyota. We have a considerable lead in creating, developing, selling and servicing vehicles with petrol- hybrid technology. We have sold more than 5.5 million hybrids worldwide since 1997. That’s a long experience. You don’t How did Toyota become the world’s greenest brand with the world’s best selling green car – and how does the company live up to its sustainability credentials? Ben Tuxworth talks to Jean-Yves Jault of Toyota Motor Europe. BT: You’re just back from the Frankfurt Motorshow. BMW launched the i8, and others are taking some bold positions on their eco-credentials. What does it mean for you? JJ: We fully respect our competitors, and what we say is “Welcome to the club.” 24 25
  14. 14. DIRECTIONS 2013 SALTERBAXTER 26 27 market a hybrid like a conventional vehicle. The sales process is also different. And you need the credibility that comes with customers’ recognition that your hybrid cars are just as reliable, if not more, than your ‘normal’ cars. We’re now focused on bringing more emotion to our hybrid offering, playing not just the rational card but putting forward the peace of mind, the enjoyment of a different way of driving – and the fun, through our engagement in the World Endurance Championship with a hybrid. BT: Consumers identify Toyota as green mainly because of the Prius. Does such a hero product make it harder or easier to position the rest of the business? JJ: The Prius is a tremendous brand asset. For many people, it is ‘the’ green car. It has a long history, excellent brand recognition, and symbolises our early realisation that developing a car for the 21st century that would be 50 per cent more fuel efficient than a conventional car at the time, was one of the keys to our long-term success as a company. But Prius was only the beginning for us. Since then, we have developed our hybrid portfolio, aiming to have our Hybrid Synergy Drive powertrain available in every vehicle by 2020. To date, we have more than 23 hybrids for sale in 80 countries and regions worldwide. And between now and 2015, an additional 15 new or redesigned hybrids will be added, including a Fuel Cell hybrid car. So, hybrid is becoming synonymous with ‘the alternative way to drive’, whether it’s a B-segment Yaris, a C-segment Auris, or any of our Lexus vehicles. At the same time, we have improved our hybrid technology, following our principle of continuous improvement or kaizen. We are working on our fourth generation hybrid system, and with each of the previous generations, we’ve improved fuel economy and emissions by 10 per cent, improved output by 30 per cent, and decreased cost by more than two-thirds. Finally, we also brought hybrid to the World Endurance Championship last year, where we competed head-to-head with Audi – we finished a very respectable 2nd and 4th at this year’s Le Mans 24 Hours race. Our hybrid technology is the basis for our entire map of the mobility of the future. In this map, you have small, pure electric vehicles for short distance driving in urban centres. In the middle are hybrids and plug-in hybrids, which offer excellent fuel economy and versatility of use, without any range anxiety. And at the other end will be hydrogen fuel-cell vehicles – they will ultimately offer the same range as conventional cars today, around 500 to 700 km, quick refuelling, and no emissions other than water vapour. Our hybrid technology underpins all these different solutions. BT: Prius is a remarkable story – not least because you knew it would be a 20-year investment before seeing any return. Do you think Prius happened because of something fundamental about Toyota? Or could it have happened anywhere? JJ: I’ve been working at Toyota for close to 18 years now, in various functions. Much has been written about, ‘The Toyota Way’, and our Toyota Production System. I would pick three elements, which make this company somewhat different: ‘Long-Term View’, ‘Challenge’ and ‘Perseverance’. I remember reading an interview with former Toyota Chairman Hiroshi Okuda in the French newspaper Libération, in 2002. He was answering a question about shareholder value and whether it was relevant for Toyota. He said “one has to give back returns to shareholders, but also to employees and society as a whole. I would like for shareholders to obtain happiness, but long-term happiness. That is, for me, the only true corporate governance.” In other words, as manufacturers, we must focus on the long term and not be subject to the diktat of quarterly earnings reports. In everything I have ever done at Toyota, my peers, my bosses, my Japanese colleagues have always asked me: “what is your long-term plan?” Challenge is equally important. It means “don’t be afraid to give yourself an ambitious target”. It’s OK if you miss that target ultimately – what matters is that by setting yourself such a difficult, almost ‘impossible to attain’ objective, you will move mountains in the process and achieve much more. It’s OK to fail, as long as your goals were worth it and you learnt something in the process. I think the Prius story is such a story: the leaders of the time had a vision – a fuel efficient car for the 21st century. They started working on Prius around 1993. They had many trials and tribulations, but they persevered with the challenge and eventually came out with the first Prius. Then, they did not stop: they kept on refining it, and with a bit of luck (Leonardo Di Caprio and Cameron Diaz’s appearance at the Oscar ceremony in a Prius did help a bit), it became a market success. BT: Does Prius raise consumer and stakeholder expectations of Toyota across the board? Do you have to be the greenest company for everyone, in everything? JJ: Today, customers are not just customers but also citizens. So when you make decisions, take actions or communicate, it’s important to be coherent. Toyota’s environmental focus is not just on developing and making cars with lower tailpipe emissions. We take a 360-degree approach, from design to purchasing to logistics and production, all the way to sales and after sales. Our environmental charter applies to all areas of the company. But it’s important not to be ‘green’ just for the sake of it. Our true focus is on green growth. Without a sound business model, any green initiative won’t be sustainable. Take the example of EV. We’re ready with the technology, but the market doesn’t seem to be mature yet. In the current state of battery technology development, there are still many constraints such as high cost and low efficiency, which means limited range or increased weight and price. Customers aren’t prepared for that trade-off. So, we keep working on advanced battery technology. Meanwhile, we believe the plug-in hybrid is probably the most sensible solution for the next few decades if we want to make a significant positive environmental impact in the short term. We think it’s better for the planet to sell millions of hybrids and plug-ins than a few EVs, even if those are zero emission. BT: Does the relentless consumer focus on cost make it harder to position what’s valuable about Prius and the eco-credentials of your vehicles? JJ: The early adopters generally spend more to get the best environmental technology available. But you’re right, the average customer is only prepared to spend so much on a car. That’s a given. Brand value can help bring that up – the more desirable a brand is, the bigger the potential to reach a good sales price. Brand is about emotion – what kind of benefit, beyond the rational, does one get from the brand. The other component is cost – and it’s our job to bring it down. At the start of a new technology, incentives can and do help. But our business model cannot be based on them. So we work on bringing down the cost of our technology so that we can offer it at a competitive price – this is especially critical for a mainstream brand like Toyota. Today, you can buy a Yaris Hybrid for roughly the same price as a diesel equivalent, at a comparable level of equipment. We’ve reached a hybrid tipping point in Europe. Around 40 per cent of our sales of Yaris and Auris are hybrids, and one in four cars we sold in Western Europe so far this year is a hybrid. We believe that innovation, together with emotion, is a good recipe. BT: How does the sustainability proposition you make to consumers and others vary across different markets? Can you be consistent? JJ: It’s more a question of timing. Around the world we are recognised for two strengths – quality and reliability; and environmental technology. In developed markets, such as Japan, the US and Europe, environmental aspects are much more important societal issues and drivers of customer behaviour. In emerging markets, we still lean more on our quality and reliability reputation. But that will change – probably faster than we think – and when it does, we will be ready to deploy a range of environmentally- friendly vehicles in these markets. China is already signalling that it intends to encourage green mobility. We believe it is part of our responsibility as a global corporate citizen to provide clean mobility to the millions of future customers who will soon have access to mobility – otherwise, the environmental impact of the growth of automobile sales in the next 20 to 30 years will outweigh the benefits to those societies. We’re already producing Prius in China and we’ve recently opened and expanded an R&D centre there to develop vehicles for that market – even if at present, Chinese customers prefer conventional cars. BT: With concepts like the Toyota home energy management system in development, it feels like there will be a big communications challenge in positioning Toyota as a provider of energy solutions rather than a car maker. JJ: Viewed from Europe, Toyota is known mainly as an automotive company. But in Japan, Toyota is involved in several non-automotive businesses – housing, financial services, e-commerce, marine, biotechnology, robotics and afforestation. The home energy management system is a natural evolution of two areas of Toyota’s business: the upcoming rise in plug-in vehicles, and our housing business, which provides prefabricated homes equipped with solar panels. With the rise of pure electric or plug-in hybrid vehicle sales, the problem of managing peak power demand will be significant. So we’ve started developing smart homes, vehicle-to-home communication, and a smart data centre to monitor energy consumption and usage, weather conditions, and pick the best time to charge vehicles or using the energy stored in the car’s battery to power your dishwasher. Car companies will have to become providers of mobility in a broader sense in the future, and the demands on us will go beyond the pure automotive product. Partnerships will be an important part of tackling these technological challenges: helping us set-up new charging standards, as we are doing in Japan with other car companies; or helping us envisage how private and public transport will work together, as we will start doing in Grenoble next year; and helping us share the tremendous investments necessary to develop future technologies, as illustrated in our new partnership with BMW. BT: You’re the world’s greenest brand, with the world’s best-selling hybrid vehicle. Where do you see Toyota in 10 to 20 years’ time? JJ: We hope that we will be able to continue bringing smiles to our customers’ faces – this will be the result of many other things going right, and it will be our biggest reward. Whether we are Number 1 or not, is not our focus. That should be the result of being the best in quality, customer satisfaction, environmental technologies, and bringing value to our stakeholders. PRIUSWASONLYTHE BEGINNINGFORUS.SINCE THEN,WEHAVE CONSIDERABLYDEVELOPED OURHYBRIDPORTFOLIO, WITHTHEAIMOFHAVINGOUR HYBRIDSYNERGYDRIVE POWERTRAINAVAILABLEIN EVERYVEHICLEBY2020 WETAKEA360-DEGREE APPROACH,FROMDESIGN TOPURCHASINGTO LOGISTICSANDPRODUCTION, ALLTHEWAYTOSALES ANDAFTERSALES
  15. 15. DIRECTIONS 2013 SALTERBAXTER 28 29 DIANAVERDENIETO Founder, Positive Luxury Sustainability and luxury may sound like opposites, but the fashion industry is finding ways to make them complement each other, argues Diana Verde Nieto. Fashion, with its connotations of high consumption, novelty and rapid turnover may sound like the last place you’d look for true sustainability, particularly at the luxury end of the market where excess has been a major part of the offer. But like other industries, the brands behind luxury are facing up to the challenge of sustainability and the changing values of their customers. Luxury is being redefined. The ‘new’ luxury is a paired- down, less conspicuous version of its elder, lavish, bling incarnation. And along the way, it is reacquainting itself with its traditional values of timelessness, durability and exquisite craftsmanship – the new rules of luxury that any advocate of sustainability could get behind. CSR has been a good start for their sustainability journey, but to reap the rewards of using sustainable methods, the luxury industry needs to communicate these efforts to the consumer in ways that suggest transparency and added value. BADGES OF TRUST For luxury goods brands, finding ways to bring sustainability into the proposition is still challenging, and as with other sectors, trustmarks are playing an increasingly important role. They are a way of letting the consumer know, at a glance, that a product comes from a brand they can trust, and an immediate way of communicating a company’s environmental and ethical standards. There are of course hundreds of labels and accreditation programmes for sustainability, but they still tend to focus on limited aspects of how a brand operates. Fair Trade or the Rainforest Alliance focus on aspects of the supply chain and business model; other badges relate to energy performance or recyclability. My aim when setting-up Positive Luxury and our Blue Butterfly was to create an interactive trust mark that looks at a brand’s overall performance. The Blue Butterfly is awarded to brands that have a positive impact on both people and the planet, and we aim to guide the consumer away from inadvertently funding companies with poor sustainability performance towards more positive purchases. The future for luxury brands is bound up in sustainability. They will not be described as ‘ethical brands’ as these characteristics will be inherent within every brand that survives. The choices made now by the luxury industry will determine who it is that sinks or swims. Diana Verde Nieto is the Founder and CEO of Positive Luxury, positiveluxury.com