oikosNewsSustainability Consulting for Value Creation – The Alumni Debate Online

Sustainability Consulting for Value Creation – The Alumni Debate Online

07 October 2016 | News

The first oikos alumni debate online took place on September 27th. It was the first 100% alumni international event: made by alumni for alumni!

The evening was guided by the title: “Sustainability Consulting for Value Creation”. Two panelists from the field shared their insights with the present alumni and replied openly to their questions: Katharina Beck and Thomas Petruschke. The debate was moderated by Greg Ives.

Getting together

The goal of the Alumni Debates Online is to gather oikos alumni irrespective of their location and connect those who have shaped oikos during the last three decades. Their diversity is significant – ranging from recent graduates who just started their careers to alumni who have more than 20 years of experience in business, politics, NGOs and academia. All of them have in common their oikos history and of course their interest in sustainability.

For this first online debate, the topic set by the team was “Sustainability Consulting for Value Creation”.

With a fundamentally changing market environment, in the face of immense global environmental and social challenges, the need for sustainable business practices represents an important opportunity for businesses and organizations to seize. Integrating environmental and social values into core business activities is crucial for lasting profit and growth – so goes the tale. But just how big is the grain of truth?

Two alumni agreed to debate on that theme. Katharina Beck (Accenture Strategy – Sustainability Services, oikos Cologne Alumna and international President in 2008) and Thomas Petruschke (BSD Consulting, oikos Bayreuth Alumnus and international EB Member until 2006). The debate was moderated by Greg Ives (IM/KM Design, oikos Penn Alumnus).

Sustainability Consulting: A lot of Potential

To begin with, the panelists were asked to sketch out the state of the field. According to Thomas Petruschke, sustainability has moved closer to the strategy department than ever.  Another observation of Thomas is the need for increased specialization: Working on projects that are supposed to create impact requires specialization at a certain point, because even fields like that of sustainability reporting have become more technical and more complex. There is also a change in the way companies address their stakeholders: becoming more strategic, companies now take a long-term view on stakeholder relations. Companies realize that with ever more watch-dogs to “blame and shame”, they need to come up with more believable solutions. But also framework conditions for sustainable products or sustainable strategies are emerging quickly. This, too, is getting more strategic.

Katharina Beck insists on differentiating between sustainable idealism and what consultancies can actually bring to the table. On the one hand, consultancies offer a variety of services, answering needs in many of a company’s realms. Consultants, says Katharina, are often the preferred choice, because firms do not want to hire anyone themselves or need more specialized people. However, they work only temporarily for a firm and so they cannot implement sustainable thinking on every level. On the other hand, 10 to 20 years ago, large corporations which had money on hand started to write extensive reports. At the beginning, these reports merely contained environmental impacts of business practices. But as more companies entered the arena, these reports held more detailed accounts of sustainability efforts, including materials analyses and stakeholder engagement. This is where sustainability consulting was born and where much of the sector is still most needed today.

Despite the fact that, driven by public interest and a more wide-spread understanding of concepts such as the Triple Bottom Line[1], sustainability has become a core concern to many corporations, professional consultancy in this field is just at its beginning.

This can be partly explained by the fact that it has proven difficult, at times, to demonstrate the potential for value creation, sustainability offers for those organizations. Naturally, this is where the debate moved next.

Sustainability:  A vehicle for value creation?

For Thomas Petruschke it is clear that today’s strategy approaches have departed from the classic feel good CSR (Corporate Social Responsibility). Regulation has increased and companies constantly try to prepare and sense in what directions the policy debate might move, making them innovative. Though still not sexy to talk about (i.e. not the favorite topic in a board meeting), sustainability has become a big driver for companies. According to Thomas, a much bigger share of attention is coming from the policy area: how to deal with companies’ impact on society and how to leverage the positive impact they potentially hold.

