Since the main role of the CEO is to set strategy & vision, it’s hard not to consider aspects of Corporate Social Responsibility (CSR) when setting the direction of a firm. CSR has begun to shape the culture of firms across the country. What has bubbled to the top most recently are CSR issues & compliance standards around environmental stewardship.
The chief executive has to take notice of the slue of mandates & regulations aimed at making electronic goods (along with their production & disposal) less harmful to the environment. From sourcing, manufacturing, transportation, commercialization, distribution, consumption, and disposal of goods, the adherence to WEEE and RoHS are critical in the supply chain. When a company is not in compliance, it looses its ability to sell in certain markets.
The optimal use of information & communication technology is critical to the CIO. According to Gartner, CIOs should only expect to pay hefty energy bills but beware that the vast majority of U.S. data centers will face energy disruptions in the coming years.
Because data centers can consume 15 times the energy per square foot of a typical office building, the potential for economic & environmental benefits are impressive. This situation caught the attention of Congress in 2006, which ordered the U.S. Environmental Protection Agency to study trends in data-center energy use. The agency delivered a report in 2007, estimating that the IT sector consumed roughly 61 billion kilowatt-hours in ‘06, or 1.5% of the total U.S. electricity usage — more than double since 20000.
- How Green is the data center? (source: Gartner)
Look at the example of Citigroup. This company pledged to spend $232M on a LEED-certified data center in Germany.
Not only do consumers favor companies that credibly demonstrate reduction of carbon impact, employees are also positively impacted green initiatives. However, environmentalists and savvy consumers are on the look-out for “green-washing,” or marketing campaigns that masquerade as real environmental progress.
A corporate initiative may have honest intentions and even be an absolute positive for the environment. But if it doesn’t address the company’s central environmental culpability, then there are significant risks.
- Can Green be transparent? (source: Green Marketing)
Toyota, the darling of environmentalists these days, has its own take on transparent green marketing. Fore years, the automaker has discouraged the word “green” in any of its internal or external communications.
The HR Executive:
From recruiting to employee retention, sustainability projects boost employee moral. Sometimes called the “hire calling,” these initiatives come in many shapes and forms, including: employee telecommuting, carpooling, green building, employee matching programs, payroll giving, wellness programs, etc.
As the talent shortage becomes acute, more organizations are going to take a stance on green recruiting. Job seekers coming out of college are now demanding to know the kids of things that potential employer are doing for the environment.
- Employee Sustainability Projects (source: Strategy Business.com)
There are many success stories that can be noted here. One example which stands out from the rest is Toyota Motor Corp. success of moving one of its divisions into an environmentally friendly, or “green” building in Torrance in 2003, employee moral jumped while absenteeism fell. Another is Wal-Mart’s “Personal Sustainability Project” which encourages employees to come up with programs that will improve health & wellness as it relates to people and the environment.
While chief executives are proclaiming their new environmental initiatives without much fanfare, CFO’s, as guardians of their companies’ financial welfare, are let to account for the impact of these programs on the bottom line. The return on investment for CSR depends on three things: the industry, the company’s existing reputation, and the way the company approaches the issue.
The impact of reduced supply chain risk, increased brand loyalty or green IT can still be hard to quantify. However, with rising energy pries, many companies are realizing prompt returns on environmental programs.
- What return can I expect on my investment? (source: CFO magazine)
For example, Herman Miller (furniture manufacturer) says the company sees $4.5 million in annual savings from $2 million in annual spending on environmental initiatives.