A few months ago, Tim Horton’s reputation was under attack across Canada for selling in-store display advertising to Enbridge. Within days, sumofus.org garnered over 30,000 signatures on a cross-Canada petition, demanding the chain remove them.
The company cancelled the contract and sought to distance itself from the pipeline message – but the damage was done. The fallout was magnified when many Albertans were then just as incensed at Tim’s for axing the spots. Lose-Lose.
Could the fiasco have been avoided if Tim Horton’s still had its award-winning sustainability team? Or did the fact that they had fired six of their seven sustainability professionals in the department a few weeks prior ultimately contribute to the company’s exposure to unnecessary reputational risk?
Companies rationalize that they don’t need a team of sustainability professionals in various ways. Most often, the argument is that “sustainability is now in everyone’s job description.” But is that even remotely true? And even if it were, would that still eliminate the need for a high level of in-house expertise?
With the right leadership, organizations can leverage their sustainability initiatives to much more than just raising awareness
Applying the same logic, would the fact that preparing emails, spreadsheets and word-processing documents is in virtually everyone’s job description, mean that a chief information officer and in-house information technology (IT) experts being expected to both maintain systems and look to the future is also unnecessary?
There are two aspects to this discussion. Most importantly, if we accept (and surely by now we must) that organizational sustainability is a strategic megatrend that companies ignore at their peril, then it needs to be a critical part of any organization’s strategic plan. And at a more basic level of execution, sustainability needs to be baked-in operationally, in the same way as IT has been, and we need to figure out the best way to do so.
In the early stages of embracing sustainability, companies approach it at an elementary level, as either an employee engagement or cost avoidance strategy.
At that preliminary level of execution, newly minted “green” employees act in the way they think is most sustainable, but often lack the knowledge or expertise to deliver optimal results.
Raising consciousness is a necessary first step, but without the expert knowledge or holistic view that a sustainability professional brings, it’s easy to make “rookie mistakes.”
A really basic example of this that everyone can understand, says Frances Edmonds of HP, is well-meaning employees confusing municipal blue box recycling rules with office recycling. While municipal programs allow intermingling of all recyclables, office and industrial programs require a much more stringent separation of, for example, paper and anything else. “One errant recycled coffee cup and the whole shipment can be rejected – and ultimately end up in landfill,” Edmonds warns. “People need to be trained. Unless there is a group of operational experts constantly updating and informing employees, and devising and reviewing programs, the ultimate cost to companies can be quite high.” And that’s not factoring in the lost “opportunity cost.”
But with the right leadership, organizations can leverage their sustainability initiatives to much more than that.
Former Canadian Tire VP of Strategy and Business Sustainability, Tyler Elm joined the company in May of 2008, recruited to develop a sustainability strategy for the corporation that would be “good for the business and its brand.”
The value that long-time industry veteran Elm and his sustainability team were able to unlock was far more lucrative for Canadian Tire. Yes, there were revisions to improve “green programs” that made them operationally more effective. But by looking at the overarching strategy, and rethinking and streamlining operations, Canadian Tire achieved savings or cost avoidance of over $100-million during Elm’s four-year tenure. Many initiatives created during this time were vastly more “environmentally preferable” than some of the dubious claims on manufacturers’ packaging.
A major part of Elm’s success was getting suppliers to reduce packaging – and thus product and transportation costs. Beyond that, shifts in transportation modes (like switching to more rail transportation) not only reduced costs, but also eliminated GHGs – which creates cost savings that will only magnify as carbon pricing becomes more prevalent across the country.
By helping Canadian Tire executives look further outside their usual box, Elm helped the organization unlock a tremendous amount of value that not only generated revenue or savings now, but also has the organization well positioned as a sustainability leader for the future.
Chantale Despres leads a team of three responsible for driving sustainability efforts at CN Rail. She laughed when asked for examples of well-meaning employees doing what they thought was the right thing. Despres says that CN is still early in their journey, but that examples of great employees wanting to do the right thing abound – with sometimes unintended results.
“The one example we use internally is of the rail yard that was consuming a lot of energy. To help, employees proposed, and the company installed, a wind turbine. It was a “sexy answer,” she relates. Activities by the sustainability team, however, eventually uncovered a deeper issue – and one that could be fixed far more efficiently.
“Our rail yards run on air compressors for braking,” Despres explained, “But the compressor in this instance was so old, it was leaking air as fast as we were compressing it, and so consumed massive amounts of power literally 24/7.” While it looked good, the wind generator was not effective at all – and, of course, the air was still escaping.
At CN’s largest railyard, located in BC, Despres’ team, CN’s facility management group, BC Hydro, and the local team performed a more professional review, including energy audits, and identified the true energy hogs. They recommended doing the “less sexy” thing, and ultimately CN replaced the compressor, providing far greater results and at significantly lower cost. That incident led to a widespread investigation of all of CN’s compressors. Many of them were replaced, resulting in significant cost savings across Canada – savings that magnify every time electricity rates increase.
