Innovation + Responsibility

If I was better at math, things might have turned out differently for me.

"The corporate social responsibility movement is fundamentally changing the way we do business around the world and I want to re-focus my career in a way that will allow me to contribute to that change.  I want to promote business advocacy while encouraging global responsibility, with the end result being a re-definition of how we measure business success. I want to make the triple bottom line – people, planet and profits – a reality in American corporate culture.  I plan to do this by devoting my career to the field of socially responsible investing, empowering shareholders to use their influence to force companies to acknowledge and nurture the connection between corporate social responsibility and business success."  

That's the opening paragraph of my business school application essay. Then I took finance during my first year of business school and, well...I had to re-think things a little bit! But despite my inability to grasp Black Shoales or how to calculate a Beta, my interest in SRI and my belief in it as a tool for change persist to this day.

So it was with great interest that I read the Executive Summary of the Social Investment Forum's 2007 Report on Social Investing Trends in the United States (the SIF releases this trend report every two years).  Below are some key findings:

Socially Responsible Investing is Growing. Fast.
SRI is growing "at a faster pace than the broader universe of assets under professional management" in the United States.  Approximately one in nine dollars under professional management - 11% - are involved in SRI.

Since the 2005 report, assets under management that used one or more socially responsible investing strategies has increased from $2.29 trillion to $2.71 trillion.

Assets in socially and environmentally screened funds were up 13 percent, from $179 billion in 2005 to almost $202 billion in 2007.

Big Money has Big Dollars in SRI
The bulk of assets invested in socially screened investments comes from institutional investors (typically the most powerful and influential shareholders around) and high net worth individuals. 

Institutional investor assets in SRI were up 27 percent in 2007 to $1.88 trillion from $1.49 trillion in 2005.

High-net-worth clients had $39.5 billion invested in socially screened investments, up from $17.3 billion in 2005. 

The Future of SRI
SRI is continuing to grow and it's my belief that as investors become more and more hip to the shenanigans of the greediest sorts that run rampant on Wall Street and that are currently reverberating throughout our economy (because, you know, Enron wasn't enough of a wake up call!), SRI will become more and more popular.

How You Can Get In On the SRI Action
You don't have to be a high-net-worth individual or an institutional investor to be part of the socially responsible investing movement.  You know that money you put into your IRA every year? Direct it to a socially responsible mutual fund.  Check with your company's 401(k) plan - maybe you have an SRI option in there to which you can direct a portion (or all) of your investments. 

I'm pretty excited that Sun recently announced a new addition to our 401(k) plan. It's called a "brokerage window" and it allows employees to invest their 401(k) dollars into any mutual fund they want, including socially responsible mutual funds! I have been eager for Sun to provide me with an opportunity to direct my investments in a way that is consistent with my personal values and now I have one!

Do You Want a Copy of the Social Investment Forum Report?
If you are interested in seeing a copy of the Social Investment Forum's Executive Summary, post a comment below with your email address and I will send it your way. 

With all this talk of recession swirling about, and companies preparing for what may lie ahead, I am sure there is more than one person wondering what will happen to the corporate responsibility function. Will fears of - or actual - recession force companies to cut back on this area of the business and instead divert these resources into other key functions (or simply tighten the belt altogether)?  I suppose that if this question was being asked 10 or 15 years ago - before mainstream corporate people really understood the top- and bottom-line value CSR can bring to an organization - the answer might be yes. And I bet there are companies today who will cut back on their CSR "department" as a matter of economic necessity.  But my guess is that most companies will not. Because in 2008 companies are (finally) starting to understand that having a credible and productive corporate responsibility function is no longer a nice to have, it's becoming a license to operate.

Before I go on, I want to state a few caveats:

1) I am not sure what a recession will do to corporate philanthropy efforts, even at a company like Google. For a company like Patagonia, which has a corporate policy to donate 1% of sales revenue to environmental causes - philanthropy will be directly tied to sales and not the whim of possibly skiddish executives (although my guess is that at Patagonia this wouldn't be an issue anyway). My hope is that at the companies where recession (or recession fears) does impact philanthropy, the companies use it as an opportunity to get creative about what and how they give.

