To celebrate BSR’s 20-year anniversary in 2012, we held a global series of dinner debates to explore what has, and what has not, changed in sustainability—and how to accelerate progress.
BSR President and CEO Aron Cramer outlined the central theme to frame these discussions:
As BSR marks its 20th year, there are many reasons to celebrate our progress as a community of global business leaders and innovators.
In many ways, everything has changed over the past two decades. Sustainability has entered the business mainstream—and is widely recognized as an opportunity for innovation, not just another risk to manage. Millions more people live in dignity and comfort.
At the same time, nothing has changed. We continue to grapple with the same threats we identified 20 years ago: global climate disruption, economic inequities, and natural resource depletion, among others.
How far have we really come? And how can business, government, civil society, and consumers work together to fast-forward solutions for a sustainable world?
In this context, the dinner debates sought to gather opinions from business and other thought leaders on these two questions.
Not surprisingly, each gathering—which took place in Beijing, Hong Kong, London, New York, San Francisco, and Shenzhen—produced a unique take and some common threads: There was a strong consensus that long-term thinking must be applied and incentivized more widely, that consumers need to be engaged and inspired in sustainability, and that financial market reforms are sorely needed. We were delighted to see that the four-step approach outlined in our report “BSR at 20: Accelerating Progress” resonated with the global community we convened, and we intend to continue working toward these goals in 2013 and beyond.
Beijing: Beyond the Short Term
BSR’s Beijing debate took place in September and featured Cramer; Walmart China Senior Vice President for Corporate Affairs Ray Bracy; Orville Schell, the Arthur Ross director of the Center on U.S.-China Relations; and Steven Sitao Xu, director for Advisory Services-China at the Economist Intelligence Unit.
The conversation in China recognized the paradox of a country seeking massive levels of economic growth while also understanding that the high-growth model that has produced such great progress over the past quarter-century is likely unsustainable. How China manages this paradox will affect the entire world.
The discussion highlighted the importance of tailoring sustainability approaches to the Chinese context:
- A focus on short-termism: Xu described economics as a trade-off between efficiency and fairness—and argued that China must adopt a growth model that incorporates fairness. China has been able to grow by keeping immediate costs low, without considering a longer return on investment. This short-termism has exacerbated problems such as environmental degradation and pollution.
- The role of government: Bracy suggested that the Chinese government provide incentives to encourage short-term-minded companies to make longer-term sustainability investments.
- The role of business: At the same time, the speakers agreed that the Chinese government cannot act alone. Collaboration among government, business, and civil society will be vital to advance social and environmental issues. Schell argued that business can demonstrate leadership now, without government policy support. In the general discussion in the room, however, many agreed that without a platform for collaboration on sustainability, such action is challenging.
- The Chinese consumer: It was widely recognized that the behavior of the Chinese consumer is a crucially important variable. Many at the dinner recognized the central fact that extending Western consumption patterns to China requires natural resources that are not available, and equally, that Chinese citizens have the same human aspirations to meet their needs.
Resolution of this dilemma will play a key role in determining whether a sustainable world economy is achieved.
Hong Kong: Culture of Consumption?
Also in September, BSR Vice President for Asia-Pacific Jeremy Prepscius led a discussion in Hong Kong with Melissa Brown, principal at Serasi Capital and former executive director of ASRIA; Wai-Shin Chan, director for Asia Climate Change Strategy at HSBC; and Glenn Frommer, head of sustainability development at the MTR Corporation. Tom Holland, senior writer for the South China Morning Post, moderated.
Much of the discussion focused on Hong Kong’s cultural focus on consumption, which extends from companies to individuals. Chan and others pointed out that shifts in Hong Kong’s culture across government, business, and society are essential to the acceptance and success of sustainability efforts.
In particular, the group discussed the need for changes in:
- Individual thinking: Frommer suggested changing Hong Kong’s culture of consumption by focusing on work-life balance: Workers should prioritize family time over longer working hours, higher paychecks, and conspicuous consumption. Chan argued that this would require a corporate culture that allows employees to challenge the status quo, which is less acceptable in many Asian cultural contexts. Audience participants suggested changing compensation models to reward long-term gains, such as three- to five-year bonus cycles, to help shift individual mindsets.
