"Boost your corporate performance – get the best sustainability professional on your Board"

By Jane Stevensen and Gillian Wilmot
July 2011

Sustainability, CSR, environmental strategy, ethical performance. Simply 21st century buzzwords, essential in the commercial lexicon to tick the right boxes, or real drivers for building business and adding to the bottom line?

For a number of top performing FTSE 100 multinationals this agenda is right up there with finance, business development, marketing, and operational strategy at the most senior level. Without a Director of Sustainability on the main board companies are finding they are losing out to competitors on a multiplicity of fronts. Sustainability is now an essential tenet of corporate strategy across a broad spectrum of sectors; top examples include retail – M&S; finance and banking – Barclays, HSBC; chemicals – Johnson Matthey; FMCG – Unilever.

At the 2011 World Economic Forum in Davos earlier this year, Unilever’s Chief Executive, Paul Polman, delivered a hard hitting speech to the audience of global business leaders, economists and politicians on how companies which haven’t built sustainability into their businesses will be losers. He believes that the accepted business cycle of short-term profits and shareholder satisfaction has to change; the ultimate cost of short-termism, he says, is the current financial crisis which kicked off in 2008/9. “Too many investors have become short-term gamblers: the more fluctuations in share price they can engineer, the better it is for them. It is not good for the companies or for society, but it is influencing the way firms are being run, all the same.” The way forward, according to Polman and like-minded business leaders, is to fundamentally change the way business is done. As part of this ‘new capitalism’ the world economy has to take a new approach to agricultural production. Based on UN figures, the global population will be 9.6bn by 2050 and the extra 3bn mouths to feed will need an increase in production of 70%. “According to the WWF, the world currently lives off 1.3 worlds in terms of use of resources”, Polman said. “When you add 3bn people and increased standard of living, that figure rises to three Earths if you live like the US or the UK. That is just not going to work. We need to change things”.

So how can business change? Key to this transformation will be an understanding of what the integration of sustainable practice can bring to a business, and not only for the global players with mega budgets to manage. Perhaps the most obvious way of grabbing attention is the likely enhancement of a company’s bottom line through reduction in waste and better use of resources, but critically corporate governance, risk management, and increasingly importantly reputational risk, are all addressed by adopting a clear sustainability strategy supported at the most senior levels with absolute commitment from the Board. The transition to a low carbon economy is well underway; companies failing to address the reality of operating in a world where carbon carries a realistic price are unlikely to survive. And Operations is not the only functional area a Sustainability professional addresses; the seemingly impossible combination of resource reduction combined with market growth is being achieved by businesses with sustainability embedded in corporate strategy. Johnson Matthey’s Sustainability 2017 programme aims to more than double earnings per share while achieving zero waste and halving the key resources the business consumes per unit of output by 2017, the year of Johnson Matthey’s 200th anniversary. Marks & Spencer’s eco and ethical programme Plan A aims to make M&S the world's most sustainable major retailer by 2015. Launched in 2007 and extended in March 2010, it takes a holistic approach to sustainability focusing on involving customers, involving all areas of the business and tackling issues such as climate change, waste, raw materials, health and being a fair partner. And in addition to the commercial advantages, there are a growing number of women making the move from mainstream business backgrounds into sustainable management expertise; with the current debate in the media on diversity on Boards, the potential for enhancing the senior team at this key strategic level is compelling.

For businesses with an eye on future markets the developing economies in Asia and China will be critical for growth strategies; these emerging economies are already ahead of the UK and US in terms of green stimulus as a percentage of total stimulus, which sees China and South Korea 38% and 81% ahead of the UK respectively (equating to $221b and $31b; estimates from HSBC 2010).

With consumers driving the business approach to sustainability, and recognition from the global finance sector that sustainability increasingly drives profit and cash flows, plus the value added of a highly motivated and engaged workforce, placing the right Sustainability professional on the Board is a no-brainer.

Successful Search for a sustainability professional is about fitting the skill set of the individual with the strategy and culture of the business. It is important to understand the current and future business strategies and the scope of the role to generate an exact profile for the Search. This will enable mapping of prospective candidates and a successful long, short-list and appointment.

Gillian Wilmot does Mentoring and NED roles. Her executive career encompasses leading companies and brands, including Marks & Spencer, Boots, Next, Avon Cosmetics, Littlewoods and Royal Mail as MD of Mail Markets. Her Non-Executive Director roles include Admiral, Blackwells, Land of Leather, Help the Aged, Pockit.com and Chair of DPT.
Contact her on gillian@wilmot.biz