Sustainability leaders can influence five to 10 times their budgets.
Originally posted on the CSRwire website.
By CSRwire Contributing Writer Elaine Cohen
Corporate sustainability budgets amount to a small fraction of a percent of sales at the largest companies. But effective sustainability executives control spending five to 10 times greater than their own budget.
A new piece of well-written research published this month by GreenResearch, a research, advisory and consulting firm focused on cleantech, alternative energy and sustainability, maintains sustainability executives have financial clout way beyond what a quick look at corporate sustainability budgets might indicate. I am reminded of a quotation often attributed to Anita Roddick: “If you think you’re too small to have an impact, try going to bed with a mosquito in the room.” So true! Whilst it may not be appropriate to compare sustainability leaders with mosquitos, whose presence and impact can be rather irritating and not terribly productive, and often gets them swatted out of play, there is a lesson here that sustainability practitioners can learn: mastering the art of influence.
GreenResearch interviewed more than 30 senior sustainability executives at major companies in North America and Europe, aiming to investigate the structure of the sustainability function, purpose of their sustainability strategy, budget for developing and executing strategy, and practices around sustainability reporting. Amongst key research findings is the assertion sustainability budgets are tiny, but often have outsized influence.
“Corporate sustainability budgets amount to a small fraction of a percent of sales, just a few million dollars annually at the largest companies. But effective sustainability executives control spending five to 10 times greater than their own budget through their influence on other departmental budgets.” It follows, then, to achieve their goals, sustainability executives need to master influencing skills.
“Many companies are discovering substantial environmental impacts associated with their businesses occur in their supply chains or with end customers. Sustainability leaders at these companies must marshal the resources and skills necessary to influence suppliers and customers to adopt more sustainable behaviors in production and end use.” Indeed, sustainability leaders must first and foremost influence within their own companies, often the most challenging form of organizational objective.
Sustainability teams are typically small, targeting to have their major influence through their work with other company departments, ultimately impacting the way internal departments interact with all external stakeholders. Sustainability executives may directly control relatively small budgets, but they can have substantial influence over major spending by other departments as an outcome of such indirect influence. The research shows that some companies are in the early stages of developing their sustainability practices and budgets may not yet be fully allocated. “More often, though, companies keep central sustainability teams and expenditures small and depend on their ability to influence spending across the organization. At companies ranging from Bloomberg to Henkel, the sustainability function effectively controls five to 10 times its official budget through initiatives it sponsors and justifies through other departments such as facilities and IT.”
In a study published by the International Society of Sustainability Professionals in 2010, based on the responses of 400 sustainability professionals, communicating with internal stakeholders, problem solving and inspiring and motivating others were listed as the top three skills sustainability professionals should possess. These rather sidestep the issue of direct and indirect influence. Not all communication is influence, and not all inspiration leads to action. However, in the CR Competency Map, published by Business in the Community (BITC) last year, “influencing leadership” is placed squarely at the center of the 16 competencies sustainability practitioners should display. BITC describes the manifestation of the influencing competency when the sustainability practitioner: “gains support for the CR agenda by persuading and convincing others. Understands others and influences them in a way that results in acceptance, agreement or behavior change.” In this map, sustainability leaders, drive change. This change almost inevitably influences budget allocation.
What the study by GreenResearch now articulates is the result of this influence can be quantified as big money. GreenResearch points to facilities spending, supply chain and product development budgets that are impacted by sustainability considerations. I suggest it goes farther than this. I believe sustainability practices, with the appropriate level of “influencing leadership,” impact every single corporate departmental budget because business impacts are generated by every single corporate department.
The Accounting For Sustainability Project (A4S) has a focus on the reporting of performance, but the A4S approach demonstrates well how sustainability impacts can be identified and addressed in all parts of the organization. One such example is the case study of a fictitious company, GRO Foods, in which both costs and benefits are reported in quantitative and qualitative terms with respect to all facets of the company’s sustainability performance required to deliver the business strategy. Whilst sustainability practices must be properly embedded in departmental activities and owned by departmental heads, the sustainability officer has a pivotal role in establishing direction, aligning targets and, most importantly, articulating the business and sustainability imperatives that influence a company’s leadership to change.
How are sustainability leaders mastering this art of influence? The CR Competency Map provides some useful guidance and tools, and the GreenResearch study confirms sustainability leaders use compelling arguments including “existential threats such as dwindling supplies of key natural resources,” demands from customers, expectations of employees, support for employee recruitment, retention and engagement and emphasis on “sustainability as the path to differentiation in a commoditized market.”
Whatever the focus, if you are a sustainability officer, take heart, your impact may well be 10-fold what it seems. Provided, of course, you have mastered the art of influence.
About Elaine Cohen
Elaine Cohen is a Sustainability Consultant and Reporter at Beyond Business and blogger on sustainability reporting and author of CSR for HR: A necessary business partnership to advance responsible business practices.
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