- Social security: Speakers also noted that without a stronger social safety net from government and business, workers will continue to focus on financial capital to support their families rather than on spending time with them. Frommer suggested that businesses implement paternity-leave programs and that the Hong Kong government establish stronger social security programs.
- The business case: When it comes to making progress on sustainability, Brown said the business case needs to make clear why compliance is important—which requires leadership from the top. Without strong internal communications on the relevancy of sustainability to the core business, and a focus on the medium- and long-term, sustainability will falter in Hong Kong.
London: Systems Change Required
Our London dinner debate took place in November and featured a conversation between Cramer and David Blood, senior partner and cofounder of Generation Investment Management, who opened the discussion with highlights from his research with Generation cofounder Al Gore on “Sustainable Capitalism.” Blood framed the discussion by noting a key finding from their research: Current sustainability initiatives will not be enough to generate the kind of progress required in the future.
Other highlights from this discussion included the need for:
- Better communications: The business case for sustainability is strong, but we need to communicate this case more clearly, broadly, and quickly. Blood noted that for many leaders, “long-term thinking” may resonate more than “sustainability.” In a similar way, when business leaders hear discussions about “values and purpose,” they relate more to “purpose.” In the end, he said, we need more vision, discipline, and better business models to drive this agenda forward.
- Changes in the marketplace: The transition to a more sustainable marketplace is not happening quickly enough. Financial markets are failing to connect business objectives with sustainability. Blood noted that this is perpetuated by a political system that follows the short-term mindset of the financial market and by a citizenry that does not appreciate the confluence of the challenges we’re facing.
- Disruptive change: Particularly in regard to climate change, we’ve accepted the status quo and are passively waiting for disruptive technology to solve this challenge. Inaction, Blood pointed out, is in fact both a choice and an action. The big question still remains: How can we spur the disruptive change needed to accelerate progress?
New York: Collaboration and Commitment
In June, Cramer led a discussion in New York that featured Beth Comstock, senior vice president and chief marketing officer for the General Electric Company.
In a discussion about what’s required for future progress in sustainability, highlights included:
- The role of partnerships: Comstock noted that collaboration, knowledge-sharing, listening, and establishing a common mission have been key to GE’s successes in sustainability. This includes taking customer desires to heart, working across sectors to achieve goals, and investing for the long term.
- Commitment and impact: Credibility is also important, which is why GE has focused on metrics and demonstrating impact. Without a shared value system and the integration of sustainability into overall company strategy, success will be difficult. When companies publicly share their commitment to sustainability and are transparent about their real impact, they can increase brand value.
- Bottom-up solutions: Going forward, Cramer and Comstock discussed how to inspire positive change. Cramer said this will happen through “bottom-up” solutions. Comstock suggested that when national governments fail, companies and local governments must take the lead on sustainability challenges. She predicted that the next 10 years will be difficult, but there is hope, as companies increasingly accept that sustainability planning is a cost of doing business and as consumers shift to prioritize sustainability.
San Francisco: Inventing the Future
Cramer opened the San Francisco debate in June by asking futurist Peter Schwartz, senior vice president of global relations and strategic planning at Salesforce and the cofounder of the Global Business Network, to reflect on lessons he has learned in the past 20 years. Schwartz said that when faced with scenarios for the future, companies succeed or fail based on their ability to act. He argues that companies fail not in correctly predicting what will happen but rather in accepting what will happen and acting accordingly.
In a wide-ranging discussion about the future and innovation, other highlights included:
- The importance of embedded values: Schwartz suggested that management must integrate values into corporate culture and strategy, moving beyond compliance to achieve sustainability goals. In an argument that aligned with the New York discussion about bottom-up solutions, he added that companies and cities should act when national governments cannot or will not.
- A beautiful vision for the future: Schwartz believes we shouldn’t try to turn back the clock. Conservation and environmentalism seek to re-create a state of nature before it was changed by humans, but human-made environmental degradation has been occurring for centuries. Instead, he proposed that we think differently about the future, imagining not a pristine pre-human state but a beautiful, well-tended garden. How will we get there?
