35 Chapters
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2 Leadership, organizational culture, and strategy for corporate sustainability

Epstein, Marc J. Berrett-Koehler Publishers ePub

Identifying, measuring, and reporting social, environmental, and economic impacts cannot begin until the board of directors and CEO are committed to improved sustainability management. Often it is through mission and vision statements and values, or the development and articulation of a corporate sustainability strategy that the board and CEO set the tone at the top. It is then necessary to drive this commitment through the organization by implementing the various systems for identifying and measuring impacts, stakeholder engagement, product design, product costing, capital budgeting, information management, and performance evaluation.

The CEO communicates the values of the organization, the behaviors expected, and the results ultimately achieved. The CEO is responsible for inspiring, insisting on, and implementing action plans for boosting performance. Effective and consistent leadership provides an alignment between sustainability activities and corporate goals and provides internal credibility to promote progress toward improved sustainability management within business units and organizational functions. Management support is particularly important when companies are implementing global sustainability standards across their business units.

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10 Social Impact Measurement Maturity

Epstein, Marc J. Berrett-Koehler Publishers ePub

Ultimately, the goal of performance measurement is to increase your impact. The most effective way to do this is through careful measurement and management of your organization’s projects. If your social impact measurement system is mature, it can provide you with a better understanding of how you are investing your resources and the specific results they are producing. And it can provide the information you need for careful and dynamic management of activities that is responsive to outcomes, needs, and changes in the environment. In this chapter, we introduce a five-level model that you can use to describe and evaluate your current social impact measurement system and to generate ideas about how you could improve that system.

Our model, shown in Figure 23, uses a stepwise or maturity-stage format that highlights the characteristics of impact management systems. The model has five categories, which represent general profiles of organizational capability, though your organization may find it has characteristics of two or more levels. Organizations usually move through the levels as they become more experienced in evaluating impact and in using this information to make decisions. Each level encompasses the capabilities of all the categories below that level.

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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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CHAPTER 9: EXTERNAL SUSTAINABILITY REPORTING AND VERIFICATION

Epstein, Marc J. Berrett-Koehler Publishers ePub

It is critical to collect and analyze information on sustainability for improved resource allocation decisions. This information should then be included in internal sustainability reports to improve managerial decision-making regarding processes and products. How companies perform on sustainability is also an important factor for external stakeholders since they are affected by corporate strategies and actions. All elements of the sustainability contribution model (inputs, processes, outputs, and outcomes) should be measured and reported for improved management decisions and actions and for improved accountability to stakeholders.

Various pressures have caused companies to increase their social and environmental disclosures in corporate annual reports and the quantity and quality of disclosure in separate environmental or sustainability reports. Corporate responses to increased stakeholder demands for information on corporate sustainability performance vary widely. Some companies have issued social and environmental reports for each operating division or geographic area, some for the entire corporation only, and some have included this discussion in corporate annual reports. In one study of the Fortune Global 250, 20% of the companies included a sustainability section in their annual reports, while 54% published a separate sustainability report.1 Another study by SIRAN (Social Investment Research Analysts Network) found that:

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12 Call to Action

Epstein, Marc J. Berrett-Koehler Publishers ePub

Investing in impact is not easy, but the world needs you. The social and environmental issues we face today are tremendous. But investors like you are making great strides in many areas, and there has never been more interest in solving the big problems. Tackling the challenges that lie ahead will require all of us to invest our scarce resources in the most strategic and effective ways possible.

You’ve already chosen to devote your time, money, and other precious resources to help others by promoting positive social and environmental changes. And now you’re making the decision to manage your investments in new ways to create the maximum possible benefits. We’ve all heard about well-meant projects that have languished or failed, and none of us wants to waste resources or fall short of the promises we’ve made to our beneficiaries and ourselves. With good intentions, deep thinking, and careful management, every investor can create better outcomes.

The time is right to focus on impact. Virtually all stakeholders involved with social impact—investors, regulators, community members, trade partners, and beneficiaries—are more interested than ever in making sure that these investments make a difference. While this puts pressure on investors to deliver, it also leads to a great deal more attention toward providing support and resources that can help deliver impact.

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