BOOSTING THE TRIPLE BOTTOM LINE

Leadership in Corporate Social Responsibility has long been a tradition at Ivey. In this article, the school’s dean describes some of the research and policy initiatives that continue to develop strong leaders and help companies make important contributions on social issues.

According to global survey results released by the McKinsey Institute last November, 84 percent of executives believe “that making broader contributions to the public good should accompany generating higher returns to investors.” I agree, as I am sure all the members of the faculty, staff and student body at Ivey would. Business does indeed have a fundamental responsibility to give back to society.

This same survey, however, also revealed that “executives continue to see most sociopolitical issues as risks rather than opportunities.” But while I recognize that there are always risks in any business venture, I disagree. As my experience and our research at Ivey prove, the opportunities for business to contribute to society far outnumber the risks.

The survey further uncovered that only 14 percent of executives believe that companies “do an ‘adequate’ or ‘good’ job of anticipating social pressures.” With Ivey’s emphasis on Cross-Enterprise Leadership, in our approach to both business education and research, we are striving to change this perception. Our aim is to help companies to do a better job of not only anticipating, but acting on social issues.

In this article, I will share the new initiatives under way at Ivey aimed at advancing the business world’s understanding and practice of corporate social responsibility and sustainability. I will show how Ivey is working with other organizations to investigate best practices and then helping companies to apply them effectively. And I will illustrate the impact of Ivey’s own efforts to fulfill its mission of developing business leaders who think globally, act strategically and contribute to the societies within which they operate.

Leading-edge CSR research

As researchers and educators, we know that the best corporate performers concentrate on improving the triple bottom line – or the sum total of their financial, social and environmental results. That’s because their leaders recognize that business and markets don’t operate in isolation, but are influenced by and have an influence on the environment, communities and society at large. These leaders see their companies as part of an “enterprise” – a rich, growing and continually evolving network of interdependent relationships. And they value the role that their organizations can and should play in enriching that enterprise. This is the essence of cross-enterprise leadership.

Since its inception, and certainly well before climate change, off-shoring, health and other social issues started to appear in newspaper headlines, Ivey has made important contributions to the business world’s understanding of vital social trends. This is certainly true of Ivey’s early and ongoing efforts to advance environmental stewardship – the most pressing issue cited by the executives surveyed by McKinsey.

Ivey Professor Rob Klassen has studied the impact of environmental management and technologies on firms for more than two decades. Over the past two years, he has specifically examined how environmental management practices affect relationships among firms and their suppliers and customers. Generally, he believes, as I do, that “sustainable development – as reflected in a firm’s economic, social and environmental performance – has added complex new pressures.”

In a recent study of manufacturing plants, for example, he found that as corporations attempt to become more environmentally sustainable, they have to work more closely with other companies in their supply chain to achieve their sustainability goals. He also found that a company’s investments in environmental technologies cannot be made independently of other organizations in the supply chain. And in another study, he discovered that all the partners in a supply chain can indeed proactively build capabilities for collaborating on environmental issues.

Most recently, Professor Klassen examined the reverse supply chain practices of more than 100 Canadian firms. Through a reverse supply chain, firms retrieve used products and materials from customers to recover their value – through recycling, remanufacturing or reselling. The study results demonstrate that when companies leverage their reverse supply chains in this way, they not only reduce the negative environmental impact of waste disposal, they also lower their production costs. In essence, “being green” saves money.

In addition to researching environmental issues in business, Ivey has been active on the public policy front through the Lawrence Centre for Policy and Management. In October 2006, the Centre hosted the “Developing Sustainable Energy Policy Workshop”. Funded by the federal and Ontario governments, the workshop brought together the ideas and expertise of more than 140 business executives, scientists, academics, government policymakers, consultants, energy experts, students and non-governmental organization leaders.

These participants called for aggressive government action on climate change issues. Their recommendations, aimed at getting Canada on the fast track to reducing greenhouse gases (GHG), include tax measures to spur technology commercialization as well as public education initiatives on conservation and demand management. “The time for cautious, modest steps is over,” says Dianne Cunningham, the workshop chair and Director of the Lawrence Centre. “Mounting evidence of rapid global warming signals the need for Canada to embark on a visionary and bold path marked by clear, understandable and measurable milestones.” I couldn’t agree more.

Corporate social responsibility, however, encompasses a field of research and practices that extends beyond environmental stewardship. That’s why Ivey has established the Cross-Enterprise Leadership Centre for Building Sustainable Value as part of our plans to advance the concept of cross-enterprise leadership. Its purpose is to provide practitioners and students with the knowledge, tools and capabilities they need to manage and act upon private and public interests.

The Centre is led by Professor Tima Bansal, who has focused much of her 20 years of research on triple-bottom-line issues. Specifically, most of her research explores how corporate sustainability and social responsibility affect both a firm’s reputation and its profitability. Overall, she believes that “Business leaders who choose to ignore pressing social, economic and environmental issues do so at their own considerable peril – and their organization’s.”

But for Professor Bansal, this just isn’t simply a matter of staying in business or safeguarding corporate reputation. It’s about gaining competitive advantage and managing risk by being proactive and responsible. Over the long run, she believes and I must agree, that “it is the pursuit of both societal and economic value that yields long term and stable profits” for companies.

