Corporate social responsibility through sustainability is becoming the driver for enterprises across the globe as they acknowledge there’s more to success in business than simply making money. But are New Zealand companies keeping up? By Patricia Moore.
Ask NZ King Salmon CEO Grant Rosewarne if corporate social responsibility and sustainability is important to his company and the answer is unequivocal.
“Absolutely. This is the area we live in and our children will live in and we want to hand on the environment and our company and our social structure in a positive way.
“We’re here for the long term. Essentially all our people are employed in the top of the South Island. Our farming occurs in this environment; our processing occurs in this environment so it’s got to be done in a way that ensures our children inherit something to be proud of.”
But there’s another reason, he says. “We only exist at the pleasure of all our stakeholders whether they be shareholders, employees – or team members – our suppliers, and the community in which we operate. If they’re not supporting us we don’t have a licence to exist and grow.”
NZ King Salmon wants every stakeholder to be better off as a result of its existence, he says.
“We have multiple generations working for us and we regularly say ‘in 30 years time our children will be the beneficiaries of the decisions we’re taking today’. Our definition of sustainability is ‘our operations can go on in perpetuity without an increase in effect’.”
NZ King Salmon is the only New Zealand member of the Global Salmon Initiative and Rosewarne says this is an ideal vehicle for benchmarking itself against world producers.
Salmon is a very finicky species he says – a sentinel species, or indicator of a healthy environment. “They just don’t survive in a situation where the waters aren’t clean and pure.”
The company’s commitment to sustainability and the environment has earned NZ King Salmon a number of major accolades – and played a significant part in the success of their Ora King brand (www.orakingsalmon.co.nz) which now appears on the menus of upmarket restaurants across the world.
And the company is part of a global trend that is seeing corporate social responsibility through sustainability becoming the driver for enterprises across the globe as they acknowledge there’s more to success in business than simply making money.
It’s a seismic shift from the belief, espoused by the late American economist Milton Friedman, that the sole purpose of business was to generate profit for its shareholders.
The focus now is on all stakeholders, not just shareholders, and profit is just part of a triple bottom line that also includes people and planet, measuring the company’s financial, social and environmental performance; only by taking all three P’s into account can the true cost of doing business be understood.
So, in general, are New Zealand companies taking up the challenge and working on ways to identify, measure, and improve their social and environmental impacts?
From a position of regarding CSR and sustainability as something external to their core business strategy, more businesses are taking a much longer-term view with many looking 30 years out, says Penny Nelson, executive director for the Sustainable Business Council, (www.sbc.org.nz).
“They’ve moved well beyond the ‘why’ to ‘how do we bring others along with us, to achieve what we need to, for medium to long-term business value’.” Pressure to think long-term is coming from a range of places, says Nelson.
“Employees, customers, investors and communities; and we’re seeing growing interest from governance. They’re asking how can we attract the best talent, how can we capture the financial benefits of greater workplace diversity, how do we respond to disruptive business models?”
On the other side of the coin, there are still companies that see CSR as being detached from their main business, she says.
“In our experience such businesses are unlikely to see the full benefits of the work they’re doing.
CSR practices that are easy to discard when times get tough means they are less likely to support wider business sustainability.”
Organisations that focus on sustainability become more resilient, says Nelson. “We’re seeing people identify, then proactively manage risks, by better understanding their impacts.”
An example is a group of SBC member companies working together to identify ways to reduce their carbon footprint by making freight more efficient.
“As a result, by using rail rather than road transport, Toyota NZ has reduced the CO2 emissions on vehicle parts being freighted from Wellington to Palmerston North by 39 percent, and reduced costs.”
In another example DB Breweries has created a biofuel from beer by-products.
“By addressing its waste it’s also able to help reduce carbon in the atmosphere.”
The Sustainable Business Network launched in 2002 at a time when sustainability was a little known term here, says founder and CEO Rachel Brown. “Businesses were pretty sceptical about the term, linking it mainly to the environment. It took us a couple of years to explain the value sustainability – triple bottom line thinking – would bring to the business.”
SBN is now a network of 500 member organisations with a vision to make New Zealand the model sustainable nation for the world.
“To achieve this we help our members succeed in four areas we believe are critical for New Zealand; renewables, community, mega efficiency and restorative business.” Their success stories (www.sustainable.org.nz) are proof that integrating sustainability is good for business, says Brown. “They show how sustainability helps build a stronger brand, more market loyalty and profitable returns for the business.”
SBN initiatives, such as its Circular Economy Model Office Guide, a world first launched in July, are attracting global interest. Unlike the traditional linear economy, where goods are made, consumed, then discarded, the circular economy focuses on a sustainable alternative; recycling, re-using, designing out waste, and sharing goods and services.
“Response has been enthusiastic from here and overseas, with a number of organisations looking to have the world’s first Circular Economy Office but we’re keen to see the first office to go through the process is based in New Zealand,” says Brown.
Integrating sustainability is not without its challenges. The SBC, working with a group of senior business leaders, has identified a number of challenges including:
- Establishing effective governance.
- How to influence executive teams and boards to work effectively on sustainability.
- How to incorporate sustainability thinking into core business strategy.
- Embedding sustainability into business programmes.
- Developing a simple narrative on what the company is doing for staff, customers and suppliers.
- Ongoing performance management and reporting.
Senior business leaders from some of the country’s largest companies were also involved in the SBC’s Leadership for Sustainable Value course which Nelson describes as “an opportunity to share the best possible information available”.
The calibre of companies represented suggests corporate social responsibility and sustainability is in safe hands, but Nick Main, former chief executive and chairman, Deloitte NZ, and global sustainability advocate, who led a number of sessions, believes there are challenges in getting sustainability firmly on boardroom agendas. “Boards are concerned about a lot of things, so how do you get sustainability on the agenda? What’s the language for getting it there?”
The GFC caused many corporates here to go into survival mode and some are still in that mindset, he says. He believes there’s a more active conversation happening in Europe, perhaps because environmental impacts are so much more obvious there.
“I think the conversation has slowed down here and that’s a concern because so many of New Zealand’s brands are dependent on the environmental and sustainability aspect. We need to have our brands’ stories in line with the values that consumers in other markets are looking for.”
Integration of sustainability into business models has little to do with company size, says Brown. “The ease of doing this is pretty much dependent on how much change or transformation is required. If the shift simply involves a readjustment then it’s fairly simple. However, if it is transformative, the entire business will be absorbed in the transition.”
Pockets of transformation are emerging, says the SBC’s Nelson.
“One of the most interesting aspects of transformative businesses is their willingness to work together, to partner and collaborate with suppliers, competitors, customers, the scientific community, NGOs and government where necessary. We’re already seeing some very interesting opportunities emerging as a result. To me that’s an exciting change; CEOs working together on issues that concern them is what will turn the dial on sustainability.”
