By dodging the contentious issues around sustainability, companies are missing an opportunity to set out their value proposition in a convincing way, says Vanessa Richards
This article was first published in the January 2020 International edition of Accounting and Business magazine.
A dispute in Australia about the role that companies should – or should not – play in leading change caught my attention towards the end of last year.
Government ministers told businesses to stick to their knitting and avoid engaging in issues such as climate change or same-sex marriage. Companies responded that they have an obligation to act on issues of concern to their stakeholders and to safeguard shareholder value.
The dispute is a symptom of the environment in which we now live. Opinions are increasingly fragmented, and strongly held. As a result, one person’s sustainability will be another’s corporate activism.
Some boards shrink from attracting attention by taking a stand in this context and many have gone for safe options: focus on compliance, keep policies in line with peers and, if there’s a need for a corporate giving programme, fund uncontentious causes only.
This results in a sustainability narrative that bears little relationship to a company’s business strategy, stakeholders or impact on the world. A waste management company I worked with had a sustainability programme that consisted largely of a grab-bag of charitable causes such as cancer research and children in need. There was barely a whisper about environmental impacts, water or climate change – all issues directly relevant to the business’s risks and opportunities. Management didn’t want attention over potentially controversial issues.
It’s an approach unlikely to offer any protection. Issues don’t go away simply because they aren’t acknowledged. And when a problem does arise, failure to set out an approach can be disastrous.
The nettle needs to be grasped. There will always be opposing viewpoints. Boards must stop treating sustainability as a way of placating criticism, and start seeing it as an opportunity to set out the company’s place in the world and its responsibilities to those it impacts.
The key to a defensible sustainability programme is not only to engage your stakeholders but also to respect their perspectives – including those opposed to management’s view. Sustainability policies should be a rigorous and challenging analysis rather than a feel-good exercise. That does not mean accommodating every opinion or compromising core principles. It means having a clear rationale that links to your purpose and strategy and explains how your policies protect shareholder value.
Get this right and you’ll be better placed to handle dissent and address the concerns of most stakeholders. You’ll never shut down all dissent – and that’s not the point of the exercise anyway. What you are doing here is setting out your value proposition in a convincing and connected way. Your stakeholders can make their choice accordingly.
Vanessa Richards is a corporate communications and governance consultant in Australia.
"Boards must stop treating sustainability as a way of placating criticism"