Accept and work with long-term horizons

Catalin Ratiu, John Molson School of Business, Montreal, Financial Post 

National Post, May 18, 2010, Financial Post p.11

With high demands on businesses to green their act, many find it difficult to choose initiatives that have the most impact both on bottom line and carbon footprint. As a result, companies resort to tried-and-true, though often costly, marketing campaigns to influence customer perception about their sustainability efforts, but do not follow up with investments in substantive initiatives.

Whether or not you are interested in climate change theories, it is increasingly difficult to disagree that making smart green choices can have a net positive impact on the bottom line.

Why, then, do so many companies treat their environmental performance as a marketing and not a strategic issue? And why do so many invest in initiatives that turn out not to stick and end up scrapped- -sunk costs and all?

The answer to this puzzle is likely inside your company, and in how it approaches the development of green initiatives.

In the past year I have examined how public transit authorities develop sustainability initiatives in more than 50 urban and metro areas around Canada and the United States. I found that the most proactive organizations have a few things in common.

This setting is particularly appealing, because transit authorities are not under the same pressures from environmental groups as business firms. In fact, they are viewed favourably as part of the solution to rampant pollution and traffic congestion. Hence, many have had the freedom to experiment with a wide range of green initiatives and their lessons might be useful to corporations.

So how are green initiatives developed and what lessons can be passed to your organization?

A first lesson is to start by working with a wide range of actors inside and outside the organization. Successful public transit authorities consult with scientists, policymakers, business leaders, and customers, all in an effort to anticipate what is called for in their activity sector. By engaging actively with a broad range of stakeholders, they can effectively develop services that address the most pressing concerns.

Second, develop processes of anticipation and foresight. Most companies use financial forecasting tools and these are useful to understand the viability of investments. But they do not provide any input into the strategic viability of environmental initiatives. Keep in mind that sustainability sciences are evolving, and new issues are brought up constantly. Anticipating sustainability issues of relevance to your business involves learning about current concerns with an eye for opportunities. In the public transit sector, initiatives that stuck were usually born out of an anticipated need or issue outside the organization.

A third important characteristic of successfully implemented initiatives is to accept and work with long- term horizons. This is more easily observed in public transit than other industries, because pressures for greening are typically lower. This allows them to take more time to develop high-impact initiatives. Meanwhile, this is a good reminder that changing the corporate environment to accommodate a broad, deeply embedded initiative takes time.

But the returns on investment are promising.

In addition to increased operational efficiencies from better use of energy and other technologies, successful organizations reported organization-wide benefits, such as the acquisition of new skills and knowledge.

Moreover, front-runners of sustainable initiatives are trend setters, who distinguish themselves and contribute to the development of standards. In so doing, they develop new areas of expertise that help diversify into new and emerging industries.

Finally, sustainable initiatives that stick are strategic not tactical. We all wish to positively impact the world around us, and the various choices we make daily while conducting business have great potential in doing just that.

- Catalin Ratiu is a PhD candidate at the John Molson School of Business, Concordia University in Montreal.

Online at: http://www.financialpost.com/story.html?id=3040098#ixzz0oITQ4vBu