What happens downstream?: Scott Mattoon's blog

The New York Times ran a piece on the front page of today's Business Day section about the emergence of executive positions chartered with sustainability in American corporations.  The story's headline, "Companies Giving Green An Office," suggests the elevated status of this new crop of executives is a provisional mantle granted whilst the real CxO's figure out whether a separate position is essential to the integration of sustainability in their companies, or even whether the whole environmental responsibility thing will blow over.

In her cursory exploration of the trend, Claudia Deutsche reports that the role has moved from a compliance measure and appeasement of critics to an integral decision making position entrusted with responsibility for not only how to spend money, but also how to make money.  This is certainly the case for Sun's own Office of Eco Responsibility, headed by VP Dave Douglas,  which is responsible for the development and marketing of certain products, including Project Blackbox, in addition to internally facing environmental and energy efficiency initiatives.  I am not convinced that capitalizing on market opportunities is what drove the companies cited in the story to formalize these executive positions, however.

Of the eight companies cited in the article (Sun was not one of them,) seven have senior executives dedicated to environmental or sustainability programs, one (Hilton Hotels) has a subset of sustainability, (carbon footprint,) tacked on to his traditional office, and one (G.E.) has two officers focused on the environment.  The list of these executive positions is summarized below.

Clearly, this is good news for advocates of the environment and for sustainable business, but for anyone who has been following sustainability in business, this article was hardly a news flash.  These eight companies have had significant environmental programs in place for years (albeit, some weaker than others).   Two relevant aspects of the trend were unfortunately missed in the coverage of this newsworthy trend:

1. What drove most of these eight huge multi-nationals to put meaningful programs in place was brand protection from years, if not decades, of media attention and watchdog attacks that constantly badgered the companies to be more environmentally responsible.
   
2. Dozens of other Fortune 500 companies have joined the ranks of these giants, recently adding executive offices focused on sustainability, many of which are responses to market opportunities rather than gestures to stay out of the hot seat.
   

What drives companies to adopt a sustainability program is not necessarily indicative of the effectiveness of the program.  Both Dow and DuPont, originally incited to come up with environmental policies by critics, are now truly innovating for the environment and helping industry improve environmental processes.  Dow's focus on efficiency led to more than 200% ROI on energy efficiency initiatives from 1981 to 1993.  DuPont committed to "improve the value of our products and services per unit of natural resource employed," and has delivered on that goal year after year.    eBay, Google, and Yahoo! on the other hand, largely motivated by branding opportunity and a sense of responsibility, have moved rapidly to develop energy efficiency programs,  yet Google's solar panels program, perhaps the most aggressive of all undertaken by these Internet giants, will reduce their energy use by about 30%.  Admirable, but not exactly radical.  It leaves one to wonder what they'll do for an encore.

Nice to see the trend covered on the front page of the NYT Business section, but a deeper look into the drivers of the trend and a wider view than just these eight companies would make the article more valuable.  Hopefully Ms. Deutsch will put this trend on her regular beat.