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Steve Calechman

Management

Making Organizational Sustainability Work

How to do well and do good at the same time

Published: Tuesday, March 28, 2023 - 11:03

Sustainability is a hot topic. Companies throw around their carbon or recycling initiatives, and competing executives feel the need to follow suit. But aside from the external pressure, there are also bottom-line benefits. Becoming more efficient can save money. Creating a new product might make money. However, customers care about a company’s practices and will spend their money based on that.

The work is in getting there. Becoming sustainable can seem simple: Establish a goal for five years down the road and everything will fall into place. But it’s easy for things to get upended. “There is so much confusion and noise in this space,” says Jason Jay, senior lecturer and director of the Sustainability Initiative at MIT’s Sloan School of Management.

His work helps companies break through the confusion and figure out what they want to actually do, not merely what sounds good. It means doing research and listening to science. Mostly, it requires discipline, and because something new—be it a product, process, or technology—is being requested, it also takes ambition. “It’s a tricky dance,” he says, but one that can result in “doing well and doing good at the same time.”

It’s about taking steps

Three steps, to be exact. The first, which is the crux, Jay says, is for a company to focus on a small set of issues that it can take the lead on. It sounds obvious, but it’s often missed. The problem is that companies will do either one of two things. They’ll take an outside-in approach in which they end up listening to too many stakeholders, “get pulled in a million different directions,” and try to solve all of society’s problems, which means solving none of them, he says. Or they’ll go inside-out and have one executive in charge of sustainability who will do some internal research and come up with an initiative. It might be a good idea, but it doesn’t take into account how it will affect the facilities, supply chains, and the people who work with them. And without that consideration, “it’s going to be very difficult to get the necessary traction inside the company,” Jay says.

What’s needed is a combination of the two—outside perspectives coupled with insider knowledge—to find an initiative that resonates for that company. It starts with looking at what the company already does. That might show where it’s making a negative impact and, in turn, where it could make a positive one. It also involves the C-suite executives asking themselves, “What do we want this company to stand for?” and then, “What do I want my legacy to be?”

Still, it can be hard to envision what change can look like or what actions might have a positive effect. Jay says this is where a simulation tool like En-ROADS, developed by MIT Sloan and Climate Interactive, can help explore scenarios.

But it’s ultimately about making a commitment and allowing an iterative process to play out. A company then discovers its true focus might be something less flashy. Nike early on, for example, found that a huge source of greenhouse gas emissions was sulfur hexafluoride gas in the Nike Air bladder. When they re-engineered it, they ended up with inert nitrogen and a stronger material that was aesthetically cool and lightweight for the athlete. That didn’t come in one brainstorming meeting. It meant doing research and looking at what the science says is possible. It’s not quick, but it also shouldn’t be, if the goal is to take real, measurable action.

“Cheap talk leads to cheap things,” Jay says.

The next two

Deciding what matters is key, but nothing materializes without establishing concrete goals. This is where a company “shows the world you’re serious.” But it’s a place where companies slip up. They either set weak goals, ones they know they can easily reach, so there’s no challenge, no accomplishment, “no stretch,” Jay says, or they set goals that are too ambitious or aren’t backed by science. It could be, “We’re going to be net zero by 2050,” but how exactly is never answered.

Jay says it’s about finding the sweet spot of having a reasonable amount of goals—two to four—and then have those goals feel like a reach, yet possible. When that balance is right, it becomes a self-fulfilling prophecy. People stay motivated because they experience progress. But if it’s off, it won’t happen. “You need that optimal creative tension,” he says.

And then there’s the third step. Companies need to find partners to make their sustainability programs succeed. It’s the one part that’s most overlooked because executives continually believe that they can do it alone. But they can’t, because big initiatives require help and expertise outside of a company’s realm.

Maersk, the global shipping company, has a goal of replacing fossil fuel with green fuels for ocean freight, Jay says. It discovered that green ammonia could make that happen, and it was Yara, a fertilizer company, that best understood ammonia production. But it could also be a startup that’s working on a promising technology. Sometimes, as with moving to electric cars, what’s needed is political partners to enact policy and offer tax breaks and incentives. And it might be that the answer is collaborating with activists who have been pushing a company to change its ways.

“There are strange bedfellows all around,” Jay says.

Know how to tap the brake

All the steps circle back to the essential point that becoming sustainable takes a committed investment of time, money, and patience. Starting small helps, especially in a corporate culture that tends to move slowly. Jay says there’s nothing wrong with going from zero projects to one, even if it’s a small one in a specific department. It allows people to become accustomed to the idea of change. It also lets the company establish a framework, analyze results, and build momentum, making it easier to ramp up.

The patience part can be hard since there’s a rightful sense of urgency involved. Companies want to show that they’re doing something, and want to address climate change sooner rather than later. But Jay likens it to building a skyscraper: The desire is to get it up fast, but if the foundation is shaky, everything will crumble.

“What we’re trying to do is strengthen that foundation so it can reach the height we need,” he says.

First published March 3, 2023, on MIT News.

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About The Author

Steve Calechman’s picture

Steve Calechman

Steve Calechman has more than 25 years of experience, specializing in service journalism. He’s written about everything from quinoa to assessing a used car to liquid metal batteries. If there’s a new angle to an old topic, he’ll find it, translate the tech talk, and have it to you by the end of the day. You can see more of his work at stevecalechman.com.