Under these new rules, two types of consumer are emerging and changing the way fashion works. One is the wealthy consumer who might previously have commissioned three £30,000 bespoke outfits per season, and who is now only requesting one, and making it work hard throughout the season by recycling it for different occasions, albeit with some new accessories. The idea of wearing the same outfit twice might have filled the contemporary fashionista with horror ten years ago, but now the taboo has lifted and it is becoming unsavoury to show such excess. The second consumer profile is the Generation Y shopper: recession-riddled eco-educated young people who see thriftiness as their greatest asset. Flagrantly mixing high street with haute couture, these millennials are more likely to shop in sales and only drop large sums of money on statement pieces that boast versatility. They are also creating a new trend in consumer purchase in which heritage brands are disregarded for newer ‘clean-slate’ brands that are sustainable from the outset, use simple consumer- facing dialogue and because of their authenticity on digital platforms are seen as far more accessible and engaging. COMMUNICATING THE NEW LUXURY Despite these changes under way in the fashion industry, and the many initiatives focused on improving the social and environmental performance of supply chains, there is still surprisingly little information available to consumers on where their money goes and where the product comes from. But consumers are catching on, and recent incidents such as the collapse of the Bangladeshi garment factory have brought issues of transparency to the fore. As a result, we’re beginning to see higher consumer demand for products that are transparent and traceable. Companies such as De Beers diamonds are pioneering transparency that is as clear as their stones. With an entire website dedicated to their sustainability credentials, managing their mining environment, their work ethic and maximising the value of diamonds to producer nations, consumers can purchase their diamonds knowing exactly where they have come from, the processes they go through and that their environmental impact is minimised. No blood-diamonds here. With companies such as De Beers leading the way, others in the luxury sector are bringing their sustainability programmes out from the store room and into the shop window, and the consumer is being encouraged to dissect the product. Stella McCartney is innovating eco-products for the 2013 collection, including biodegradable shoes that decompose when composted, and faux fur made with over 50 per cent vegetable oil. Watchmaker IWC is launching its own corporate social responsibility website as an addition to its retail site. Fashion house Jaida Hay has a ‘Follow Your Garment’ feature online.
  16. 16. DIRECTIONS 2013 SALTERBAXTER 30 31 KAIPETERS Chief Executive of Ashridge Business School What’s the connection between personal and organisational authenticity? Kai Peters explores. As companies pursue purpose-based strategies for sustainability, they face the very real challenge of how to create working environments in which these values are actually manifested. In seeking to create shared sustainable value across an entire corporate eco-system, the interests of the entire supply chain and of all other stakeholders must be aligned. This challenge is real and recognised. We have conducted a number of studies at Ashridge over the past five years in which we have surveyed chief executives around the world. In one survey of 200 CEOs, 76 per cent stated emphatically that it was important for leaders in their own organisations to have the skills, mindsets and capabilities to lead in a holistic manner, but that only 8 per cent believed that these attributes presently existed in their own organisations. In a follow-up study with 800 CEOs, 88 per cent indicated that developing the required skills and abilities necessitated role modelling the desired behaviours and educating everyone in the stakeholder community appropriately. The CEOs involved identified three broad clusters of skills needs. The first was context, including an understanding of customer needs, legislation, resources scarcity and competitive behaviour. The second was complexity – coping with ambiguity and trade-offs, learning from mistakes, and developing the capacities to deal with ethical dilemmas. The third cluster, connectedness, was about understanding diversity, developing a shared vision with stakeholders, and raising issues of responsible management with staff. Identifying needs such as these is relatively simple, but meeting them is of course much more challenging. In a series of articles and most recently in the book, Steward Leadership, we have set out to identify both the enablers and stumbling blocks for achieving authentic, sustainable leadership.