- Innovation and empowered individuals: Advances in globalization and information technology have allowed companies to tap into diverse viewpoints, helped emerging economies develop economically, and empowered people. As we become increasingly connected, Schwartz predicted, power will shift from centralized systems to individuals with vast information at their fingertips who will make breakthroughs from the bottom up.
Shenzhen: Voices From the Supply Chain
Our dinner debate in Shenzhen in September followed a slightly different format, with four separate discussions that explored the future of supply chain initiatives from the perspective of brands, manufacturers, and workers.
BSR opened the first session by noting three changes to improve supply chain sustainability: collaboration between buyers and suppliers, more attention to energy and water conservation, and a shift of mindsets to address the overall well-being of workers and better use of natural resources during production.
Highlights from the individual sessions—which featured more than a dozen speakers from global and Chinese companies, academia, and civil society—included:
- Brands: Global companies from all industries are aiming to address the same general components of a sustainable business model: high productivity; human rights management; environment, health, and safety management; energy conservation; and stakeholder engagement. But in order to ensure supplier performance, brands must encourage supplier ownership over top-down mandates. Collaboration between suppliers and buyers will help avoid audit fatigue, confusion, inefficiency, and high costs.
- Manufacturers: Manufacturing in China is moving toward a set of standardized systems that will help the country remain a manufacturing hub. To ensure sustainability performance, senior management must adhere to international best practices. Companies that do so will gain a competitive advantage, attracting more workers, investors, and business.
- Workers: Speakers in this session noted that female workers account for 60 percent of the factory workforce, yet factories do not tend to consider their particular needs and challenges, such as inequality in promotion and training opportunities, lack of care for women’s reproductive health concerns, and tension between pressures from work and life.
Our Path Forward
In one sense, the overriding theme of our dinner debates could be described as “everything is different”—we all experience the challenges of sustainability differently in different regions of the world—and “everything is the same”—we have a shared belief about the solutions.
Here are some common themes about solutions:
- It’s time to focus on the long term: All geographies highlighted the urgency of shedding our short-term focus in favor of pursuing a truly sustainable future. The debate in London emphasized the need for financial markets to lead the way, while the Beijing speakers discussed the role of government to incentivize change. As Generation Investment Management’s Blood and Gore have argued, we must also shift the way financial markets operate, such as eliminating quarterly reporting cycles, aligning compensation with long-term performance, and providing incentives for long-term investments.
- We need to engage more effectively with consumers: In order to promote long-term social, financial, and environmental progress, we need to improve our communications about sustainability to consumers. While some consumers may be aware of these issues, few are “voting with their wallets.” In Shenzhen, buyers and suppliers struggle to install sustainability programs when consumers still prioritize cost over sustainability, and in Hong Kong, hyper-consumerism is a major hurdle to change. Solutions include consumer- and employee-engagement programs that put a human face on the supply chain and encouraging employees to have greater work-life balance.
- Systems change is needed in the marketplace and in culture: It’s clear that large systems must change: Financial markets need to shift to account for externalities—and in a world of radical transparency, this kind of disruptive change may just be possible. In addition, our global debates highlighted the need for systems change at the cultural level, such as in Hong Kong, where conspicuous consumption is almost overpowering, and in Beijing, where companies are held sway by an exploding economy.
- Bottom-up solutions and individuals can help lead the way: From the New York discussion about solutions coming from cities, local governments, and companies, to the San Francisco discussion about empowered individuals using technology to create a better future, it’s possible progress will result not from one but from many solutions and players. This theme also resonated with the format of the discussion in Shenzhen, which highlighted the unique roles of each layer in the supply chain—from brand to manufacturer to worker. This also translates to the role of consumers around the globe, who have yet to fully embrace sustainability.
As we wrap up 2012, BSR’s 20th anniversary year, we encourage you to consider your own role in these solutions, and what you can do in your company, your industry, and your community to accelerate progress.
This feature is based on notes for the dinner debates that were prepared by Shine He, Rosa Kusbiantoro, Steve McCoy-Thompson, Tara Norton, Chloë Poynton, Nate Springer, and Melody Tu.