After seven years directing a sustainability initiative at Coca-Cola Company, Dan Vermeer has joined Duke University as executive director of the new Corporate Sustainability Initiative. In our interview, he says the financial crisis will separate the truly valuable CSR initiatives from the superficial.
Will corporate sustainability survive the financial crisis?
There’s no question that there will be a whole lot of stress on the job market in general, and nobody is going to be exempt from that. There are a few things that give me comfort. One is that a good chunk of the environmental sustainability agenda has a cost-saving benefit immediately. I think efforts around reducing energy use, water use, waste are going to have very direct benefits on the bottom line in a more efficient kind of enterprise.
This is what some business schools are saying, but is this something companies actually believe?
I think so. I would differentiate the larger national and multinational firms where I would say that it’s pretty well understood that sustainability efforts have financial and strategic value. Most companies are pursuing them, and will continue to do so. I’m pretty confident about that.
I think it is less institutionalized in smaller firms that have less exposure, access to the tools, and expertise in this area. But, in general, it’s pretty well established.
There are a lot of things that go under the umbrella of sustainability, and I think you will see some aspects of that suffer. Things that are framed more in philanthropic terms, corporate social responsibility terms, or corporate affairs terms – those things are likely to suffer because they are seen as more ornamental or the kinds of things you do in good times to buff up your image.
Will we see fewer image-driven corporate sustainability initiatives?
I think this downturn is going to get rid of the more superficial aspects of the sustainability agenda. There is one line of argument in doing this sort of thing, which is about reputation and image and ethics and being a “good corporate citizen.” To me, this approach is vulnerable to downcycles in the economy.
Which initiatives will survive?
The real aspects of sustainability are, in my opinion, grounded in the realities of access to natural resources. Can you afford to pay for them? Can you drive down the use of them through efficiency and innovation? How are you going to compete in a more constrained environment? Not just carbon-constrained, but water-constrained, soil-constrained, and all of the other natural resources that we’ve come to depend on.
I think there is another way of framing the sustainability agenda, which is fundamentally about cost savings, reducing your risk operationally, and finding new opportunities to create value. I think sustainability is fundamentally about how you want to place yourself in the market. Look at the auto industry and the choices they have made over the last several years that have now put them in a really suboptimal position in the marketplace, because they didn’t invest in the R&D and provide the products that are now much in demand. There are a good number of companies that understand that sustainability is the basis of competition.
Why else do you think corporate sustainability here to stay?
You have a lot of people moving into the current workforce that really value this stuff, and see it as critical that if they’re going to work for a company, that the company is operating sustainably and not damaging the environment. Sustainability is often an important element in the ability to attract and retain talent that companies are very sensitive to, because in the broader view, there is going to be a real war for talent, and this is one of the things that distinguishes companies from each other.
What are the skills that companies are demanding from graduates in this field?
Having recently come from the private sector, I can speak to my own decisions. I think they are looking for people who truly understand the fundamentals of running a business, so they can do the analysis to show the return on investment in these sorts of efforts. They understand the market strategy of a company. They understand that if you are a publicly held company, that you are spending the shareholders’ money, and that you have an obligation to use that to produce a return. The plus side is that more and more of these sustainability efforts really are in the interests of business and shareholders.
That’s one piece of it. I personally look for people with a mix of experience across sectors. They hadn’t spent their whole life in the public sector, but had worked in government and policy issues, and or had worked in the civil society sector, working in NGOs around some of these issues. I really look for people with a hybrid set of skills and experiences and networks that they could effectively work in partnership across sectors to address some of these bigger challenges. Having worked on water issues, I can tell you that this is something that companies cannot solve alone.
(Photo courtesy: Dan Vermeer)