Despres’ team, in conjunction with the facilities management group, have become a central source of information on energy efficiency and retrofits. “Before our department existed, different yard managers worked with a variety of different vendors trying to solve the same problem, with little consistency – and often poor results.” Take lighting replacements, for example: “Yard managers were trying to reinvent the solution in each region,” Despres explained, “often with guidance from whichever hotshot lighting salesperson happened to work locally, and for different lighting companies and different lighting needs and conditions.
But by applying a systematic approach, CN could pool information about the pros and cons of products used across a range of locations and conditions, and then “choose the most energy-efficient solution most suitable for different tasks
and locations.”
Despres explained how this logic can be applied to many projects: “By centralizing our expertise, and doing better research, we were able to help ensure that we achieved economies of scale across the organization, reduced operating expenses as well as capital expense, and ensured that the solutions chosen in each instance were the most effective for the use involved, and that weather and other environmental issues were considered.” In other words, the research produced results that were optimized for cost and energy efficiency, and suitability for purpose.
Impressed by the possibilities Chantale’s team has produced, CN has set aside a portion of its sustainability-driven savings each year by creating a $5-million EcoFund, allowing the team and CN EcoChampions to explore options and invest in energy-saving technology with a longer payback cycle, which might otherwise not meet ROI guidelines.
Do you really need a sustainability professional?
A trend in some organizations has been to take “someone from the business” and make them the sustainability leader, sometimes in a regulatory affairs department, and often on the basis that such a person “understands the culture,” will keep the company out of trouble with regulators, and won’t rock the boat by pushing the organization too hard. But is that effective?
At Delta Management, we have seen some large organizations fall victim to what I refer to as the “take Larry from Lighting and make him the sustainability guy” approach. While “Larry from Lighting” does understand the organization’s culture and that is important in changing corporate behaviour, his lack of expert knowledge of sustainability and strategy almost certainly means he will overlook numerous opportunities to innovate. And it’s clear that innovation and adaptation are essential to survival in a climate changed world. Culture might “eat strategy for breakfast,” but it’s an unhealthy meal choice.
Esther Speck is the former director of sustainability for Mountain Equipment Co-op and now an international consultant combining business strategy with sustainability for large retailers and consumer goods corporations across North America. Speck argues, “For organizations to maximize their benefit from this emerging strategic megatrend, as well as baking it in to every department operationally over the longer term, they need to have someone with strong sustainability expertise who drives, or helps drive, the organization’s strategy, and who has access to the CEO.”
She’s not a fan of big “Sustainability Departments” – preferring instead that sustainability-focused professionals be embedded in operating departments – but points out that in order to maximize the opportunity, organizations do need specific, highly informed individuals with the right resources, who are tasked with looking beyond business as usual. Her usual advice to clients is that the sustainability leader should ideally be based in a corporate strategy group, with access to the CEO and possibly the board.
To achieve the best results, she says, that person needs to be able to look at the entire organization and drive an overarching sustainability strategy that is then adopted by different departments. This works better than tackling each individual issue independently, and in this fashion, Speck feels organizations can make broader gains across the entire value chain.
Her former boss at MEC, CEO David Labistour, agrees. “MEC has a lead sustainability person with the title: Sustainable Business Innovation who is distinct from any one department, and contributes to strategy – and to do so has to be able to understand how to work within the ‘business of the business’ – supply chain, finance etc. – and understand the tensions and paradoxes in competing for customers,” he says.
Celestica executive Todd Melendy, vice president of sustainability & compliance, points to his sustainability department as being essential in helping the organization innovate around this trend. “We’re still early in our journey here, but making great strides, and that would be impossible without specialists in our sustainability department,” he says.
“My longer-term goal is to increasingly shift some of those resources to operational departments, and, for instance, the procurement department now has their own sustainability analyst, but the sustainability group itself has been essential across the organization — and has helped change the mindset of other departments”.
“It’s part of a larger strategy,” Melendy continues. “For example, our sales team now looks to see if there is a sustainability angle they can play that will help them win business. Sustainability is increasingly important to many of our customers, and there is no question our improved performance in this area has led to closer relationships with several of our largest business partners. In another case, we actually won the contract because of our sustainability performance. It has become a strategic differentiator for us when competing for business.”
And it doesn’t take long to see the results: Under Melendy’s leadership, over the past three years, the sustainability team has helped Celestica climb onto the “Global100 List of Most Sustainable Companies,” and from nowhere, to 29th and then to 15th place on the Corporate Knights list, while Melendy himself was named to Canada’s Clean50 last year.
While the actions of these companies clearly have significant benefit to the environment, the larger gains have come from building organizations that are more resilient, better prepared for climate risk, more appealing to potential employees, at lower risk of a disrupted supply chain, more highly regarded by customers – and above all, more profitable.
The common thread among these organizations is the remarkable ROI they’ve gotten from their investment in appropriately trained sustainability professionals. The unique expertise that these sustainability professionals bring to the table is helping to drive corporate strategy beyond “business as usual” and outperform the competition. Who wouldn’t want that on their team?
Want to be a CSO someday? Check out EcoCanada’s outline of the gig and get their advice on how to get there.
Gavin Pitchford is the CEO of Delta Management group and the founder of Canada’s Clean50.
