IBM on Sustainability: Time For Real Time

Its hard not to be impressed with the strength of focus coming from IBM these days on sustainability. I'm ususally pretty sceptical about sustainability marketing efforts and IBM have a high hurdle to jump to reach a point of public credibility. But on the other hand technology companies, more than most sectors, are obliged to lead from the front in raising awareness of how sustainability is impacting the business and by offering real solutions to mitigate the effect and create new value whilst doing so. Just ask Greenpeace about this. Its a risky marcom exercise but IBM is succeeding with its idea of a smart planet because its not just a vacuous sloganeering platform. In fact, IBM is backing up the marketing schtick with serious intellectual effort both, in thought leadership to shake things up, and putting capital at risk to develop solutions that can move industry business models to a more sustainable footing.

Today IBM released the results of their latest global CSR survey of more than 200 senior executives. The findings are sobering but also somewhat encouraging. And if you thought all of this talk of sustainability would wash away in the toughening economy then think again. In fact, the opposite appears to be true:

  

The new economic reality has more rapidly advanced the logic of corporate sustainability management. The pennies are dropping at once and all over: integrate sustainability to make it sustainable and profitable or carry a token CSR programme that incurs incremental cost, creates no new business value and whose PR value too is rapidly commoditizing. Its a no brainer. But its a big brainer to implement.

You see, the dirty little secret of corporate social responsibility is, as we have all known for years, the trade off and optimization analysis required to drive serious decisions such as for carbon, recycling & packaging performance is complex. But rather than throw the problem to the Operations Research department; it has instead been parked for too long with the PR group who busied themselves writing attractive CSR reports and thinking about crisis preparedness and reputation management. Much less creative thought has gone into operations planning for sustainability and now IBM exposes the woeful state of the information gap for sustainability optimization planning amongst its surveyed group:

Relative to their CSR ambitions, the businesses surveyed are ill prepared with the management information essential to managing their strategic sustainability goals. In turn, we in society risk not seeing the improvements that we need to rapidly realize in order, for example, to arrest climate change. Depressing? No. To get this issue out on the table now is more than halfway towards solving it. I only wish we were having this discourse more widely ten years ago.

There are two very serious issue at hand to address - the need for sustainability information from across the business network and the need to have it in real time. Carbon is a great case in point and looking only inside the factory gates may fail to optimize the firms position or that of the environment. Looking upstream, collaboration with suppliers and partners can yield operating and environmental performance improvements. Looking downstream, customers may highly value having the total embedded production CO2 emissions data available as a product label at point of sale. We need to have a much more dynamic handle on this level of complexity if we are to seriously to take CO2 out of the business network. Adding it up in excel at the end of the year won't cut it.  

......implementing sustainability strategies requires a sound understanding of trade-offs related to areas like quality and customer service, as well as costs and environmental impact. In many cases, these factors must be evaluated for their impact across the full supply chain and life cycle. ............ 

And yet the following illustrations show that supply chain management is mainly focused on sensitive reputation issues like supply chain labor standards which are managed mostly on a compliance basis. Scant attention is paid to issues that, moving beyond compliance, can lead to cost improvement and process innovation. Carbon, water and energy are such issues that reside at the bottom of the heap. This is not an argument for de-prioritizing human rights in the supply chain but rather to point out the missed opportunity better resources & environmental impact management.

One of the great advantages of the new information era is the availability of real time data. Yet too often, the information that is being collected is stale. Nearly sixty percent of organizations are not collecting information about key operations and sustainability objectives on a frequent basis. Even in the high-profile area of carbon management, for example, 8 out of 10 are not. They may be able to use the information they have for an annual CSR report, but since they aren’t evaluating the ongoing impact of actions on their carbon footprint, it’s unlikely they can use it to make their operations more sustainable.

 

The tone of this new survey report is more sober and less exuberant than the last time out. It maybe a sign of the times but I think its a more realistic approach. Gone is the more fanciful talk of 'ubiquitous connectivity' of the anti corporate masses on the horizon nor is there any more talk of 'NGO footsoldiers' at the ready to manage compliance on the cheap for global multinationals. Rather, IBM does seem to have snapped back from previous but it comes at a cost of some clarity. IBM is now somewhat more vague about the exact nature of the relationship between civil society and business and how corporate governance models might adapt:

Stakeholders require a lot of information but their information demands can’t be your only focus. Are you collecting information that helps you meet your business objectives and are you communicating those objectives to stakeholders?

Its important to make progress on this puzzle or firms risk endlessly reacting to commentary at the cost of embedding strategy. We need durable but elastic models to effectively include stakeholders in the game.

But for all that the report has a very sensible and practical focus on two burning issues of corporate sustainability - how to become more efficient and how to find new pathways to sustainable and profitable growth. Bravo.