Enthusiasts for corporate-responsibility rankings will have no doubt spotted the same names routinely appearing at, or near, the top of the table. So, while I was pleased to see Denmark’s Novo Nordisk take first place in the latest Global 100 Most Sustainable Companies list, published by the Canadian magazine Corporate Knights in January, it also felt like another turn of a very familiar wheel.
I take comfort in the fact that Novo Nordisk, the world’s leading supplier of insulin, has moved well beyond its – still very rare – incorporation of triple bottom line principles into its company charter. It is now a leader in increasingly important areas such as energy and carbon efficiency and pay equity, the last of these an increasingly sensitive issue in many western economies. More fundamentally, it argues that access to essential medicines is a basic human right. And it puts its money where its mouth is: the company sells human insulin to 33 of the world’s poorest countries at no more than 20% of the average price it charges in the west.
That is great work. But if we want to find less well-known champions of sustainability, where should we look?
A clue is in the breakdown by nationality of the Corporate Knights’ ranking. Of the 22 countries with companies in the list, the United Kingdom leads with 16, followed by Japan with 11 and France and the United States with eight each. Conversely, a report sub-titled The New Sustainability Champions, released by the Boston Consulting Group in the run-up to the latest World Economic Forum meeting in Davos, spotlights 16 emerging-market companies showing leadership in this area. The firms are based in countries including Brazil, Costa Rica, Egypt and Kenya.
Of these companies, I already knew of five – indeed I had worked for one – but the fact they were selected from an initial pool of over 1,000 contenders suggests it wasn’t simply a case of rounding up the usual suspects for the latest crop of awards. In China, the two “champions” selected were Broad Group, a large producer of air chillers, and Suntech, which supplies a range of solar and other renewable energy products. The conclusion, for all 16, was that they “tend to grow faster and have higher-than-average margins for their industries”.
When it comes to how these corporations break away from the herd, three characteristics stand out. First, they consciously set out to turn constraints into opportunities. Second, they embed sustainability into their culture. And, third, they actively shape their business environments.
Under the first heading, the champions focus on three key areas. They tackle looming natural-resource constraints head-on, they educate their customers on the need to radically improve their resource efficiency and they provide ways for poorer people to access their products and services. Suntech, for example, helps low-income customers to structure payments for the company’s renewable-energy products.
When it comes to embedding sustainability, the New Sustainability Champions again adopt three main strategies. They define clear aspirations and goals for sustainability, and use them to galvanise the entire organisation. They integrate sustainability into operations. At Costa Rica’s Florida Ice & Farm, to take a somewhat extreme example, 60% of the chief executive’s salary is now linked to the triple bottom line of “people, planet, profit”. And they engage their workforce. The Brazilian firm Natura, for instance, gives its managers specific training in how to turn social and environmental challenges into market opportunities.
The third area identified is perhaps the most striking: New Sustainability Champions actively shape their business environments for the good of the wider world, rather than their narrow self-interest, as is the case of so many other companies. More concretely, they influence policies and standards – Brazil’s Grupo Balbo, for example, has been lobbying to turn the entire sugar industry into an organic sector. They partner up, often working with other companies, NGOs and other actors to break down barriers to change. And they work hard to build greater awareness of the challenges and solutions among investors, their customers and the wider public.
China’s Broad Group has developed a miniature device for measuring air pollution – an increasingly hot issue in China – that can fit inside a mobile phone. By putting knowledge about air quality directly into the hands of citizens, such businesses are helping to amplify the societal pressures working for change.
NGOs and the media have tended to focus on a relatively small number of high profile, big-brand companies, for a wide range of reasons. One is that, as supply chains have globalised, it has become increasingly important to peer back through those supply chains to identify risks and opportunities, problems and solutions, that might otherwise be missed. But too often the focus on these names is simply because they are the folk we can see.
The joke about the drunk man found stumbling around under a street-lamp is a good metaphor for how too many of us have looked at the corporate landscape. Asked why he was there, the drunk said he had lost his car keys. Asked if he had lost them there, he replied that, no, he had dropped them nearby in the dark – but the light was better under the lamp. It is time to look beyond the existing areas of light, into the darker areas emerging with the rise of the new world order.
Homepage image by Rod Brazier