  17. 17. DIRECTIONS 2013 SALTERBAXTER 32 33 and biological processes, but through internal reflection and insight, and the rate of change is not predictable. As psychologist Angela Pfaffenberger puts it: “a certain type of person appears to be more likely to progress in development. Individuals who achieve higher ego states are likely to have higher intelligence, socioeconomic status and education. They are resilient, flexible, and more liberal. They show an inclination towards self-exploration, curiosity and experimentation, and they value novelty”. From our work, these latter individuals are more able to engage on a journey in which critical information is noticed, questioned, validated and utilised to challenge and ultimately change assumptions. This leads to ethical decision making, and true engagement with authenticity and sustainability. So what does the research about personal authenticity mean for corporate or organisational level authenticity? First, it means that making sweeping statements about corporate level values without engaging with the leadership and staff throughout the organisation is a sure path to failure. Second, it means that while many people within an organisation can develop their levels of maturity and achieve higher levels of development, others will always struggle with more complex and sophisticated ethical and sustainability challenges. Lastly, and conclusively, it means that ongoing education, engagement and reflection with staff as well as with the critical organisational stakeholders and customers is critical to the development of sustainable, authentic organisational leadership and brand level communications. To be believed, the stories organisations tell must be true, consistent and authentic. Kai Peters is the Chief Executive of Ashridge Business School in Hertfordshire. He is co-author, together with Kurt April and Julia Kukard, of Steward Leadership: A Maturational Perspective published by the University of Cape Town Press (2013). He also writes extensively on strategy, leadership and learning. UNILEVER SUSTAINABLE LIVING PLAN Unilever is pursuing authentic and steward leadership to create shared valuefortheorganisationandsociety.An annual Sustainable Living Plan progress report sets out progress toward their 10-year strategy which aims to improve the health and well-being of a billion people and source 100 per cent of raw materials sustainably. Since these initiatives are driven both by a moral duty and a business opportunity, management development at Unilever is working hard on integrating shared value creation and sustainability throughouttheorganisationby, for example, encouraging R&D to innovate, and all employees to understand sustainability and to engage with their stakeholder communities including suppliers and consumers. A central component in this endeavour is the sustainable living lab, an initiative to build the debate and action both within and outside Unilever on the key challenges to sustainable living. INTERFACE FAST FORWARD TO 2020 Interface designs, produces and sells modular flooring systems, with manufacturing locations on four continents and offices in more than 100 countries, and a vision to become ‘the world’s first environmentally restorative company’ by 2020. Supporting this ambitious endeavour, Interface’s ‘Fast Forward to 2020’ is a comprehensive education programme which has been running since 2004. Employees must have participated in certain levels of the programme, and where appropriate passed a graded assessment, to be eligible to be considered for promotion to more senior roles. Interface facilitates a network of sustainability champions called Ambassadors, drawn from across all business functions and regions. Ambassadors act as a network of change agents within the organisation. They are offered regular inspirational sessions through the year, and are expected to develop their own sustainability projects, supported by an internal communications platform. Level 1 is for all employees, embedded in the induction process and covering key issues around sustainability and Interface’s strategy and approach. Level 2 is a one-day programme with customised content for marketers, sales, operations, human resources and other functions. The focus of the programme is on building knowledge around sustainable development and what it means for the business. Participants focus on the personal question: ‘How do I contribute to Interface’s vision of being the world’s first environmentally restorative company by 2020 as an individual? What does this mean for my part of the business and my role?’ Participants must pass a test and complete an assignment, developing a proposal for a sustainability project, many of which have been implemented by the company. Around 50 per cent of staff have participated in Level 2, including all team leaders, all senior management, all sales, marketing and communications executives and all sustainability ‘Ambassadors’. Level 3 is a two-day course for selected individuals, mostly from amongst senior staff and Ambassadors. Alongside further skill development, participants undertake their own research into future trends that will impact the business, and debate the complex choices that come from issues such as nuclear power or the role of business in alleviating poverty. Assessment is via an assignment and an assessed mock television interview, carried out and filmed by a tv journalist. In Steward Leadership, we’ve set out a nine-component framework to provide a definitive perspective on what authentic, steward leadership looks like: 1. Personal Mastery: creating what you want from your life and work 2. Personal Vision: the purposefulness of personal direction and commitment to getting things done 3. Mentoring: paying attention to, and acting on, the needs and development of others 4. Valuing Diversity: seeking out and working with varied voices 5. Shared Vision: creating shared value with stakeholders 6. Risk-taking and Experimentation: openness to new ideas 7. Vulnerability and Maturity: understanding the limits of your knowledge and perspectives 8. Raising Awareness: communicating the centrality of sustainability 9. Delivering Results: action and not only talk Different leaders and managers fall onto different points on a steward leadership maturity scale. A number of factors appear to be key to achieving greater maturity and a more holistic and authentic perspective. The educational theorist Jean Piaget developed a framework which investigates these issues. He found that as individuals mature in their understanding of their own internal worlds, their outlook with the external world matures as well. Research suggests that the combination of normal life experience and biological maturational processes such as brain development and hormone development are very important, but plateau at a relatively conventional level. Achieving significant levels of authenticity are driven not by external life experience The authenticity literature has its conceptual roots in philosophy, humanistic psychology and positivepsychology.Twoimportant elements need to be highlighted from this body of work. First, while frameworks and policies are, of course, important, what gets done in organisations is something that is decided upon by managers – thus by individuals in the actual organisation. This means that corporate authenticity can only be built by developing a whole host of individuals who embody a holistic perspective. Secondly, authentic leadership or steward leadership means placing community and society ahead of the self. This is philosophically the exact opposite of so much of Western economic philosophy,whichputs the pursuit of enlightened self-interest front and centre. At a granular level, many factors that support authenticity and a sustainable perspective are inherently human. In another Ashridge study, this time of 210 MBA students who were asked to write about authenticity from their own experience, self-knowledge and reflection emerged as key. It appears that we simply know what the right thing to do is when we think about it. Respondents spontaneously identified confidence, compassion and trust, and openness and honesty as the preferred approach to the ethical situations in which they find themselves. But the flipside of this simple recognition of the right thing is the tendency to ‘conform to the expectation of others’. Other significant stumbling blocks included the pursuit of material wealth, fear, and the influence of organisations and of the workplace. As individuals we seem to think the right thoughts and want to make the ethical decisions, but the workplace and the social environment of the organisation can be the primary blocks to authenticity.