In fact, policy-makers have played a big role in the development of sustainability consulting practices. This can be seen by the steep increase in mandatory sustainability reporting requirements. Understandably, more and more companies need direction from consultants to understand how policy evolves. And, Thomas is sure, another development makes the case for sustainability consulting: sustainability has become part of the management process.  Sustainable practices are not only interesting for waste reduction or emission saving — They also create a totally new spirit within the company: A culture of innovation, a closer connection of employees to their company; and a better reputation, easing stakeholder relations. Sustainability is now a new management paradigm, providing the most inter-created way of managing a business.

However, Thomas noted, what sustainability professionals do today is not totally new. When looking into the history of corporations, entrepreneurs and intrapreneurs always looked at the effect of their operations on society and started to measure how it affected employees, and so on. The promise of sustainability management is to do this in a more strategic, a more structured and professional way and not just as the reaction to a gut feeling. The whole idea of intercreative thinking, intercreative management is Thomas’ vision of sustainability: you simply make better decision in the corporation. And that will eventually effect the financial side.

Sustainability: “What gets measured, gets managed!”

Katharina Beck clarified: When it comes to value it’s important to distinguish between what can be quantified, as saved costs or increased revenue or else and what is the added value to society. In the end, one would need 25 metrics to measure these – too much to ask from a company, which still has problems of grasping the three metrics that are industry standard, i.e. people, planet and profit. So to get things done, Katharina knows, it’s best to connect endeavors to the bottom line. In other words, sustainability needs to be very closely integrated with financial management. There are two possibilities to do this along a given value chain: companies can either reduce the negative environmental or social footprint or use their product and service portfolios to create positive value (or at least reduce risk).

Thomas Petruschke has had better experiences with clients’ readiness to include more holistic metrics in their operations, exemplifying the six capitals model[2]. It includes social & relationship capital, intellectual capital, manufactured capital, financial capital, human capital, and natural capital. This model has been around for quite some time now and was raised by the International Integrated Reporting Committee[3] as the heart of a new framework for sustainability and, in a wider sense, to assist corporate management and corporate evaluation. However complicated the model seems to practitioners, Thomas underlines that this thinking, just like sustainability concerns in general, is not new. It resembles the basic notion of shared values that has always been an important driver for merchants and producers. The framework for integrated thinking builds on knowledge from companies that have used those categories for hundreds of years. The goal today is to bring back those six capitals into the more technical and structured management processes of a modern Multinational. However, Thomas notices, the IIRC is still not applied by many companies.

Adding to that, Katharina Beck said companies today are still overwhelmingly managed to maximize one KPI: Profit. So the model of six capitals is good in theory but difficult to put into practice.

She also highlighted the noteworthy fact that the natural capital protocol has just been launched by the Natural Capital Coalition[4] and the World Business Council for Sustainable Development[5], “a framework designed to help generate trusted, credible, and actionable information for business managers to inform decisions”[6]. It is public and more sophisticated than the IIRC. And it has practicability. The WBCSD is now working on a social capital protocol: intellectual, social and relationship capitals are brought into one.

When the debate stage opened up for questions, the participants got to know each other a little better. From the experience of the listeners, it became clear that both the (sustainability) consulting sector and the corporates still have a long way to go. Even if sustainability is part of a company’s declared goals – out of nine goals, it still is the ninth.

To have more details & concrete examples, join next alumni debate online wherever you are!

If you’re interested to become a moderator or a panelist, please contact us at alumni@oikos-international.org.

Many more debates will come, remain alert and check here:

https://oikos-international.org/programmes/conferences/alumni-debates

[The Alumni Debate Online Team]

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[1] http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html

[2] http://integratedreporting.org/what-the-tool-for-better-reporting/get-to-grips-with-the-six-capitals/

[3] http://integratedreporting.org/the-iirc-2/

[4] http://naturalcapitalcoalition.org/protocol/

[5] http://www.wbcsd.org/home.aspx

[6] http://naturalcapitalcoalition.org/protocol/