Business School dean's ninth book helps companies reduce social inequity, environmental degradation

As more and more Americans choose to buy products from socially responsible companies, not practicing corporate social responsibility has proven damaging to the bottom line. Some companies have made social responsibility part of their organizational DNA, others use it merely as a public relations strategy, while an increasing number want to practice it, but just don’t know how. 

A new book by Sanjay Sharma, dean of the School of Business Administration, aims to capture the attention of all of the above by making a case for corporate social responsibility (CSR) as a way to generate profits, and more importantly, to reduce growing social inequities and environmental degradation. Competing for a Sustainable World: Building Capacity for Sustainable Innovation is more than a plea for corporate responsibility, however, but also a prescriptive guide for companies in the latter category wanting to build a truly sustainable organization.

“Conventional business models that generated profits without regard for negative environmental or social impacts are eroding,” says Sharma. “Traditionally, companies created charitable foundations separate from the core business through which it gave back to society via philanthropy. Society no longer accepts this separation. It expects business to address its negative social and environmental impacts while it creates shareholder value.” 

Incorporating the sustainable business principles of the triple bottom line -- people, profits and planet -- is no easy task even for the most altruistic of organizations. Sharma, who worked at companies in India, Asia and Africa prior to entering academia, has spent the past 15 years holding workshops for corporate leaders, helping them identify areas where they can lessen their environmental and social impacts; build the necessary motivation within their organization to address them; and to build the necessary capacity. 

“I used to do a lot of corporate workshops on building capacity for sustainable innovation and people would say, ‘we get it, but how do we motivate and change from where we are,” says Sharma. “After I started doing workshops and consulting on those issues, they would say, ‘so where’s the book?’ I wrote the book in a way that presents my research in a very accessible way that can be understood by academics, practitioners, CEOs, policymakers, and NGOs. It’s intended to help them understand how they can develop business logic, change their organizations, change managerial mind-sets and decision-making, and build critical capabilities in order to compete in a sustainable world.”

Assessing environmental and social impacts

In the book, Sharma describes the social impacts of a company in layers, starting with the impacts of a firm on its own core employees, followed by communities in which they operate, and beyond. He provides charts and tables to help organizations measure the impact of specific issues on current and future business on a scale of one to five. These include working conditions, living wages, impact on local employment, poverty reduction, displacement of community and others. 

“Its social footprint radiates outward from the core of the organization in terms of employee safety and welfare, responsiveness to the concerns of core and fringe stakeholders, and generating positive social impacts at the base of the pyramid,” writes Sharma, who works with Stuart Hart, Grossman Chair of Sustainable Business, at the BoP (Base of Pyramid) Global Network, a cadre of 18 labs around the world that use entrepreneurs, financiers, corporate leaders, scholars, and NGOs to create sustainable business models in places where people earn less than two dollars a day.

The same layered metrics are used for an organization’s environmental footprint, defined by Sharma as “the stress it places on the Earth’s ecosystem by generating waste and emissions, affecting biodiversity of life, and drawing on nonrenewable resources for its inputs and energy consumption.” Tables include rating measures for carbon dioxide emissions, solid waste, air quality, damage to the ecosystem, biodiversity of local species and others.  

Sharma gives numerous of examples of companies who are becoming more proactive like Wal-Mart, which is working on a sustainability index that surveys more than 100,000 global suppliers to evaluate their sustainability footprint. He cites Ben & Jerry’s as being at the forefront of corporate social responsibility guided by a nonpartisan social mission that “seeks to meet human needs and eliminate injustices in our local, national and international communities by integrating these concerns into our day-to-day business activities. Our focus," their mission reads, "is on children and families, the environment, and sustainable agriculture on family farms.”  

In his work with Coca-Cola, Sharma helped them identify water usage and packaging as their biggest impacts. Coca-Cola responded by adopting a sustainability mission of clean water all across the world. “Coke prospered because of it, and so did the communities around them, society as a whole and the environment,” said Sharma, adding that the company addressed packaging by making 30 percent of the their plant bottles out of corn starch with a goal of gradually moving toward 100 percent within five years. Other companies such as BP, which wasn’t as proactive in trying to reduce potential environmental degradation, lost shareholder value and is paying billions in damages related to the Deepwater Horizon spill.

In general, Sharma says most firms have come to realize the cost savings generated from reduced or alternative energy use. “Fewer firms,” he writes, “understand that fair wages and good working conditions for its employees and its contractors’ employees and fair prices to suppliers such as commodity farmers in its supply chain all enhance customer preferences and may lead to price premiums and the license to operate in certain jurisdictions.”

Embedding sustainability into the business school

Sharma said he designed the School of Business Administration’s new MBA in sustainable entrepreneurship (SEMBA) around the sustainability principles in his book. “Sanjay practices what he preaches,” writes Hart, who is an international expert on the implications of environment and poverty for business strategy, in the forward. “SEMBA was developed and launched applying many of the principles articulated in the book.”

“Not surprisingly," Hart continues, "sustainable innovation calls for a fundamentally different set of organizational structures, systems, processes, and mindsets; since the existing corporate ‘immune system’ is very strong, any project that deviates too far from the norm is quickly surrounded by ‘antibodies' and rendered harmless. It is for this reason that Sanjay Sharma’s book is so important and could not come at a more important time.”

PUBLISHED

10-15-2014