Very recently, for example, in association with Professor Mary Graham of Clarkson University, Professor Bansal examined how corporate reputation affects the purchasing decisions of consumers in the airline industry. These results show that consumers are willing to pay more for a better corporate reputation. What is more, the research demonstrates that consumers base their willingness to pay more primarily on a company’s reputation. As Bansal and Graham conclude, these findings suggest that “corporate reputation research has an important place within our understanding of corporate strategy.”

Research Network for Business Sustainability

Several years ago, Professor Bansal identified the need for evidence-based research linking corporate strategy with corporate responsibility and sustainability. She wanted to bridge the gap that often exists between academic research and business practices in the real world. She hopes to foster true change in organizations.

So in addition to acting as the Director of the Building Sustainable Value Centre, Professor Bansal initiated and now heads up the Research Network for Business Sustainability (RNBS). This network connects corporations, researchers, policy makers, and non-profit organizations in search of research and best-practices on business sustainability and corporate responsibility.

Currently, the RNBS marshals the knowledge and expertise of more than 200 Canadian researchers and is linked to business sustainability practitioners in industry and government. Through online discussions, a web-based repository of research reports as well as face-to-face conferences, the RNBS enables researchers and business people to collaborate on the creation of new business knowledge. It helps ensure that researchers ask the right questions. It also enables researchers to share their research findings directly with companies.

The RNBS also established a Leadership Council, which brings together representatives from ten corporations, three federal government departments, and two non-governmental organizations. The Council will identify the key research questions that must be answered to unlock some of Canada’s largest business sustainability challenges. It will fund and oversee two research projects each year.

The Council announced its two initial projects last summer. The first is designed to help businesses put a dollar value on their sustainability initiatives. It will synthesize the existing research into how sustainability contributes to superior financial performance. Its aim is to develop practical tools that managers can apply.

The second project will examine how companies can successfully engage the community in business decisions. It will look at the effectiveness of how companies interact with their communities, from town hall meetings and public surveys, to employee volunteerism and telephone hotlines. And then it will provide guidance to companies on how to best ensure the success of their community engagement activities, both for the community and the company.

The Council will host Forums early in 2008 to kick-start the important discussions in these two areas. Professor Bansal and I are optimistic that the Council will significantly influence new research agendas, helping to catapult Canadian business and government policy as a world leader in this area.

The United Nations Global Compact

To further advance our efforts in the international arena, Ivey also became the first Canadian business school to join the United Nations’ Global Compact in 2006. This initiative brings companies and schools together with UN agencies, labour, civil and other social interests to ensure that business can be part of the solution to vital global challenges, such as environmental stewardship, the protection of human rights and the prevention of corruption. The Global Compact’s vision is to build a more sustainable and inclusive global economy.

Beyond these critical social responsibility partnerships and initiatives, however, I believe that Ivey must continue to instill these critical values in the business leaders of tomorrow. For instance, Ivey offers a course on managing for sustainable development, whereby students learn about the drivers of social and environmental issues and how to formulate plans directed at improving a company’s financial, social and environmental performance – its triple bottom line.

But, I must add that Ivey’s students seem instinctively driven to contribute to the greater good. For example, Ivey’s MBA students rolled out a program called “Ivey Connects” in 2002. This student-led initiative is aimed at building stronger ties between the community and Ivey. It offers pro bono management consulting services to local community groups, such as Big Brothers, the London Food Bank, Ronald McDonald House, and the Women’s Community House, among others. Ivey Connects also organizes community action days whereby students volunteer for a full day in helping out a local charity.

Most recently, Ivey’s students combined their passion for environmental responsibility with their drive to help the community by committing to plant 10,000 trees over the next three years in London, Ontario’s Medway Valley. This project is part of the Re-Forest London initiative. It will serve to naturalize the edges of the Medway Valley Heritage Forest, by increasing the buffer area that protects the forest. Any watercourse area should have a 30-metre buffer according to Environment Canada, but in many places along the Medway Creek, it is less than three metres.

This past spring, the MBA class of 2007 joined the incoming class of 2008 to plant the first set of 1,000 trees. Overall, the project will take three years to implement and will cost about $250,000. The Class of 2007 pledged $20,000 towards the project, and within just eight weeks, raised 90 percent of this funding under the leadership of an enthusiastic Class Gift Committee.

Throughout my career in the private sector, I have worked for or led companies with a keen devotion to preserving the environment and to contributing to their communities and society at large. I am proud to be at helm at Ivey, where through our advancement of the Cross-Enterprise Leadership model, we are continuing to make profound and enduring contributions to the research and practice of corporate sustainability and social responsibility.

Like the cross-enterprise leaders we strive to develop, the people at Ivey recognize that we can’t neatly place borders around our school and ignore what’s happening outside those borders. We know that we can’t build a robust school without a solid community foundation and progressive environmental practices. And we remain passionate about creating new social value ourselves – in the knowledge that the best schools continually strive to practice what they teach.

This copy is for your personal use only. To order more than one copy for distribution to your colleagues, clients or customers, please quote the reprint number at the end of the article and contact Ivey Publishing: case@ivey.uwo.ca.

Leave a Reply

Your email address will not be published. Required fields are marked *