35 Chapters
Medium 9781609949778

Contents

Epstein, Marc J. Berrett-Koehler Publishers ePub
Medium 9781609949778

6 Linking Actions to Impacts

Epstein, Marc J. Berrett-Koehler Publishers ePub

Why are you here? What is your organization’s reason for existing? What does success mean to you? What would it take for you to be able to say, “Because of our investments, the world is a better place”? It is surprising how difficult these questions are to answer for many social purpose organizations. But if creating social change is important for you, it is essential to envision and describe exactly what changes you seek.

Even if you operate in dynamic environments and have rapidly changing goals, it is important to think about these questions on a regular basis. Without them, you may end up fighting fires or solving the problems that seem most salient at the moment, or you may be pulled to and fro trying to serve the interests of powerful stakeholders. Only when you are clear about the changes you hope to make can you start planning and executing the actions that will bring about those changes.

A good investment program begins with clear thinking about the desired social change. All of the key investors should understand, and ideally agree on, the organization’s ultimate mission. For companies, the mission often specifies the products or services to be delivered, the target market, and/or the specific set of customers they would like to see using these products and services. The strategy defines how the organization will deliver products to customers and, in competitive environments, how they will differentiate themselves from competitors in order to capture market share.

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7 Implementing a social, environmental, and economic impact measurement system

Epstein, Marc J. Berrett-Koehler Publishers ePub

The identification and measurement of the costs and benefits from corporate sustainability activities is critical to the evaluation of projects within the company and the evaluation of the company and its components and members. As the previous chapter shows, there is a solid academic foundation for measuring sustainability performance. Significant improvements in the development of corporate performance measurement systems that include both financial and nonfinancial measures permit much-improved evaluation of social, environmental, and economic impacts. This is aided by vast improvements in corporate information technology capabilities that permit the collection, aggregation, and disaggregation of information for improved analysis, management, and reporting.

In the last chapter we looked at methods such as hedonic pricing, market pricing, and contingent valuation. In this chapter we translate these concepts and approaches into systems and measures that can be effectively implemented. We look at:

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CHAPTER 10: THE BENEFITS OF SUSTAINABILITY FOR CORPORATIONS AND SOCIETY

Epstein, Marc J. Berrett-Koehler Publishers ePub

Global companies are increasingly faced with difficult dilemmas. There is significant pressure to reduce costs in the supply chain, yet switching to lower-cost suppliers may increase social and environmental impacts, and reactions from various stakeholders, including employees, customers, regulators, and community activists, may have a detrimental effect on financial performance. Senior management often faces complex decisions about facility location that in simpler times could be made by examining differentials in labor, shipping, and raw material costs. Now social, environmental, and political risk must become part of the calculus.

Business unit managers are regularly told by the CEO about the importance of sustainability yet they receive daily pressure to increase short-term profitability. And their bonuses are typically based entirely on profits. Making the decisions (and these are often trade-offs) about achieving excellence in both sustainability and financial performance is a big challenge.

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CHAPTER 3: ORGANIZING FOR SUSTAINABILITY

Epstein, Marc J. Berrett-Koehler Publishers ePub

Once leadership commitment is established, corporations need to implement their sustainability strategy through appropriate organizational structures, systems, performance measures, rewards, culture, and people. This alignment of strategy, structure, and management systems is essential for companies in both coordinating activities and motivating employees (see our model [Fig. 1.7] on page 46). In this chapter I discuss:

The organizational structure around sustainability issues often entails organizing activities and resources spread throughout many locations.1 Corporations must consider whether key resources and activities should be centralized or decentralized and decide on a level of central control versus business unit autonomy. These decisions must be appropriately aligned with corporate culture. The decision to either centralize or decentralize an organizational structure can depend on several contextual factors, including: 86

Larger companies, operating in multiple industries and multiple geographic locations, face more challenging environments, which often lead to a more decentralized organizational structure. The advantages of decentralization often include greater flexibility and increased responsiveness. Specific local expertise about markets, competitors, and customers provides valuable knowledge that could translate into innovative and efficient solutions. A more decentralized decision-making process gives managers autonomy and can create an environment that is often more conducive to experimenting and developing new ideas.

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