  18. 18. 35 DIRECTIONS 2013 SALTERBAXTER CREDIBILITY Aligned strategy: is your sustainability strategy fully integrated into your business strategy? Do you publish an integrated annual report, and/or make direct reference to sustainability commitments within your core company profile, to underline that impression? Clear purpose: does your sustainability strategy have a clear social purpose? Do short- and long-term targets support the strategy? Do you refer back to your overall purpose and vision across all platforms? TRANSPARENCY Credible targets: do you set out detailed targets for delivering your sustainability promises? Do you simply state performance or do you evaluate your achievements against previous targets? Tangible action: do you set out a convincing action plan for achieving the targets you have set? HOW AUTHENTIC AREYOU?With increasingly complex value chains, growing pressure on resources and shifting stakeholder expectations, it may not even be clear what the right thing is from day to day. But some companies seem to navigate the difficult waters of authenticity with relative ease. To us, they do so by focusing on five key dimensions of both action and communication. But how does your business check out? OPENNESS Open leadership: is sustainability being driven at different levels of your company? Do your reports and online communications carry the voices of employees explaining how your sustainability strategy is part of their job, not just something for a CEO or presidential statement? Engagement with stakeholders: does stakeholder engagement come across as a priority? Are there detailed examples of stakeholder engagement given? Do you give evidence of how you’ve responded to issues raised? CONSISTENCY Open conversation: are you using different media to reach out and share objectives and aims, experiences and achievements? Aligned statements: is there a consistent message across all platforms? Are the same themes prioritised in your sustainability report, online, in social media and in your thought leadership activity? UNIQUENESS Defined ambition: is your stated aim unique, memorable, compelling? Is your aim to lead on a specific issue? Do the commitments you set out and your performance make a unique contribution? Beyond reporting: reporting helpstrackperformance.But areyouhelpingtosetthe futureagendaaroundyour socialpurposebydeveloping thoughtleadership?Areyou campaigningorraising awarenessofspecificissues, collaboratingwithNGOsor academicstoadvancethinking ontheissuesatstake? No company is getting all this right, all the time, and as Directions 13 has explored, some of the companies that lead the world on sustainability still have some authenticity blind spots. But we believe more focus on the hallmarks of authenticity can help any company manage its real and reputational risk, improve its relationship with stakeholders, employees and consumers, and ultimately position it for commercial success. To learn more about being authentic, visit salterbaxter.com 34
  19. 19. DIRECTIONS 2013 SALTERBAXTER 36 Our clients include: Absolut adidas Group Allianz Anglo American ArcelorMittal BP BSkyB BUPA C&A Coca-Cola Enterprises DMGT De Beers Friesland Campina GlaxoSmithKline Harrods Interface Laing O’Rourke L’Oréal LEGO Group Maersk Group Marks & Spencer Mondelez International Morrisons Nokia O2 / Telefónica Philips Reckitt Benckiser RSA Standard Chartered Toyota Europe About us: Salterbaxter works where business strategy, sustainability and creative communications meet, creating strategies and stories for some of the world’s leading businesses and brands. We help business perform better, communicate better and deliver better long-term outcomes. We call this Ideas for Better Business. Contact us: Jeff Sutton Director of Business Development jsutton@salterbaxter.com Tel +44 (0)20 7229 5720 salterbaxter.com @salterbaxter Salterbaxter The Dome, Level 4 Whiteleys Centre 151 Queensway London W2 4YN Tel +44 (0)20 7229 5720 Salterbaxter Nordic Aps Havnegade 39 1058 København K Tel +45 33 43 63 76 2001 Trends in CSR reporting 2007 Cutting through the noise of the climate change debate 2003 Trends in CSR reporting 2009 Mapping the landscape of European CR 2006 Is CR in your blood? 2004 Trends in CSR reporting 2005 Best in show of this year’s crop 2002 Trends in CSR reporting 2008 Sustainability gets tough 2012 Profits from purpose 2011 Opportunity in the new age of uncertainty 2010 The Innovation Edition About Directions Directions is in its thirteenth year. It is widely viewed as the leading annual publication on trends in sustainability and communications. Salterbaxter also produces regular Directions supplements on key topics throughout the year. Contact us for further information about our quality printing services and our environmental credentials Park Communications Alpine Way London E6 6LA Heath Mason D: 020 7055 6555 T: 020 7055 6500 info@parkcom.co.uk EnvironmentalPrinter ofTheYear2012 Second year running (PrintWeek) Our printing partner: Copyright © Salterbaxter. Directions is a registered trademark of Salterbaxter. Printed by Park Communications Limited CarbonNeutral® , Alcohol Free, FSC® chain of custody certified. Printed on Satimat Green, a paper containing 75% post consumer recycled fibre and 25% virgin fibre sourced from well managed, responsible, FSC® certified forests. Imagery retouching: Julian Hicks www.retouchthis.co.uk