2) There are still quite a few companies at which CSR (or whatever they happen to call it) is not much more than a marketing program.  I am thinking these companies would reduce their CSR efforts because the companies still don't grasp the business benefits of CSR initiatives.

So why am I writing about this? Well, I think this question presents an interesting opportunity to collect some data that many in the CSR - and frankly anti-CSR - space have long lacked. The question is this:

What is the long-term impact of  CSR  on a company's performance?

I would argue that up until now, there has not been a quorum of credible CSR programs to enable anyone to answer this question. But the last few years we have seen an explosion of CSR initiatives - companies like Sun, GE and Brown-Forman have all formalized their corporate responsibility efforts - on top of a refining of CSR initiatives at early-adopter companies (like Nike, Starbucks, Vodafone, and others).  And many of these companies have embedded CSR so deeply into their operations and their brands, there is no way to let it go in tough economic times.

Here is what I propose:

Why don't  we choose a metric - stock price, revenue, profits - and use it to measure the performance of companies with CSR programs. We can do it over a five or ten year period and track and compare the performance of those companies that continue to use CSR as a key component of their overall business strategy and business operations against those that marginalize or, at worst eliminate, CSR efforts during challenging economic times.  It would be interesting to see if CSR has any measurable impact on a company's performance. I think this is a worthwhile exercise. I know it would not bear results for several years, but it could be an interesting tracking study.  I mean, why stop at five or ten years? We could go on forever. We can name it after me - I've always wanted something named after me! The Marcy Scott Lynn Sustainability Tracking Index. Hm, doesn't exactly roll off the tongue.

I feel pretty confident that the results of the study would show what I believe in my heart - that companies that truly embed corporate responsibility principles into their strategy and operations are better managed companies. Better managed companies do better in the marketplace. Therefore, companies with integrated CSR will do better in the marketplace.  I don't remember much from high school math but I think that's called a syllogism.  

Fortune's Most Admired Companies list for 2008 just came out and Sun made it this year! For the last couple of years we were listed as a "contender" - that means that we were ranked below #6 in our industry and so we were not considered to be ranked on the full list.  But this year we made it!  We are officially "Admired."

We rank #5 in the "Computers" category with a score of 6.39.  I'm not totally clear on the scoring, but Apple, which was ranked #1 in our industry (and overall), scored 7.42.  Now, I don't entirely understand that because Google, ranked 4th overall and second in their industry, had a score of 8.07 (and General Electric, which was 3rd overall, scored 7.85. Go figure). I'll leave the math to someone else and instead be happy that Sun made it onto the list this year and celebrate our continued progress in the marketplace of ideas.

Sun ranked #2 in our industry for "innovation" (behind Apple) and #3 for social responsibility (behind IBM and Xerox).  There are a few areas we didn't rank so high - namely around our financial performance. So hopefully as that continues to improve, so will our place on this list!

For more details about Sun's ranking, go here.

For more about the overall list, go here.

Well, months ago I did a blog entry about putting the "social" in social responsibility. Yesterday I decided to experiment and I formed a Facebook group called, "The Sun Employee Sustainability Network - Every Job is an Eco Job!" Okay, so it's not exactly an elegant name...a bit of a mouthful really.  But since I have been saying since I arrived at Sun, and even in this space, that it is more valuable for people to find the "eco" (or CSR) in their own job than to find a job on the eco or CSR team (and since "Every Job is an Eco Job!" has become the rallying cry for the Sun Eco staff), it seemed like a good name for the group. And with groups out there like, "National Corn Dog Day," and, "If 1,000,000 people join I'll legally change my name to McLovin," well...I realize mine is not so bad.

So, I started the group last night around 10pm PST and this morning, at 8:19am PST there are 11 members.  Mark Monroe already posted photos to get things started - he posted a mock-up of a solar array on the roof of one of our Broomfield, CO campuses. 

 
I sent invitations to the 40 or so Sun employees that I am connected to on Facebook. Hopefully all of them will join.  And then we will have to see: will more people join than just the ones I invited?  Will Sun employees (who I don't know) see that their friends have joined this group and want to join themselves? Can Facebook actually work for this? We shall see. And I'll keep you posted here!

If you are already on Facebook and want to join the group, go here.  If you are not already on Facebook and want to join...well, get on Facebook and then go here!